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Wednesday, March 31, 2021

Wednesday Closing Dairy Market Update - February All-Milk Moves Lower

MILK:

Class III futures ended the day with stronger gains. Contract months from May through November closed above the $18 mark. USDA announced the March Federal Order class prices Wednesday. The Class II price was $15.07, up $1.07 from February but $1.68 lower than a year prior. March Class III was $16.15, up $0.40 from the previous month but $0.10 lower than in March 2020. March Class IV was announced at $14.18, an increase of $0.99 from the month prior, but $0.69 lower than a year ago. Traders overestimated the Class III by $0.05. Traders also overestimated the Class IV price by $0.12. The Agricultural Price Report was released Wednesday, providing the prices for the income-over-feed calculation used in the Dairy Margin Coverage Program. February's income-over-feed price was $6.22, a decline of $0.92 from January and increasing payments made to producers enrolled in the program. The average corn price in February increased 51 cents per bushel to $4.75. The central Illinois soybean meal price moved down $11.96 per ton to $427.28 for February. Alfalfa hay price climbed $4 per ton to $175 while the premium/supreme (dairy quality) hay added $5 per ton to move to $211. The blended hay price used for the DMC program was $193 per ton, up $4.50 from the January price. The all-milk price for February was $17.10, down $0.40 from January and $1.80 lower than a year prior.

AVERAGE CLASS III PRICES:

3 Month: $18.09
6 Month: $18.30
9 Month: $18.30
12 Month: $18.11

CHEESE:

Cheese prices moved in different directions with still no purchase of spot barrels for the week. It has been a year from the first influx of retail cheese purchase demand skyrocketing while foodservice demand fell apart. Cheese manufactures are still working on the many issues caused by the sudden shift in demand and other infrastructure issues but have seen the problems of the past as growth potential for the future.

BUTTER:

Although spot butter closed lower, the actively traded session shows demand is there. Butter futures settled higher Wednesday. The February Dairy Products report will be released Thursday.

OUTSIDE MARKETS SUMMARY:

May corn jumped 25 cents to close at $5.64 1/4 per bushel. May soybeans rocketed 70 cents, ending at $14.36 3/4. May soybean meal also climbed higher, adding $25 per ton and closing at $423.20. May wheat increased 16 1/4 cents, closing at $6.18. April live cattle was unchanged to close at $120.97. May crude oil declined $1.39, closing at $59.16 per barrel. The DOW fell 85 points, closing at 32982 while the NASDAQ also jumped 201 points, closing at 13.247.



Wednesday Midday Dairy Market Summary - Cheese Prices Mixed; Butter Lower

Spot cheese prices ended with opposing results. Block cheese price closed down a penny at $1.7375 with two loads traded. Barrel cheese price moved up 0.25 cent to $1.4825, but with no loads traded. Butter price moved lower after several consecutive trading sessions of positive movements. Butter fell back 0.50 cent to $1.8175 with eight loads traded. Grade A nonfat dry milk price gained 0.50 cent to close at $1.1850 with three loads traded. Dry whey price jumped 3 cents to push the spot market price higher once again. Dry whey closed at $0.66 with three loads traded. Tomorrow is the last trading day of the week, as dairy markets will be closed on Friday. Class III futures are mostly higher, with the strongest gains in the front months. Class III futures are 2 lower to 35 higher. Class IV futures are not worried about the small decline in spot butter prices Wednesday as more than a few contract months are pushing stronger gains. Class IV futures are unchanged to 26 higher. Butter futures are 0.33 cents to 3 cents higher. Dry whey futures are unchanged to 1.20 cents higher.




Wednesday Morning Dairy Market Update - Markets May Consolidate

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: 5 to 10 Higher
Butter Futures: 1 to 2 Higher

Outside Market Opening Calls:

Corn Futures: Steady to 2 higher
Soybean Futures: 5 to 8 Higher
Soybean Meal Futures: Steady to $2 Higher
Wheat Futures: 1 to 3 Higher

Milk:

Traders remained shy overnight not wanting to commit themselves to a market direction. Support remains strong under the market, but whether it will be strong enough to push Class III futures back to the highs remains to be seen. With milk production increasing steadily moving into spring flush, there are no concern over supply. The concern will be how to process all of the milk and how to move product without building substantial inventory. There is plenty of fresh cheese available to the market, but orders need to be filled and sometimes buyers need to come to the spot market to get it due to the inability to get it from regular suppliers. USDA will release the Prospective Plantings report Wednesday with the average trade guess of 93.1 million acres (ma) of corn, 90.0 ma of soybeans and 45.2 ma of wheat. Quarterly stocks for corn is estimated at 7.778 billion bushels (bb), soybeans at 1.561 bb and wheat at 1.272 bb. USDA will also release the February Agricultural Prices report providing an income over feed price for the month.

