FEB-APR settled 25¢ higher on the day. Buyers also were reassured by buying support for barrel cheese at unchanged price levels. Butter futures, on the other hand, continue to sell off.

USDA revised November cow numbers down 7,000 head, but reported an estimated 12,000- head increase from November to December. Based on preliminary numbers, the greatest expansion in the fourth quarter came from Iowa (+5,000 head in December vs. September), Indiana (+3,000 head) and New Mexico (+3,000 head). The largest declines came from Minnesota (-6,000 head) and Missouri (-2,000 head).

An ample supply of replacement heifers offset aggressive culling in 2011. Dairymen sent 2.914 million cows to slaughter last year, up 3.8% from the prior year and the most since 1997. The January “Cattle” report comes out Friday.

In 2011, California milk production was a record-high 41.462 billion lbs., up 2.7 per cent from 2010 output. Wisconsin milk production was also a record, but just barely: 26.111 billion lbs., up 0.3 per cent. Wisconsin output had increased 18% in the previous six years.

Retail dairy prices pulled back in December. The Milk CPI was 148.7 down 0.1 per cent from November. The Cheese CPI was 223.4, down 1.0 per cent. The Butter CPI was 199.6, down 0.5 per cent, according to the Bureau of Labor Statistics.

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