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Friday, January 29, 2021

Friday Closing Dairy Market Update - December Income Over Feed Drops to $8.87

MILK

Milk futures declined for the week for both Class III and Class IV milk. The second half of the week showed more stability due to underlying cash prices showing limited losses. Volatility during the second half of the week was the least it has been since before Christmas. Cows did not care about volatility and continued to produce milk, as milk receipts at the plant level continued to increase. The December Agricultural Prices report was released Friday. It showed stronger feed prices and a weaker all-milk price. The result was an income-over-feed price of $8.87, a decline of $3 from November. Those who chose the $9.50 level for the Dairy Margin Coverage program will receive a payment of $0.63 per cwt. The average corn price for December was $3.97, up $0.18 from November. The central Illinois soybean meal price was $396.68 per ton, an increase of $8.85 per ton from the previous month. Alfalfa hay price increased $2 per ton to $169 with the supreme/premium quality hay averaging $203 per ton, up $3 from November. This resulted in a blended alfalfa price of $186, up $2.50 per ton from November. The all-milk price was $18.50 compared to $21.30 in November resulting in a decline of $2.80 per cwt. The annual USDA Cattle Inventory report showed 9,440,400 dairy cattle on Jan. 1. This was an increase of 1% from a year earlier. Milk replacement cattle totaled 4,604,500 head, down 2% from the previous year.

AVERAGE CLASS III PRICES

3 Month: $16.04
6 Month: $16.49
9 Month: $16.80
12 Month: $16.91

CHEESE

Cheese prices did not move much this week. Blocks declined 3.50 cents with no loads traded. Barrels slipped 0.25 cent with 21 loads traded. Dry whey declined 0.50 cent with seven loads traded. Cheese demand from retail is good. Cheese purchasing by the government is ongoing, but not affecting the market as was hoped. More impact might be felt over time as purchases continue through the end of April for the Food Box program. There is no indication if the Food Box program will continue after that time.

BUTTER

For the week, butter declined 6 cents with 18 loads traded. Grade A nonfat dry milk remained unchanged with 37 loads traded. The high volume of trades was unable to move price, indicating there is sufficient supply with price at a good level for both buyers and sellers. The weakness remains a concern as lower price is needed to increase demand. However, retail demand can only absorb a certain amount.

OUTSIDE MARKETS SUMMARY

March corn jumped 12.50 cents, closing at $5.47. March soybeans jumped $16.75 cents, closing at $13.70, with March soybean meal gaining $3.90 per ton, closing at $431. March wheat jumped 16 cents, ending at $6.63. February live cattle declined $0.95, closing at $115.05. March crude oil slipped $0.14, closing at $52.20 per barrel. The Dow plummeted 621 points, ending at 29,983, while the NASDAQ fell 266 points, closing at 13,071.




Friday Midday Dairy Market Summary - Cheese Holds Steady

Both block and barrel cheese prices remained unchanged during spot trading Friday at $1.5750 and $1.39 respectively. There were no trades in either one. Only offers for two loads of blocks and a load of barrels were placed Friday. No buyers showed up looking to do any business. Butter price declined 2.25 cents closing at $1.2450 with no loads traded. Offers to sell 2 loads pushed price lower. This increased the idea that price may be headed for the low set in April 2020. Grade A nonfat dry milk price remained unchanged at $1.1725 with 8 loads traded. Dry whey price increased 0.50 cents closing at 53.50 cents with one load traded. Class III futures are 13 cents lower to 9 cents higher. Class IV futures are 16 cents lower to 6 cents higher. Butter futures are 1.00 cent to 3.75 cents lower. Dry whey futures are 0.10 cent lower to 0.32 cent higher. USDA will release the December Agricultural Prices and the Cattle Inventory report Friday.





Activists urge scrutiny on 'mega-dairies' amid lawsuit

 A coalition called Stand Up To Factory Farms wants a moratorium on large dairies amid a lawsuit alleging fraud.

Activist groups are calling for a moratorium on large commercial dairies in Oregon amid a lawsuit by Tyson Foods against Pasco, Wash.-based Easterday Ranches alleging fraud.

Tyson says in its lawsuit that its losses are more than $225 million as a result of false cattle sales and feed costs claimed by Easterday, reports Oregon Public Broadcasting.

“In an effort to ensure the orderly recovery of assets in the aftermath of a fraudulent scheme by Easterday Ranches, Tyson Fresh Meats is asking for a court-appointed receiver to take control of Easterday Ranches,” Tyson Fresh Meats told OPB in an emailed statement.

Animal welfare and environmental groups note that Easterday is seeking a draft permit from the Oregon Department of Agriculture for a nearly 30,000-cow dairy on the former site of Lost Valley, a dairy shut down by Oregon authorities after more than 200 environmental violations.

.A coalition of groups called Stand Up to Factory Farms argues the lawsuit shows there is more than one "bad actor" among the state's largest dairies. The groups want Oregon to deny Easterday's permit and restrict what it calls "mega-dairies."

"It's been clear for years now that these facilities housing tens of thousands of cows and producing waste on par with many cities are mega-polluters regardless of the operators," the groups said in a statement. "It is time for Oregon legislators to enact a mega-dairy moratorium to protect our state from irresponsible mega-dairy operators and prevent harms from massive industrial dairies until regulations are in place to protect Oregonians.“

The statement was emailed to Farm Progress by Food and Water Watch, a Washington, D.C.-based organization promoting public and corporate accountability.

Tyson claims Easterday billed for fictitious cattle and feed. Tyson discovered the missing cattle in December when the company evaluated its inventory, OPB reports. Easterday has not responded to media requests for comment.

The case, Tyson Fresh Meats, Inc. versus Easterday Ranches, Inc., is expected to go before a Franklin County judge in February, the public broadcaster reports. No court date has been set.



