Monday, December 7, 2020

Monday Morning Dairy Market Update - Milk Begins the Week Under Pressure

 Opening Calls:

Class III Milk Futures:5 to 10 Lower
Class IV Milk Futures:Mixed
Butter Futures:Mixed


Outside Market Opening Calls:

Corn Futures:3 to 5 Lower
Soybean Futures:5 to 10 Lower
Soybean Meal Futures:$3 to $4 Lower
Wheat Futures:5 to 8 Lower


Milk:

Milk futures found some temporary support late last week, but that may not carry over this week unless some aggressive buying interest surfaces in cheese. Fundamentals are not supportive to strong price support with the best we can hope is a sideways market. Milk production continues to slowly improve with overall good weather for cow comfort. There is indication from processors that orders are slowing, which would not be surprising. Increasing milk production and slowing demand is not a good combination for the near term. However, inventory of cheese has not been building and is about even with a year ago, which should put the market in a position that may hold support. One concern remains over the continued impact of COVID-19 as we move through the winter. The impact would not be from retail demand, but from continued pressure on the food service industry. However, export demand remains very strong with the value of dairy exports in October 6.6% higher than October 2019.

Cheese:

Cheese prices are in a precarious situation. Slowing demand due to much of the holiday orders being filled, may begin to increase inventory. Historically, inventory stabilizes or begins to increase in December, and this year it could increase more rapidly than usual. Manufacturers are running near or at capacity in many cases. This could become a bigger issue as we move through the holidays and more spot milk is available for purchase. Cheese exports in October were 12.8% below October 2019, which is also a concern.

Butter:

The market showed surprising strength over the past two weeks and could either continue the trend or run into buyer resistance. Large inventory may cap the strength of price. There has been strong retail demand and strong export demand, but that has been not enough to offset supply. Price could run into buyer resistance soon.





Monday Midday Dairy Market Summary - Block Cheese Price Jumps

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