Cheese:

Prices could go either way Wednesday. The bias is to the upside, but with increasing cheese production and a slight slowing of curd demand, sellers may want to move product at these prices. Restaurant demand has been steadily increasing, but the pipeline may be filled for the time being with maintenance orders being placed. This may move prices into a sideways range. Buyers and sellers may find a level at which they will be comfortable doing business.

Butter:

Spot butter moved to the highest level since June 22, 2020. Price seems to be gaining momentum climbing for six consecutive days gaining 15.75 cents. Demand from the food service industry is improving more rapidly than earlier anticipated. Exports have also been very strong the past few months as U.S. price competitive to World price. Price may be near a level where it may consolidate for a period of time.




Tuesday, March 30, 2021

Tuesday Closing Dairy Market Update - Butter Price Firms

MILK

Class III ended for a second day with small, mixed movements. Trading continues to be lighter this week than the past week. Last year, the markets responded with sharp moves after each announcement of the Farm to Families Food Box Program. USDA is currently soliciting comments on how to improve or change the program moving forward. Many areas that saw widespread COVID-related closures are still struggling to build back and would welcome an extension of food assistance for those in need. While the benefits of healthy dairy products are a great fit in food programs, last year's government purchases caused market disruptions. The ideal program would support producers across the United States with more regularity and equality than in the past year. USDA is accepting comments on any potential plans through the end of the month.

AVERAGE CLASS III PRICES

3 Month: $16.98
6 Month: $17.53
9 Month: $17.82
12 Month: $17.78

CHEESE

Retail demand for cheese is at a fork in the road. More states are lifting restrictions and events are being planned for the summer, but the fears of moving too quickly back to normal have kept home refrigerators stocked. Grocery store purchases of cheese have maintained strong levels throughout 2020, even as the retail price of cheese reached its highest value in years. Foodservice purchases may stay tight, not wanting excessive inventories just yet.

BUTTER

Butter continues to strengthen, with spot butter price reaching back to June 2020. At that time, prices rose quickly and peaked at $2.0150 on June 4 before tapering off by the end of the month to levels similar to what we have seen this month. Foodservice may stock butter sooner than other dairy products in preparation for future events given its more flexible storage options.

OUTSIDE MARKETS SUMMARY

May corn decreased 7.50 cents, closing at $5.3925. May soybeans dropped 26.25 cents, ending at $13.6675, while May soybean meal increased just $0.10 per ton, closing at $398.20. May wheat fell 15 cents closing at $6.0175. April live cattle was unchanged to close at $120.97. May crude oil declined $1.01, closing at $60.55 per barrel. The Dow fell 104 points, closing at 33,067, while the NASDAQ also declined, moving back 14 points, closing at 13,045.




Cheese prices rally after slump

Cheese prices weakened last week but then rallied. The Cheddar blocks fell to $1.67 per pound on Wednesday, lowest since March 3, but closed Friday at $1.72, down 7 cents on the week and 13 cents above a year ago when the COVID factor began hitting the markets. The blocks tumbled 24.75 cents that week and the barrels were down 9 cents.

The barrels slumped to $1.4375 last Monday but finished Friday at $1.4625, up a penny on the week and 12.25 cents above a year ago. Sales for the week included 4 cars of block and 3 of barrel.

Monday’s market had the blocks up 2.75 cents on 7 trades, as traders contemplated the shortened week, due to the Good Friday holiday, and awaited Thursday’s February Dairy Products report, which will come after trading for the week is completed. The blocks were unchanged Tuesday, holding at $1.7475, with no activity.

The barrels were up 1.75 cents Monday on an unfilled bid and were also unchanged Tuesday, holding at $1.48, 26.75 cents below the blocks.

Dairy Market News reports that some Midwestern cheese producers have been running full schedules while others are picking up. Foodservice cheese demand is not at pre-pandemic levels but has picked up quite a bit in the late winter/early spring season. Cheese availability reports were similar to those of production and vary plant to plant. Some producers are moving cheese out the door while others have available loads here and there. Market tones are mixed.