Friday Morning Dairy Market Update - Traders Uncertain of Price Direction

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Mixed
Butter Futures: Steady to 1 Lower

Outside Market Opening Calls:

Corn Futures: 4 to 8 Higher
Soybean Futures: 8 to 14 Higher
Soybean Meal Futures: $2 to $4 Higher
Wheat Futures: 4 to 6 Higher

Milk:

Trading may be light and mixed prior to spot trading. Milk futures have held the past two days, but underlying cash has not been able to support a higher price trend. Hope for a repeat of last year's strong prices as a result of the Food Box program, has virtually been eliminated. Increased buying of dairy products has been met with higher supply, reducing the need for buyers to come to the spot market aggressively. Continued strong milk production should keep the market sufficiently supplied. USDA will release the December Agricultural Prices report Friday afternoon. This report provides the average prices used for calculating income over feed. A Dairy Margin Coverage payment is expected due to the substantial rise of grain prices in December compared to the decline of the All-milk price.

Cheese:

Based on the price action seen this week, further weakness of cheese is expected Friday. If prices bounce, it may be only temporary as there is little to suggest aggressive buyer interest. The increase of trading activity in barrels Thursday with price still declining, does not bode well for the near term.

Butter:

One has to wonder just how low price will need to move in order to increase demand sufficiently to reduce supply. The decline of price since July has not been enough to accomplish the task. In fact, supply has increased steadily in comparison to the previous year throughout that whole period of time. That is not likely to change anytime soon. Further weakness is expected.




Thursday, January 28, 2021

Thursday Closing Diary Market Update - Most Milk Futures Post Minor Gains

MILK

Milk futures have been able to bounce somewhat the past two days. This is likely due to the large losses early in the week as the market generally tends to overdo itself either up or down in a volatile market. The past two days have been mild with limited price fluctuations. Weather in some areas has become more winterlike, but that is not expected to have any significant impact on milk production. Spot milk in the Midwest continues to see lower-than-usual prices for this time of year. Price is running as much as $8.50 below class. Some plants have indicated there are fewer offers of spot milk recently. It is unclear whether this is due to better demand surfacing, requiring plants to process as much milk as possible in order to meet that demand or if there is less being offered due to the low price for the milk. They would rather process it and store it rather than sell it at a steep loss. The increase of cow numbers and production per cow will assure heavy milk production through the rest of winter and spring. Spring flush may see very high output per cow unless milk production is curtailed. Plants may implement quotas to reduce milk volumes, but it may not have a significant impact if it will only be temporary to get through the flush.

AVERAGE CLASS III PRICES

3 Month: $16.12
6 Month: $16.55
9 Month: $16.84
12 Month: $16.94

CHEESE

Greater buyer interest developed for barrels Thursday, but price is still declined. That does not improve the near-term market outlook. Sellers are more interested in moving supply rather than holding back hoping for a price increase. Processers are running on full schedules to process available milk. This is expected to meet regular consumer demand as well as demand from government purchases for the Supplemental Nutrition Assistance Program and the Food Box program. So far, extra government programs have not had the price impact as last year.

BUTTER

Price is slowly working lower with a potential to reach back to the low of last April. Price is declining to spur demand. Even with lower price, demand has not increased sufficiently to keep inventory from growing. Retail demand is strong, but the lack of demand from the food service industry continues to plague the market. Weekly butter inventory in selected warehouses for most of the month showed an increase of 23%, which points to continued higher supply.

OUTSIDE MARKETS SUMMARY

March corn gained 0.50 cent, ending at $5.3450. March soybeans fell 21.50 cents, closing at $13.5325, with March soybean meal down $9.50 per ton, closing at $427.10. March wheat lost 11.25 cent, ending at $6.47. February live cattle declined $0.45, ending at $116. March crude oil declined $0.51, closing at $52.34 per barrel. The Dow gained 300 points, closing at 30,603, while the NASDAQ gained 67 points, ending at 13,337.




Thursday Midday Dairy Market Summary - Cheese and Butter Slide Lower

Block cheese price declined 1.75 cents closing at $1.5750 with no loads traded. There were 3 offers for blocks remaining at the close. Barrel cheese price declined a penny closing at $1.39 with 15 loads traded. There were 7 unfilled bids and one uncovered offer remaining at the close. The fact that there were that many unfilled bids may be the reason Class III milk futures are holding slightly higher. This could indicate there is greater buying interest developing at this level. The concern is that the amount of trading activity seen Thursday and price still slipping does indicate sellers continue to have product to move and are not holding back for higher prices. Butter price declined 1.25 cents closing at $1.2675 with 12 loads traded. Sellers are not holding back and need to move product in order to manage inventory. Grade A nonfat dry milk price increased 0.75 cent closing at $1.1725 with one load traded. Dry whey price increased 2 cents closing at 53 cents with one load traded. Class III futures are 9 cents lower to 10 cents higher. Class IV futures are 1 cent to 4 cents higher. Butter futures are unchanged to 0.50 cent lower. Dry whey futures are 0.32 cent to 1.48 cents higher.




Thursday Morning Dairy Market Update - Milk Futures Hold Overnight

Opening Calls:

Class III Milk Futures: Steady to 10 Higher
Class IV Milk Futures: Mixed
Butter Futures: Mixed

Outside Market Opening Calls:

Corn Futures: 2 to 4 Higher
Soybean Futures: 2 to 4 Higher
Soybean Meal Futures: Mixed
Wheat Futures: 3 to 6 Lower

Milk:

Traders are deciding whether support has been achieved in the underlying cash or whether the market is just taking a breather before resuming the downtrend. According to Wednesday trade and overnight activity, there is a sense that spot prices have reached a level at which buyers might step up again. More than likely, it is just a matter of futures attempting to get in line with cash due to heavy selling earlier in the week. The bearish implications of the Milk Production and Cold Storage reports will remain over the market unless demand and underlying cash proves otherwise.

