By  E. W. Lang

Dairy Margin Coverage for January was announced by USDA at $7.14 per cwt. Low milk prices and high corn, soy and alfalfa prices contributed to the number that allows producers signed up for the $7.50 or higher levels to collect a subsidy on covered production. Producers signed up for the maximum coverage of $9.50 will collect $2.36 per cwt. of covered production, others less.  Or none. 

Milk-Feed indices remain at very low levels for the near term and rather low levels for the rest of 2021. Most market cows were selling from 48 to 53 cents per lb. in Withee, Wisconsin, and a fair number poked through 70 cents in Pennsylvania this week. Let’s note here that USDA has just reported the national dairy herd size at 9.45 million head, the largest number in a quarter century.

Block cheese gained eight cents this week to close at $1.62 per lb. Barrels gained one at $1.42 and butter lost eight cents to close at $1.47 per lb.

Class III Milk Futures for the week are up two cents at $15.62 per cwt. for February, down five cents at $16.22 for March and up four bits at $17.69 for an April through June average.

Class IV Futures are $13.28 for February, $14.11 for March and April through June averages $15.23 per cwt. USDA has reported butter inventories at 33% higher than a year ago.

One of the television farm shows has nearly proclaimed that the sky is the limit for cereal and grain prices in light of U.S. supply and international demand. The commentators sort of indicate that there's no end in sight, but back pedal their predictions to the extent that they not look like idiots this fall. We can understand that endeavor, certainly.

That said, the optimism delivered by the show also affects ad revenue. Equipment and chemical companies don't want to buy ad time on a show that encourages rational thinking and caution, or features what could happen to prices after one exceptional growing season. I do offer that perspective here, but attach the disclaimer that all of my predictions regarding market trends and general elections are wrong 50% of the time, and have been for years. 

Extreme cold extending into Texas caused 0.4% of U.S. milk production to be dumped during February.  Speaking of Texas, natural gas customers throughout the Midwest have received a warning that 11 days of extremely high natural gas prices will be included in their February billing. Those prices will be four to seven times higher than usual, as open market purchases were necessary to acquire gas during the extreme cold that caused pipeline shutdowns in Texas.

I heard on TV that unusually warm weather is expected to extend “nearly to the Northwest Territory” this week. The Northwest Territory is above Alberta and Saskatchewan, so it looks like weather events, much like commodity prices, even out over time.