Foodservice demand for Western cheese continues to rise with the loosening of COVID restrictions while retail demand has held steady. Export demand is strong despite the ongoing issues at the ports and tightness of shipping supplies, although the cargo ship blocking the Suez Canal was finally set free.

DMN says, “As market prices edged lower for block cheese, international buyer interest has ticked back up.” Plenty of milk is available and plants are running at or near capacity but cheese is moving well. Cheese inventories are around or slightly higher than a year ago.

Spot butter got a bounce from last week’s Cold Storage data and closed Friday at $1.7750 per pound, up 11 cents on the week and 28.75 cents above a year ago when the butter had a 26.75 cent meltdown. Sales totaled 7 loads last week.

Monday’s butter added 1.75 cents and it was up another 3 cents Tuesday, hitting $1.8225, highest CME price since June 22, 2020.

Butter contacts tell DMN that foodservice demand has grown but some say it softened slightly from the previous week. General demand tones have “turned a corner from previous months,” says DMN, but “there is a lot of butter available.” Cream tightening continued last week, but “the big question is, which direction cream availability will take following the spring holidays.”

Some contacts expect steadiness then further tightness, while others expect some loosening considering the flush season, but market tones remain “somewhat sturdy.”

Cream is ample in the West, but some contacts expect the supply may start tightening for butter makers as ice cream, sour cream and cream cheese makers are increasing intakes.

Some manufacturers report heavy butter inventories that are still growing.

However, U.S. butter is competitively priced in international markets and export interest remains steady. Retail sales are down slightly compared to early COVID supply stockpiling from a year ago, but retail butter demand is reportedly strong. With restrictions softening and consumer comfort levels growing for dining out, foodservice demand continues to strengthen, says DMN.

Spot Grade A nonfat dry milk also strengthened last week, climbing to a $1.17 per pound Friday close, 1.75 cents higher on the week and 25 cents above a year ago when it fell 6.75 cents. There were 16 CME sales last week.

The powder was up a half-cent both Monday and Tuesday, hitting $1.18 per pound, highest since Jan. 21, 2021.

Dry whey set another record high since trading began on the CME, hitting 62.75 cents per pound last Wednesday, a level not seen in previous NASS-surveyed prices since 2014. It was unchanged the rest of the week, up 1.50 cents on the week and 29.75 cents above a year ago. Only 2 sales were reported all week.

The whey was unchanged Monday but inched up 0.25 cents Tuesday on a trade, to another CME high of 63 cents per pound.

Culling slips

Dairy cow culling was down in February and slightly below February 2020. The latest Livestock Slaughter report shows an estimated 265,200 head were sent to slaughter under federal inspection, down 12,100 head from January and 900 or 0.3% below February 2020. Culling in the first two months of 2021 totaled 542,500 head, down 22,100 or 3.9% from the same period a year ago.

Know your cheese

Hoards Dairyman Managing Editor Corey Geiger gave listeners a lesson on cheese in the March 29 "Dairy Radio Now" broadcast. Based on a recent Hoard’s "Dairy Livestream" program, we talked about blocks and barrels because they are so much a part of milk pricing but Geiger said that the two are not created equal.

Blocks can be either 40 pounds or 640 pounds, while barrels weigh in at 500 pounds. Most plants specialize in one or the other and there’s not much switching between the two. Blocks are usually “ready to eat,” he said, and have a certain flavor and melting consistency. They are also colored by a natural additive and most Americans outside the Northeast eat a yellow Cheddar.

One of the participants in the Livestream was Kurt Epprecht, who operates Ohio-based Great Lakes Cheese Co. Epprecht said that barrels are generally an easier bet for cheesemakers to make because of their valuable white whey.

Most customers who buy whey, a byproduct of the cheese making process, want it to be white, Geiger explained. Whey is typically made from barrel Cheddar which is white and therefore has more value. Many countries stipulate that they will not accept bleached whey, a necessary process if it comes from yellow Cheddar. That’s very important in the infant formula market, Geiger said.

Another topic of the Livestream concerned the use of Mozzarella cheese in milk price discovery. Mozzarella is the most consumed cheese in the U.S., according to Geiger, even ahead of Cheddar, but one of the participants, dairy buyer and trader, Ted Jacoby, CEO of T.C. Jacoby and Co., says including Mozzarella in milk pricing would be “difficult.”