Cheese:

Cheese prices declining to the current levels has been a surprise since the friendly news of increased purchasing for the Supplemental Nutrition Assistance Program and another round of the Farm to Families Food Box program at the beginning of the year. However, it has not reacted positively due to plentiful fresh cheddar cheese supply. Unless supply tightens in the country bringing more buyers to the daily spot market, price may continue to flounder.

Butter:

The low butter price should be attractive for buyers. However, large stocks and strong production are keeping buyers purchasing on an as-needed basis. They see little need to stock up as there is no indication of supply tightness anytime soon. The anticipation is that prices may decline further under current market conditions. Buyers have readily available supply in the country with little need to come to the spot market.




Wednesday, January 27, 2021

Wednesday Closing Dairy Market Update - Milk Futures Close Higher

Milk:

Reports so far this week generally indicated milk production to be steady with last week. There is sufficient milk available for both manufacturing and bottling needs. There are a few months before spring flush gears up and reaches its peak. Continued overall growth of milk production may mean some difficulties handling the milk over the next few months. However, increased demand through government buying programs may utilize the extra milk. The problem might end up being a possible lack of manufacturing and bottling capacity. Many plants are running at or nearly at capacity. Farmers seem to have no intention of reducing milk production due to the anticipation of good milk prices for the year. This, along with good weather so far this winter, is keeping milk production very strong.

Average Class III Prices:

3 Month: $16.10
6 Month: $16.51
9 Month: $16.79
12 Month: $16.90

Cheese:

Cheddar cheese sales have been reported to have increased, which is understandable due to the fifth round of the Farmers to Families Food Box program. Stronger buyer interest is being easily met with sufficient supply. Buyers of cheese are approaching the market with caution as they do not want to be too aggressive with purchases as supplies are growing. On the other hand, they want to make sure they have sufficient supply to meet demand. Buyers will remain a bit on edge through much of the year as the impact of government purchasing last year will remain fresh on their minds. There is anticipation food service demand will slowly increase as the year progresses.

Butter:

Churning remains very active across much of the country as cream supply is heavy. Some plants have sold some extra cream but at lower prices. Many plants do not want extra supply at the current time as they try to manage inventory by utilizing their own supply. Retail sales are good, but not good enough to keep inventory from building. This may be a problem for much of the year as production might overwhelm demand.

Outside Markets Summary:

March corn gained 1.75 cents, closing at $5.34. March soybeans gained 4.50 cents, ending at $13.7475 with March soybean meal up $0.10 per ton, closing at $436.60. March wheat declined 7 cents, closing at $6.5825. February live cattle declined $0.55, ending at $116.45. March crude oil gained $0.24, closing at $52.85 per barrel. The DOW fell 634 points, closing at 30,303 while the NASDAQ fell 355 points, ending at 13,271.




Wednesday Midday Dairy Market Summary - Cheese and Butter Prices Hold

Both block and barrel cheese prices remained unchanged Wednesday at $1.5925 and $1.40 respectively. There were no loads traded in either category. Butter followed suit with price remaining unchanged at $1.28 with one load traded. The positive aspect is that prices did not decline, but the negative aspect is that they did not increase. Buyers have not turned aggressive at these lower prices. Supply is such that they feel they do not need to be as there is sufficient supply out in the country. Grade A nonfat dry milk price increased 2.75 cents ending at $1.1650 with 15 loads traded. Dry whey price increased 1.25 cents closing at 51 cents with 2 loads traded. Class III futures are 2 cents lower to 13 cents higher. Class IV futures are 29 cents lower to 7 cents higher. Butter futures are 0.50 cent lower to 0.60 cent higher. Dry whey futures are 0.80 cent to 2.42 cents higher.




Wednesday Morning Dairy Market Update - Futures Take a Breather

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Mixed
Butter Futures: 1 to 2 Lower

Outside Market Opening Calls:

Corn Futures: 6 to 8 Higher
Soybean Futures: 8 to 15 Higher
Soybean Meal Futures: Mixed
Wheat Futures: 2 to 5 Higher

Milk:

Milk futures may take a breather Wednesday after the large declines seen Tuesday in both Class III and Class IV futures. However, a bounce higher regaining those losses is not likely anytime soon. The bearish implications of growing inventory already in December as well as strong milk production indicates supplies will be plentiful. But, as we have seen last year, the market can change rather quickly as volatility is expected to be substantial again this year. We much keep in mind that volatility can take place both ways. Price increased substantially a few times last year and then fell back. Volatility can also mean prices could moves substantially lower and then come back as well. There is hope that enough people will be vaccinated against COVID-19 allowing life to return to some sort of normalcy. This would improve regular consumer demand rather than a large portion of demand being reliant on government purchasing.

Cheese:

Barrels may have found a level at which buyers are comfortable purchasing more aggressively. Price may not move much higher, but at least there may be support. Blocks do not seem to share that same sentiment. Weakness still prevails. The large decline of dry whey price Tuesday may indicate at turn of trend as buyers may have sufficient product for the time being.

Butter:

The market is in serious trouble. Price moved back to the level of early May and only 18 cents from the extreme low in April when all nonessential businesses were closed. We are not in that situation Wednesday, but inventories have increased to substantial levels. Price continues in the downtrend that began in early July. 