He points out that every plant which produces Mozzarella differs “so an even exchange for Mozzarella is a really difficult thing to establish.” And, “Most Mozzarella is a part-skim product, so you’re automatically skimming fat,” he said, and “the components are different than a whole milk cheese, so that throws off that correlation between Cheddar and Mozzarella. Mozzarella can also be sold frozen, while most Cheddars cannot, so bottom line, Geiger believes block and barrel Cheddar will remain the mainstay in price discovery.

Last of all, we wanted to know: Is barrel cheese really in a barrel? “It used to kind of resemble a chemical or fluid barrel,” answered Epprecht. “It was metal, but since then, it has gone to a plastic bag and a corrugated box with multiple dimensions. It was very much a barrel at one point, but now it’s a cylindrical 500-pound block that is usually vacuum-packed,” he concluded.




From: Capital Press

Tuesday Morning Dairy Market Update - Sellers Could Become More Aggressive

Opening Calls:

Class III Milk Futures: Steady to 5 Higher
Class IV Milk Futures: 4 to 8 Higher
Butter Futures: 1 to 2 Higher

Outside Market Opening Calls:

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

Milk:

Milk futures have made a nice bump higher over the past few days. There is concern whether those gains will hold. Strong milk production with many plants running at or near capacity keeps milk and dairy products readily available. High cow numbers will keep milk production strong. The limiting factor might be the production limitations imposed on farms for a period of time as we move through spring flush. Even with those limitations, there will be sufficient milk available for bottling and manufacturing. Milk production is not slowing down as the outlook for milk prices is positive based on current futures prices. Weather continues to be good for milk production in most areas with an early spring possible, allowing fieldwork to begin early. The Prospective Plantings report will be released on Wednesday, providing estimates for planted acreage this year. Corn and soybean acres are projected to be significantly higher.

Cheese:

Buyers have been more aggressive in the spot cheese market over the past few days. Increased activity in blocks Monday could indicate price has moved to an attractive level for moving cheese. Sellers could turn a bit more aggressive as they take advantage of the higher prices. Holiday orders have been shipped with the market turning to usual demand. Cheese prices have yet to break out of a sideways trading pattern.

Butter:

There is strong support under the market due to good domestic and international demand. Price has been competitive on the world market for quite some time, which has built a nice demand base. Warmer weather will allow for more outside dining, which will increase demand from restaurants. Price may be at a level at which it may pause for a period as buyers and sellers assess supply and demand.




Monday, March 29, 2021

Monday Closing Dairy Market Update - Class III Futures Mixed

MILK

Traders were not sure of price direction Monday and did not get too excited even when cash prices increased. A mixed close in Class III futures shows traders exercising caution as prices increased. June futures are trying to move back above $18 but will need further support from underlying cash to accomplish that goal. Futures have had a nice rebound the past few days, turning the outlook a bit more positive again. Milk supplies are readily available in the country with greater volumes expected over the next few months. The limiting factor may be production quotas that may be put on by processing facilities. However, some of those restrictions may not be adhered to very closely by producers. Limiting the production curve of a cow is never a good thing and affects that cow until her next lactation. If production restrictions are only put on for a few months, farmers may not slow down very much. Milk and cream demand for Class II products has been strong leading up to the holiday period. That demand has now been filled with buyers waiting to see just how strong product movement will be before reordering.

AVERAGE CLASS III PRICES

3 Month: $16.95
6 Month: $17.52
9 Month: $17.81
12 Month: $17.78

CHEESE

Cheese production remains strong with sufficient milk supply available for needs. Cheese demand has improved from the food service industry but remained somewhat steady for retail demand. Levels of demand varies from area to area and even plant to plant, depending on variety. Lower cheese prices increased international buyer interest. Now with price increasing again, there could be some slowing of export interest, depending on how much higher cheese prices will move.

BUTTER

Buyers continue to come to the spot market to purchase butter to fill orders or maybe to increase ownership of supply in case the market tightens significantly down the road. That is not likely, but buyers would rather be safe than sorry. Retail sales have been strong as stores have been featuring butter for the holiday season to bring consumers into the stores. Inventory is rather large, but increasing demand from the food service industry and a strong export market may limit the amount of inventory growth this year.