Tuesday, January 26, 2021

Tuesday Closing Dairy Market Update - Milk Futures Post Heavy Losses

MILK

Milk futures plummeted Tuesday with Class III contracts through June posting closing prices below $17. A stronger barrel price had no impact on the bearishness that has swept the market since Monday. Traders have thrown in the towel of optimism for the time being. The hopes for stronger prices due to increased demand from the Food Box program have been a disappointment. The market is trading fundamentals and not the price movements of last year. Fourth-quarter milk production was up 3.0% from the same period the previous year, according to the milk production report released Monday. This is just slightly less than the 3.1% increase of the first quarter. There were just six states of the top 24 states that showed milk production declines in December. Florida showed the largest decline of 5.0%, followed by Vermont with a decline of 3.1%. Washington was down 0.9%, Georgia was down 0.7%, with both Oregon and Utah down 0.5%. The largest milk production gain was seen in South Dakota with an increase of 11.9%, followed by Indiana with a gain of 9.8%. Texas increased 7.5%, and Kansas increased 5.1%. The rest of the states showed increases of less than 5.0%. Grain prices increased sharply today as strong demand offset some better crop conditions in Brazil and Argentina.

AVERAGE CLASS III PRICES

3 Month: $16.02
6 Month: $16.45
9 Month: $16.73
12 Month: $16.84

CHEESE

Barrel cheese tried to push higher Monday, but higher prices also brought those interested in selling. Price could not hold the gains. The bearish impact of the cold storage report reverberated throughout the complex, affecting futures through the rest of the year. This is real and increased buying for the Supplemental Nutrition Assistance Program (SNAP), and the Food Box program may not have as much impact as it did last year. Since the announcement of government purchases for these programs, cheese prices have eroded substantially.

BUTTER

Price fell below the previous low, moving price back to the lowest level since early May. Plants have not been trying to balance inventory with demand as there has just been too much cream available. Plants have been having difficulty selling extra cream and have been churning higher volumes and putting the finished product in storage. This will be an anchor on the market for some time to come.

OUTSIDE MARKETS SUMMARY

March corn jumped 20.75 cents, closing at $5.3225. March soybeans jumped 27.50 cents, ending at $13.71, with March soybean meal up $6.90 per ton, closing at $436.50. March wheat jumped 16.50 cents, closing at $6.65. February live cattle gained $0.52, closing at $117.05. March crude oil declined $0.16, ending at $52.61 per barrel. The Dow slipped 23 points, closing at 30,937, while the NASDAQ declined 10 points, ending at 13,626.




Tuesday Midday Dairy Market Summary - Cash Prices Fall

Block cheese price declined 1.75 cents, closing at $1.5925 on an offer and no bids. Barrel cheese price gained 0.75 cent, closing at $1.40 with 4 loads traded. Barrel price was initially 3.75 cents higher before selling became more aggressive near the close, resulting in price falling back from its high. Butter came under significant selling pressure with price falling 8 cents, closing at $1.28 with just 1 load traded. This moves the price to the level of May 7, 2020, Grade A nonfat dry milk price declined 2.50 cents closing at $1.1375 with 13 loads traded. Dry whey took a large hit with price down 4.25 cents closing at 49.25 cents with 3 loads traded. Class III futures are 3 to 57 cents lower. Class IV futures are 30 to 39 cents lower. Butter futures are 0.80 to 4.12 cents lower. Dry whey futures are 2.50 to 3.75 cents lower.




December milk output jumps 3.1%

Increased cow numbers and increased output per cow drove December milk production well above December 2019.

Preliminary data in USDA’s latest Milk Production report shows output at 18.94 billion pounds, up a very bearish 3.1% from a year ago. December output in the top 24 states hit 18.1 billion, up 3.2%.

Revisions raised the November 50-state total by an eye-grabbing 73 million pounds, to 18.1 billion, up 3.4% from November 2019, instead of the originally reported 3.0%.

December cow numbers increased for the sixth consecutive month, totaling 9.44 million in the 50 states, up 12,000 from November’s count, which was revised up 24,000 head. The December herd was at a whopping 100,000 head above December 2019 and the largest dairy herd in over 20 years.

December output per cow averaged 2,006 pounds, up 40 pounds or 2.0% from a year ago.

Fourth Quarter milk output in the 50 states totaled 55.6 billion pounds, up 3.0% from a year ago, with cow numbers at 9.43 million head, up 59,000 from the Third Quarter and 81,000 more than a year ago.

The preliminary data would peg 2020 total milk output at 223.06 billion pounds, up 2.1% from 2019, with cow numbers at 9.38 million head, up 46,000 or 0.5%.

California’s December milk output was up a tank busting 110 million pounds or 3.2% from a year ago, thanks to a 70-pound gain per cow offsetting 5,000 fewer cows. Wisconsin was up 2.6%, on a 55-pound gain per cow offsetting 2,000 fewer cows.

Idaho was up 1.2%, on 11,000 more cows, though output per cow was down 10 pounds. Michigan was up 4.9%, on a 45-pound gain per cow and 12,000 more cows. Minnesota was up 4.7%, on a 45-pound gain per cow and 10,000 more cows, and New Mexico was up 3.7%, on a 30-pound gain per cow and 7,000 more cows milked than a year ago.

New York was up 2.2%, thanks to a 45-pound gain per cow. Cow numbers were unchanged. Oregon was down 0.5% on 2,000 fewer cows but output per cow was up 15 pounds. Pennsylvania was up 1.5%, on a 45-pound gain per cow offsetting a loss of 5,000 cows.

South Dakota continues to show the biggest increases, up 11.9%, on 14,000 more cows and 15 more pounds per cow. Texas was up 7.5%, on 33,000 more cows than a year ago and 35 more pounds per cow.

Vermont was again one of only six states showing a decline, down 3.1% on 4,000 fewer cows, though output per cow was up 5 pounds. Washington state was off 0.9% on 3,000 less cows, with milk per cow up 5 pounds.

Lots of product

Give no thought of any shortage of butter or cheese anytime soon in the U.S. The December Cold Storage report put that to rest and no doubt sent shivers throughout the industry as stocks grew markedly, a result of restaurant and food service shortfalls and slowing government buying opposite rising milk output.