OUTSIDE MARKETS SUMMARY

May corn declined 5.75 cents, closing at $5.4675. May soybeans declined 7.50 cents, ending at $13.93, with May soybean meal down $5.90 per ton, closing at $398.10. May wheat gained 3.50 cents, closing at $6.1675. April live cattle gained $0.87, closing at $120.97. May crude oil gained $0.59, closing at $61.56 per barrel. The Dow gained 98 points, closing at 33,171, while the NASDAQ declined 79 points, closing at 13.060.




Monday Midday Dairy Market Summary - Cheese and Butter Show Gains

Block cheese price was on a little bit of a roller coaster Monday with price first increasing, then slipping back before gaining further strength to close 2.75 cents higher at $1.7475 with 7 loads traded. More loads were traded Monday than all of last week. Barrel cheese price increased 1.75 cents closing at $1.48 with no loads traded. Butter price increased 1.75 cents closing at $1.7925 with one load traded. Grade A nonfat dry milk price increased 0.50 cent ending at $1.1750 with one load traded. Dry whey price remained unchanged at 62.75 cents. Class III milk futures are mixed, but mostly higher. Contracts range from 13 cents lower to 21 cents higher. Class IV futures are have not yet traded. Butter futures are 1.67 cents to 4.00 cents higher. Dry whey futures are 0.005 cent lower to 1.30 cents higher. Futures are moving on more of a calculated basis rather than with emotional swings.




Monday Morning Dairy Market Update - Follow-through Buying of Futures Expected

Opening Calls:

Class III Milk Futures: 5 to 10 Higher
Class IV Milk Futures: Steady to 8 Higher
Butter Futures: Steady to 1 Higher

Outside Market Opening Calls:

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

Milk:

The price strength from the second half of last week should continue Monday. Overnight trade was higher but limited to a few contracts. Spot trading will decide further price strength or weakness. Milk production continues to increase seasonally as spring flush begins. Some plants have initiated production limitations in anticipation of increasing milk receipts. Plants are full and cannot take on any more milk other than current patron milk. Spot milk is available at a discounted price, Sellers are having greater difficulty finding buyers and need to move it greater distances in some instances. Some bottling demand has dropped off for the school systems due to spring break. However, that is not as noticeable due to the variable in-person school attendance that has been taking place all year.

Cheese:

Buyers have stepped up to the plate the past two days taking advantage of the dip in prices. Buyers have stepped up in order to increase ownership of fresh cheese for demand or replenish inventory. Prices remain in a range that has been established since early November with good support under the market. There is a good chance spot prices will again increase Monday as sellers may hold back waiting to see how aggressive buyers will be.

Butter:

The price spread between butter and cheese continues to slowly widen. Butter is in stronger demand from both the food service industry and the export market. Inventory is heavy, but the greater demand seems to be for fresher product. However, trading on the spot market has been light, which indicates supply in the country is readily available. Holiday demand is complete, which may have some impact on price strength.




Friday, March 26, 2021

Friday Midday Diary Market Summary - Butter Outpaces Cheese

Block cheese price increased 2 cents, closing at $1.72 with no loads traded. Barrel gained 0.25 cent, ending at $1.4625 with no loads traded. There was a late offer placed for a load of blocks a penny higher, with no interest from the buyer to go after it. Butter price gained 3.75 cents, closing at $1.7750 with two loads traded. Grade A nonfat dry milk price remained unchanged at 41.17 with no loads traded. Dry whey price remained unchanged at 62.75 with no loads traded. Class III futures are 2 cents lower to 26 cents higher. Only December and front-month March show losses. April shows the greatest gain. Class IV futures traded 15 cents higher. Butter futures are 2.02 to 4.47 cents higher.




Friday Morning Dairy Market Update - Higher Spot Prices Expected

Opening Calls:

Class III Milk Futures: Steady to 5 Higher
Class IV Milk Futures: 5 to 10 Higher
Butter Futures: 1 to 2 Higher

Outside Market Opening Calls:

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

Milk:

Milk futures showed they still had a pulse Thursday reacting positively to stronger cash prices. However, the gains were somewhat disappointing as traders are cautious over how much strength the market may exhibit. There is a lot of milk out there and there are more reports of production limits that have been, or are being, implemented. Moving into spring flush is not fun anymore. Sometime in the past, it was rewarding to see the bulk tank levels increase in spring with cows doing well. Now, it may mean lower pay for some of the milk produced over a base or management turns to the best way to limit milk production and remain at, or under, production limits. There is strong demand for dairy, but processing capacity seems to be the limiting factor. Milk futures are expected to trade higher as there is anticipation of higher cash prices on the spot market.