Dec. 31 butter stocks swelled to 273.8 million pounds, up 22 million pounds or 8.7% from November and a scale breaking 84.1 million pounds or 44.4% above December 2019, 18th consecutive month they topped the year ago level.

American type cheese hit 801.2 million pounds, up 39.2 million pounds or 5.1% from November and 51.3 million pounds or 6.8% above a year ago.

The “other” cheese category climbed to 576.9 million pounds, up 12.2 million pounds or 2.2% from November and 28.8 million pounds or 5.3% above a year ago.

The total cheese inventory amounted to 1.398 billion pounds, up 51.1 million pounds or 3.8% from November and the biggest inventory since June 2020, and 75.9 million pounds or 5.7% above a year ago.

HighGround Dairy says butter stocks typically build in December, as production climbs and holiday buying ends, but the build exceeded the five-year average.

As to the cheese build, HGD says it is a concern, “as strong milk production is expected to result in heavy cheese output in the coming months to drive stocks even higher.” The build was nearly ten times than the five-year average, according to HGD.

Cheese & butter plunge

Dairy prices were mixed in the Martin Luther King Day holiday-shortened week, as traders awaited yesterday’s release of the December Milk Production and Cold Storage reports.

The Cheddar blocks tumbled daily last week, as disappointment over Food Box program particulars were considered. They closed Friday at $1.61 per pound, down 22 cents on the week and 38.50 cents below a year ago.

The barrels rolled to $1.39 per pound last Thursday but closed Friday at $1.3925, 18 cents lower on the week, 21.75 cents below a year ago, and 21.75 cents below the blocks; 13 cars of block exchanged hands on the week and 28 of barrel.

Cheese was unchanged Monday, with only 2 cars of barrel exchanging hands.

Tuesday’s traders took the blocks down 1.75 cents, on an uncovered offer, to $1.5925, lowest since Dec. 21. The barrels inched up 0.75 cents, on 4 trades, and hit $1.40, still 19.25 cents below the blocks.

Foodservice cheese sales improved dramatically in the first half of January with growth hitting the highest level since the start of the pandemic, according to the StoneX Jan. 21 Early Morning Update. “This is pretty amazing given the tight lock-down in California and the Northeast,” the Update added. “The big growth component has been take-out from full service restaurants and the spike in sales has come as the latest stimulus payments were sent out. It looks like we all decided to treat ourselves to a mid-winter meal from a fancier restaurant using stimulus money.”

But, StoneX asked, “Quick-service has been doing well. If the increase is from consumers switching from quick-service to sit-down, is demand really growing?”

Midwest cheesemakers told Dairy Market News that milk supplies remain readily available and spot prices had met the previous week's lows of $8.50 under Class.

Curd producers say restaurant orders moved higher, something they haven’t seen in months. Cheddar producers are hopeful the government awards will assist in putting a dent in their growing inventories. Stocks are not overtly concerning, says DMN, but producers say that could change day-to-day.

The plentiful milk supply in the West has resulted in plenty of cheese, and DMN says, “an unsettled feeling persists within the market.” The announcement of more government food box program purchases created an initial push upward on cheese prices but the momentum seemed to wane. Forecasting market direction has been difficult and neither buyers, nor sellers, want to overextend themselves, says DMN.

Cheese inventories are abundant, and contacts confirm that foodservice and institutional demand have remained weak. Retail demand is better than last year but not able to offset the reduction in cheese sales to other channels and, “Until sit-down dining returns, contacts expect the cheese market may be challenging,” concluded DMN.

Cash butter was buoyed by last Tuesday’s Global Dairy Trade auction and marched to $1.4550 per pound on Wednesday, highest since Dec. 29, but it headed south from there to a Friday finish of $1.4025, still up 11.25 cents on the week but 45.75 cents below a year ago. There were 8 carloads that found new homes last week.

The butter dropped 4.25 cents Monday, on 4 sales, and plunged 8 more cents Tuesday, on a trade, to $1.28, lowest CME price since May 5, 2020.

Midwest churning is busy, as cream remains readily available regionally and from the West. Retail butter demand remains steady, as holiday pipelines have been refilled, but foodservice demand has “seen better days,” says DMN. Contacts expect the food box programs to assist the markets but they still have concerns about inventories, which are growing along with milk-butterfat yields.

Western butter output is generally heavy and includes unsalted product for export. Domestic butter interest typically declines after the holidays and plants experience increases in inventory. Cream is highly sufficient. Bulk butter production is active and stocks continue to build.

Retail sales are fair and expected to increase as some outlets are already discussing orders for the upcoming holiday. Export trading continues to be good, says DMN.

Grade A nonfat dry milk finished last week 2.75 cents lower, closing at $1.1725 per pound, 11.50 cents below a year ago, with 33 sales reported for the week.

Monday’s powder was down a penny and it lost 2.50 cents Tuesday, with 13 cars being unloaded, dipping to $1.1375 per pound, lowest since Dec. 29.

CME dry whey inched up a half-cent last Tuesday and Thursday and closed Friday at 54 cents per pound, highest since Oct. 19, 2018, and 17.50 cents above a year ago, with only 2 cars sold on the week at the CME.

The whey, which hadn’t seen a drop since Dec. 31, was unchanged Monday but lost 4.25 cents Tuesday, slipping back to 49.75 cents per pound.

Class I up 40 cents

The February Federal order Class I base milk price was announced at $15.54 per hundredweight, up 40 cents from January, $2.01 below February 2020, and equates to about $1.34 per gallon, down from $1.51 a year ago.