Cheese:

The rebound of cheese prices Thursday should carry over Friday as sellers will likely hold back, hoping buyers will remain aggressive. Orders need to be filled and sometimes the desired amount of fresh cheese may not be available through regular channels in the country. This prompts buyers to come to the dairy spot market. There has not been much of this lately as spot trading has been light.

Butter:

Price has moved above the top of the recent range with price at the highest level since July 2020. U.S. butter is competitive on the world market with exports significantly higher than last year. Churning is active with fresh butter supplies available.




Thursday, March 25, 2021

Thursday Closing Dairy Market Update - Dairy Cattle Slaughter Declines

MILK

Buyers of cheese became a bit more aggressive Thursday, taking advantage of the lower prices. Milk futures were able to rebound to some extent, but traders did not become overly excited about it. Market sentiment cannot be accurately assessed with only one or even a few days of activity. Some reports from the Central region indicate that milk production has recently increased so much as to indicate spring flush may be underway. This may only be the beginning with much more to come based on cow numbers and how production per cow is growing. Some indicate there really has not been a noticeable slowing of milk output because of the winter storm in February that created a lot of difficulties. Cows have maintained milk production throughout the period. Manufacturing plants indicate there is a lot of spot milk available with prices running from $2 to $6 under class. February Livestock Slaughter totaled 265,200. This was a decline of 12,100 from January and down 900 head from a year ago. This was the lowest February slaughter since 2018. The question here is whether it makes any difference that there was one less day this year than last year. I would say that it does not make any difference, as cow numbers always fluctuate and one less day does not necessarily mean that fewer cows will be slaughtered. Heavier culling across the country can take place on any given day.

AVERAGE CLASS III PRICES

3 Month: $16.77
6 Month: $17.35
9 Month: $17.65
12 Month: $17.65

CHEESE

It is reported that there has been some renewed interest for international buyers now that prices have declined. This will not be evident in the near-term, as it takes some time to move through the export channels, and some of it is being purchases now for later in the year. Most plants report good demand for cheese with some orders recently increasing, likely due to increasing restaurant demand. The increase of cheese prices Thursday may not turn the trend back up but may keep prices in the sideways range.

BUTTER

There are some reports of cream supply tightening in areas. This does not mean that there is a shortage, nor is there any thinking that there will be a shortage. There has been more demand coming from the increased manufacturing of higher-fat dairy products being produced for spring demand. Churning remains active and inventory is growing. Export demand remains strong, which will limit the growth of inventory.

OUTSIDE MARKETS SUMMARY

May corn declined 6.75 cents, closing at $5.4650. May soybeans fell 18.50 cents, closing at $14.1425, with May soybean meal up $3.60 per ton, closing at $404.60. May wheat fell 12.25 cents, ending at $6.1250. April live cattle gained $0.42, closing at $119.55. May crude oil fell $2.62, ending at $58.56 per barrel. The Dow gained 199 points, closing at 32,619, while the NASDAQ gained 16 points, closing at 12,978.




Thursday Midday Dairy Market Summary - Cheese Rebounds

Both block and barrel cheese increased Thursday. Blocks gained 3 cents closing at $1.70 with 2 loads traded. Barrels increased 2 cents closing at $1.46 with one load traded. This was certainly positive for the market, resulting in Class III futures turning higher with some contracts posting double-digit gains. However, the strength has been rather limited. Futures are 4 cents lower to 19 cents higher. Only front-month March shows a loss. June shows the greatest gain. Butter price increased 1.50 cents closing at $1.7375 with no loads traded. This is the highest price since July 14, 2020. Grade A nonfat dry milk gained 2 cents ending at $1.17 with 12 loads traded. Dry whey price remained unchanged at 62.75 with no loads traded. Class IV futures have not yet traded. Butter futures are unchanged to 2.02 cents higher. Dry whey futures are 0.25 cent lower to 0.75 cent higher. USDA will release the February Livestock Slaughter report Thursday afternoon.