From: Capital Press

Tuesday Morning Dairy Market Update - Further Weakness Indicated

Opening Calls:

Class III Milk Futures: 5 to 20 Lower
Class IV Milk Futures: 5 to 10 Lower
Butter Futures: 1 to 2 Lower

Outside Market Opening Calls:

Corn Futures: 2 to 5 Higher
Soybean Futures: 6 to 12 Higher
Soybean Meal Futures: $1 to $3 Higher
Wheat Futures: Mixed

Milk:

Selling pressure may continue Tuesday as the December Milk Production report was bearish. Production continues to increase as cow numbers grow along with milk per cow. This confirms the reports of milk plants already running at capacity with some diverting loads of milk as they can for the time being. This may change as there have been reports that plants may soon have to begin enforcing production quotas again for a period of time. However, increased demand from food programs may utilize a larger portion of increasing production than usual during this time of year. That would help limit some inventory build or the amount of milk available at a discount on the spot market. Traders anticipate further weakness of cheese prices based on Class III milk futures.

Cheese:

Cheese prices remaining unchanged did not temper the selling pressure Monday as traders anticipate further weakness of cheese prices. The Cold Storage report was bearish showing the second consecutive month of inventory build for American cheese rather than the usual decline. Buyers may hold back due to there being sufficient supply available even though demand for government programs is increasing.

Butter:

Price may be in further trouble as inventory continues to build. December stocks being an incredible 44% above December 2019 does not bode well for price. Butter does not age and can be brought out and sold on the spot market at any time unlike cheese. This makes the current situation much more bearish as it will take some time to reduce inventory. This is the highest December inventory since 1993. Further price weakness is expected.




Monday, January 25, 2021

Monday Closing Dairy Market Update - December Milk Production Jumps

MILK

Class III futures took another hit Monday after making a relief bounce on Friday. Traders may have anticipated some bearish reports Monday and decided to either liquidate positions or to get some sold positions on the books. The anticipation of a bearish milk production report was correct. December milk production in the top 24 states increased 3.2% from December 2019. This is the second-highest gain for the year. The revision in November added another 0.3% or 56 million pounds to the total, pushing November's milk production up 3.5%. Production totaled 18.1 billion pounds in December. Production per cow reached 2,027 pounds, which is 40 pounds above December 2019. Cow numbers reached 8.92 million head, an increase of 107,000 head more than December 2019 and 12,000 more than November. Milk production in the 50 states increased 3.1% to 18.9 billion pounds for the month. Milk production per cow totaled 2,006 pounds, up 40 pounds from a year ago. Cow numbers increased 12,000 head from the previous month and are 100,000 head from a year ago, totaling 9.443 million head. This is a 20-year record high for cow numbers. This is a bearish production report and one that will have substantial implications for dairy processors as we move closer to spring flush. Milk futures may remain under pressure as there will be little reason for buyers to be concerned over supply.

Average Class III Prices

3 Month: $16.39
6 Month: $16.88
9 Month: $17.14
12 Month: $17.23

CHEESE

The December Cold Storage was bearish as cheese inventory increased in all categories except Swiss cheese. Swiss stocks declined 215,000 pounds and is 18% lower than a year ago. American cheese inventory increased 39.2 million pounds from November or 5% from November. The concern is that inventory is now 7% above a year ago. In November, American cheese inventory was 3% above the previous year. This indicates inventory is growing rapidly. Other cheese inventory gained 12.2 million pounds, moving stocks to 5% above a year earlier. Total cheese inventory now stands at 1.398 billion pounds. This was an increase of 51.1 million pounds from November and 6% above December 2019.

BUTTER

Butter inventory grows increasingly bearish by the month. December inventory totaled 808.2 million pounds, an increase of 22.0 million pounds or 9% from November. Inventory is now 44.0% above December 2019. This will not be supportive to price anytime soon.

OUTSIDE MARKETS SUMMARY

March corn jumped 11 cents, closing at $5.1150. March soybeans jumped 31.75 cents, closing at $13.4350, with March soybean meal up $8.00 per ton, closing at $429.60. March wheat jumped 14 cents, ending at $6.4850. February live cattle slipped $0.20, closing at $116.52. March crude oil gained $0.50, ending at $52.77 per barrel. The Dow declined 37 points, closing at 30,960, while the NASDAQ gained 93 points, closing at 13,636.




December Milk Production up 3.2 Percent

December Milk Production up 3.2 Percent 

Milk production in the 24 major States during December totaled 18.1 billion pounds, up 3.2 percent from December 2019. November revised production, at 17.3 billion pounds, was up 3.5 percent from November 2019. The November revision represented an increase of 56 million pounds or 0.3 percent from last month's preliminary production estimate. 

Production per cow in the 24 major States averaged 2,027 pounds for December, 40 pounds above December 2019. 

The number of milk cows on farms in the 24 major States was 8.92 million head, 107,000 head more than December 2019, and 12,000 head more than November 2020.

October-December Milk Production up 3.0 Percent 

Milk production in the United States during the October - December quarter totaled 55.6 billion pounds, up 3.0 percent from the October - December quarter last year. 

The average number of milk cows in the United States during the quarter was 9.43 million head, 59,000 head more than the July - September quarter, and 81,000 head more than the same period last year.






Monday Midday Dairy Market Summary - Milk Futures Fall

Block and barrel cheese prices remained unchanged at $1.61 and $1.3925, respectively. There were 2 loads traded of barrels and none of blocks. Barrel price initially declined 0.25 cents before coming back to settle unchanged. This did not change the bearishness of Class III futures and added to it. February moved limit down for a time with price back to the lowest level it has been since late June and solidly below $16.00. March fell below $17.00. Futures are 3 cents higher to 73 cents lower. Some pressure might have spilled over from the weakness of butter as price declined 4.25 cents, ending at $1.36 with 4 loads traded. Grade A nonfat dry milk price declined a penny to $1.1625 with no loads traded. Dry whey remained unchanged at 54 cents with no loads traded. Class IV futures are 32 cents lower. Butter futures are 0.02 to 3.22 cents lower. Dry whey futures are 0.15 to 1.20 cents lower. USDA will release the December Milk Production report Monday afternoon, I estimate milk production to be up 2.9% from a year ago with cow numbers 6,000 head above November.