Fluid Milk and Cream - Western U.S. Report 12

 California is in flush. Milk output is heavy, and processing facilities are running at or     close to capacity. Milk handlers would like to move extra loads around, but freight is at a     premium and these costs are hampering movement. Class I and Class II sales remain steady.
Class I demand is high in Arizona. Milk production is nearing peak, but output is well-     balanced with bottling operations and other dairy manufacturers. 
Class I orders in New Mexico are down a little after the pipeline refill of the last few weeks and spring breaks for educational institutions. Milk production is steady, and balancing plants are active. Spring holiday retail orders are keeping Class II demand strong. 
Milk supply is ample in the Pacific Northwest, and processing plants are full and active. Current weather is providing good cow comfort for the milking herd. Dairy product manufacturers are pulling heavy volumes of milk, but Class I and Class II processing have decreased slightly. 
Spot milk has tightened a little in the mountain states of Idaho, Utah, and Colorado. While discounted loads are available in Idaho, industry contacts say there are fewer of them than usual. Manufacturers are running plants near capacity and milk supplies are in good balance with processing demand. 
Condensed skim loads are moving well through current contracts. In addition, balancing plants are very active, but industry contacts say supplies are well-matched with processing needs. 
Western butter churns are attracting less cream than in recent weeks. Cream supply is heavy in the west, but industry contacts anticipate it will tighten as ice cream makers build stock heading toward summer. There has been interest in moving cream from the west into the Midwest and East over the last few weeks, but availability of trucks and drivers makes this difficult. Cream multiples trended a little higher, with the top of the range moving up a few points.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2600


     Information for the period March 22 - 26, 2021, issued weekly

     Secondary Sourced Information:

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 1.837 billion pounds in February 2021. Class     I utilization was 389.5 million pounds and accounted for about 21.2 percent of producer     milk. The uniform price was $13.99, down $0.25 from January 2021, and $2.89 below the same     month a year ago.

     MONTHLY MILK PRODUCTION
The NASS Milk Production report noted February 2021 milk production in the 24 selected     states was 16.8 billion pounds, 1.3 percent lower from a year ago. Milk cows in the 24     selected states totaled 8.94 million head, 88,000 head more than a year ago. The following     table shows western states included in the report and the monthly milk production changes     compared to a year ago:

     February 2021 Milk Production, (USDA-NASS)

                   (Million Lb.)   % Change From
                                     1 Year Ago

     Arizona           398            - 4.3
     California      3,328            - 1.5
     Colorado          404            + 1.3
     Idaho           1,228            - 3.1
     New Mexico        657            - 2.5
     Oregon            201            - 4.7
     Utah              169            - 4.5
     Washington        513            - 5.7




Thursday Morning Livestock Market Update - Limited Volatility Expected

Opening Calls:

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

Outside Market Opening Calls:

Corn Futures: 2 to 4 Lower
Soybean Futures: 4 to 7 Lower
Soybean Meal Futures: $1 to $2 Lower
Wheat Futures: 4 to 7 Lower

Milk:

USDA will release the February Livestock Slaughter report Thursday. The report records the number of dairy cattle slaughtered for the month as well as other cattle. The report is not a market-mover, but it does give an indication of the outlook of dairy farmers. However, the slaughter number in some way does not matter too much as we already know that cow numbers increased 3,000 head from January and were 81,000 head more than a year earlier. Those numbers were released on the Milk Production report last week. There are always sufficient replacements ready to come into the herd. Increasing milk production and increasing cheese output may keep milk futures steady to lower as supply increases.

Cheese:

Cheese prices have not been able to break out of a price range since November. There has been some price volatility, but it has been confined within a range. Increased government purchases for food programs has not been sufficient to move the market higher as it did last year. Increasing demand from the food service industry has not been able to move it higher either. More of the same is expected for the foreseeable future.

Butter:

It appears butter will outperform cheese for a period of time. It has been more responsive the increasing demand from restaurants and has been showing some strong demand from the international market. Fresh butter supply has caught up with demand, leaving buyers with sufficient supply. Inventory is growing, but not as quickly as it seasonally does. There is no concern over supply tightness, but current demand has raised price to a level where buyers and sellers are willing to do business.