Monday Morning Dairy Market Update - Milk Production and Inventory Reports Today

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Mixed
Butter Futures: Steady to 1 Lower

Outside Market Opening Calls:

Corn Futures: Steady to 2 Lower
Soybean Futures: 1 to 3 Higher
Soybean Meal Futures: $1 to $2 Higher
Wheat Futures: Mixed

Milk:

Traders will be cautious prior to spot trading. Futures bounced Friday despite further weakness of blocks as futures needed to move in line with cash. Futures are back to a somewhat normal market with contracts exhibiting a seasonal curve. USDA will release the December Milk Production report Monday afternoon. I estimate milk production to be up 2.95 from a year ago. I estimate cow numbers to be up 6,000 head. There has been strong incentive to continue to produce milk, which has kept barns full. The livestock slaughter report showed a significant increase of dairy cattle slaughter in December, but it is likely there were more heifers entering the milking string, requiring increased culling. There has been no incentive to reduce herd numbers. That may be coming sooner rather than later as plants begin to implement quotas again in preparation of spring flush.

Cheese:

USDA will release the December Cold Storage report Monday afternoon. December is generally a pivotal month during which inventory may remain near the level of the previous month or begin to show an increase of stocks. Inventory level could go either way compared to the previous month or a year ago. It does appear that increased production is allowing more cheese to be available out in the country, reducing the need for buyers to come to the spot market to obtain supply.

Butter:

On the other hand, butter inventory is expected to show a decrease from November, but a substantial increase from the previous year. Supply is readily available for demand, keeping price under wraps. Churning remains active with plants having a difficult time balancing supply with demand. Most are churning and adding to inventory.




Friday, January 22, 2021

Friday Closing Dairy Market Update - Minor Strength of Barrels Overshadowed by Weakness of Blocks

MILK

Mild winter weather has been good for maintaining cow comfort, resulting in steady-to-higher milk production. Spot milk is moving in the Midwest, ranging from $4-$8.50 under class. This is an exceptional discount and one that we might normally see during spring flush rather than at this time of year. This makes one wonder what we might experience during spring flush if current fundamentals and market direction persist. Milk components are slowly improving in many areas. Balancing plants in the East are running at capacity as milk is moved to areas where it is needed or have capacity for bottling or manufacturing. February Class III futures closed within 1 cent of the close on Dec. 21, eliminating all the gain that was realized since that day. One would hope price may find a bottom here, but that remains to be seen. President Joe Biden signed an executive order to increase the Supplemental Nutrition Assistant Program by 15%. This will still need to move through the proper channels to be finalized and implemented. It is unclear just how much added demand this would generate for dairy.

Average Class III Prices

3 Month: $16.72
6 Month: $17.12
9 Month: $17.33
12 Month: $17.38

CHEESE

Cheese prices took a hit this week. Blocks fell 22 cents with 13 loads traded. Barrels fell 18 cents with 28 loads traded. Dry whey price gained a penny with just two loads traded. Block price is at the lowest level since Dec. 24 with barrels, reaching the lowest level Thursday since Aug. 24. Prices are at risk of falling lower as cheese production continues to improve. The outlook for increasing milk receipts may keep cheese buyers less aggressive. There are reports of a few milk plants reducing or eliminating volume premiums to their patrons as plants are filling and they are having difficulty moving extra milk.

BUTTER

Price had a nice bump during the week, but that is not expected to change the current market direction. Churning is active due to readily available supplies of cream. Plants are having a difficult time finding other buyers for cream and are in turn churning more heavily. The result is more supply than demand. Most buyers are purchasing on an as-needed basis. For the week, butter increased 11.50 cents with eight loads traded. Grade A nonfat dry milk price declined 2.75 cents with 33 loads traded.

OUTSIDE MARKETS SUMMARY

March corn fell 23.75 cents, closing at $5.0050. March soybeans plummeted 58.50 cents, closing at $13.1175, with March soybean meal down $16.60 per ton, closing at $421.60. March wheat fell 26.25 cents, closing at $6.3450. February live cattle jumped $2.62, ending at $116.72. March crude oil declined $0.86, closing at $52.27 per barrel. The Dow declined 179 points, closing at 30,997, while the NASDAQ closed 12 points higher at 13,543.




Friday Midday Dairy Market Summary - Block Cheese Shows Further Weakness

Block cheese price declined 4.25 cents, closing at $1.61, with eight loads traded. Barrel cheese price increased 0.25 cent, closing at $1.3925, with eight loads traded. Both blocks and barrels closed above their lows that were set during spot trading. Blocks closed a penny off their lows, while barrels closed 0.25 cent off the lows. Barrels were also 0.25 cent off their highs. The movement of cheese prices was not detrimental to Class III milk futures, as contracts are mostly higher. Futures are 1-18 cents higher with March showing the greatest gain. Butter price remained unchanged at $1.4025 during spot trading. No buyers or sellers showed up to do any business. Grade A nonfat dry milk price declined a penny to $1.1725 with 11 loads traded. Dry whey price remained unchanged at 54 cents with one load traded. Class IV futures are 5 cents higher. Butter futures are 1.50 cents lower to 1 cent higher. Dry whey futures are unchanged to 0.10 cent lower. Grain futures are falling out of bed as the weather forecast shows some beneficial rains in South America and funds continue to liquidate.




Friday Morning Dairy Market Update - Cheese Prices May Diverge

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Steady to 10 Lower
Butter Futures: 1 to 2 Lower

Outside Market Opening Calls:

Corn Futures: 6 to 9 Lower
Soybean Futures: 25 to 30 Lower
Soybean Meal Futures: $7 to $9 Lower
Wheat Futures: 10 top 15 Lower

Milk:

It is fortunate traders are keeping some optimism in later futures contracts or the outlook would be rather bleak. Futures have declined, but not with the magnitude as closer months. However, closer months will also increase more rapidly if cheese prices would rebound as they had done at the end of last year. After the huge market inversion of futures, it has moved back to a more normal markets with higher prices into summer and fall before slipping back into the end of the year. This does not mean the volatility will be over as futures were this way during the first half of December as well. Growth of milk production is steady with many manufacturing plants running full and even diverting some milk in some cases. The market has not even come near to spring flush yet, which may really cause some problems. Spot milk prices for excess milk are already lower than usual for this time of year.

Cheese:

The unfilled bids remaining at the close for barrels Thursday in the spot market would suggest buyers might become more aggressive at the current price. Sellers may take a wait-n-see attitude at the beginning of spot trading to see whether they will increase bids. Blocks may show the reverse as there were offers remaining Thursday at the close. It is difficult to determine where support lies due to current supply being sufficient for demand.

Butter:

Price is expected to come under further pressure Friday as sellers try to sell at the best price before it retraces further. Demand needs to increase substantially in order to balance supply with demand. However, that may not happen anytime soon as the food service industry continues to struggle overall. Government purchases for food programs will help but may not be enough to limit significant inventory build.




Thursday, January 21, 2021

Thursday Midday Dairy Market Summary - Butter Falls Back

Block cheese price fell 7.75 cents, closing at $1.6525 with 1 load traded. Barrel cheese price fell 5 cents, closing at $1.39 with 18 loads traded. Barrels initially moved to $1.38 before coming back to close a penny off the low. However, this time that has not had any real impact on the market. There were 3 unfilled bids for barrels and 3 uncovered offers for blocks remaining at the close. Butter followed the pattern that has been prevalent since the middle of last year, dropping back after two days of price gain. Price dropped 5.25 cents, ending at $1.4025 with 3 loads traded. Grade A nonfat dry milk price declined 1.75 cents, ending at $1.1825 with 6 loads traded. Dry whey price gained 0.50 cent, closing at 54 cents with 1 load traded. Class III futures are 63 cents lower to 6 cents higher. February continues to take the brunt of selling as it remains close to underlying cash. Futures are lower through July before futures show gains. Class IV futures are 19 cents lower. Butter futures are 3.00 cents lower to 1.50 cents higher. Dry whey futures are unchanged to 1.17 cents higher. USDA will release the December Livestock Slaughter report Thursday afternoon.





Fluid Milk and Cream - Western U.S. Report 3

California farm milk production has been stable this week. Milk component levels, protein     and butterfat, are at the highest levels. Manufacturers have plenty of milk for processing     needs. During this shortened holiday week, milk shipments into Class I and Class II are     slightly down. 
In Arizona, milk production is constant. Handlers do not have any issue with milk distribution. Requests from bottlers are lower, but are expected to increase in the upcoming week. Some processors had to temporarily stop taking out-of-state milk to focus on helping other in-state processors with milk balancing. Bottling demand is steady. 
In New Mexico, farm milk production is up, in line with favorable weather outcomes. With some     manufacturing plants completing repair and maintenance work, milk holdovers are higher than     usual, keeping balancing plants busy with excess milk clearing. Class I orders are steady     this week. 
Milk production in the Pacific Northwest is steady to growing incrementally. Industry contacts note a strong pull from Class II manufacturers. While not the largest portion of milk use, when coupled with the steady pull from other milk processing and producer base programs, it creates an environment in which milk intakes are well balanced with processing needs. Milk going into the bottle is steady. 
Strong milk production has been maintained in the mountain states of Idaho, Utah, and Colorado. Favorable winter weather has provided comfortable conditions for the milking herd. Manufacturers have no issues getting the milk needed for processing needs. Discounted milk loads are still common in Idaho at $4.50 under Class IV. 
With western ice cream manufacturing and some Class II dairy seasonal products decreasing, condensed skim milk and cream spot sales are steady to down. Most condensed skim loads are clearing through the dryers. Cream multiples for all Classes are mixed this week.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0000 - 1.1800



Thursday Morning Dairy Market Update - Traders Wait for Further Direction

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Mixed
Butter Futures: 1 to 2 Higher

Outside Market Opening Calls:

Corn Futures: 3 to 7 Higher
Soybean Futures: 4 to 11 Higher
Soybean Meal Futures: $1 to $3 Higher
Wheat Futures: 3 to 6 Higher

Milk:

Class III futures have experienced a massive decline over the past two weeks. This movement was magnified as traders initially believed milk prices were going to move significantly higher early this year as demand increased for government food programs. This idea put a substantial amount of premium in the market. Government programs will purchase large amounts of cheese and other dairy products, but there are also more supplies available than there were during periods of time last year. USDA will release the December Livestock Slaughter report Thursday. The report is anticipated to show continued decline of slaughter compared to the previous year. The current outlook for milk prices will keep cow numbers large and barns full.

Cheese:

The weakness of cheese may continue Thursday due to prices declining on little activity with offers remaining at the close of spot trading Wednesday. Prices might be moving to levels that could increase buyer interest, but that will depend on whether those buyers will need to come to the spot market or whether they will be able to purchase needed supplies through regular channels in the country.

Butter:

If the pattern of the past six months remains intact, the increase of price may run its course Thursday or Friday and fall back. Price is trying to hold in a sideways trading range. Government demand for food programs may be able to keep price in the range. However, that will not be without choppy price movements as business is done on a daily basis. The December Cold Storage report will be released on Monday, which is expected to show inventory quite a bit higher than a year earlier.




March Milk Production up 2.0 Percent, Jan- March Up 1.0 Percent

March Milk Production up 2.0 Percent  Milk production in the 24 major States during March totaled 18.8 billion pounds, up 2.0 percent from M...