Wednesday, March 24, 2021

Wednesday Closing Dairy Market Update - Milk Plants Filling Up

MILK:

There is plenty of milk available for bottling and manufacturing needs. Food service demand has been increasing but is now mixed due to the pipeline being filled sufficiently for the time being. Overall demand for dairy is strong. Loads of milk are moving around to either satisfy manufacturing or bottling needs in some areas or due to heavy supplies in other areas. Many plants indicate they are running at capacity. Many plants in the Upper Midwest report they are not able to take on any additional milk. If a plant breaks down and cannot process all their regular supply of milk, it is very difficult, if not impossible, to divert that milk to another plant. Some of it needs to move a long distance. The concern is that much of the nation has not yet moved into spring flush. As I have indicated before, the issue this spring may not be the lack of demand, but the inability of plants to process all the milk. USDA will release the February Livestock Slaughter report Thursday.

Average Class III Prices:

3 Month: $16.68
6 Month: $17.23
9 Month: $17.55
12 Month: $17.57

CHEESE:

Block cheese price continues to slide lower but has not fallen below the range established since November. Blocks have been slowly eliminating the gains that were realized during the first half of March. So, all in all, cheese prices have been holding well, but just not trending higher as most would like to see. Demand for certain varieties of cheese has slowed a little, but nothing to cause any concern. Supply of fresh cheese has caught up with demand, leaving the market somewhat balanced.

BUTTER:

Retail sales have been strong as stores have been advertising butter in spring promotions. The Passover/Easter season is also a strong demand period for butter. Most of that has been shipped and in the hands of retail or already in the hands of consumers. Butter price is now back above blocks where it has not been for quite some time. Historically, butter was near or slightly above blocks most of the time. That has not been the case for the past few years. Export demand remains strong, keeping inventory from building too rapidly.

OUTSIDE MARKETS SUMMARY:

May corn gained 2 cents, closing at $5.5325. May soybeans gained 9.50 cents, ending at $14.3275 with May soybean meal up $2.20 per ton, closing at $401.00. May wheat fell 10 cents, ending at $6.2475. April live cattle closed unchanged at $119.12. May crude oil jumped $3.42, closing at $61.18 per barrel. The DOW slipped 3 points, ending at 32,420 while the NASDAQ fell 266 points, closing at 12,962.




Wednesday Midday Dairy Market Summary - Blocks Continue to Slide

Midday Market Update: Block cheese continues to slide with price down 4.50 cents Wednesday closing at $1.67 with just one load traded. There was an unfilled bid at the closing price and an uncovered offer 2 cents higher at the close of spot trading. Barrel cheese price remained unchanged at $1.44 with no loads traded. The weakness of blocks put further pressure on Class III futures with contracts unchanged to 28 cents lower with trading activity rather light. Butter price increased 2.25 cents closing at $1.7225 with 3 loads traded. This moves price above blocks where it has not been for quite some time. Grade A nonfat dry milk remained unchanged at $1.15 with 2 loads traded. Dry whey price increased 1.50 cents settling at 62.75 with 2 loads traded. Class IV futures are 13 cents higher. Butter futures are steady to 2.00 cents higher. Dry whey futures are 0.08 cent to 0.57 cents higher.




Wednesday Morning Dairy Market Update - Milk Futures May Move Cautiously Lower

Opening Calls:

Class III Milk Futures: Mixed
Class IV Milk Futures: Steady to 5 Higher
Butter Futures: Steady to 1 Higher

Outside Market Opening Calls:

Corn Futures: 1 to 2 Lower
Soybean Futures: 2 to 4 Higher
Soybean Meal Futures: $1 to $3 Higher
Wheat Futures: 1 to 4 Lower

Milk:

There is no real new news in the dairy complex. Milk futures have been slowly eroding as underlying cash has not provided support. Milk receipts are increasing at the plant level leaving sufficient supply to meet all areas of demand. Milk production is higher than last year and expected to remain that way for the foreseeable future. Feed prices are high, but that has not deterred farmers from pushing milk production. Plants are full in many cases, but most are still able to handle increasing milk supplies. Tuesday, USDA announced they awarded $11.5 million for research "to help ensure America's small and medium-sized farms become more profitable and improve the quality of life in American farm communities." The press release reported that "USDA's National Institute of Food and Agriculture (NIFA) awarded 24 grants to 20 universities and organizations through their Agriculture and Food Research Initiative (AFRI), the nation's leading and largest competitive grants program for agricultural sciences." This is not just strictly for dairy, but all areas of agriculture. It will have no impact on market prices directly.

Cheese:

Cheese prices are expected to continue to show weakness but may find a level at which business will be done and prices will more sideways. Demand for fresh cheese is being satisfied with some plants reporting curd demand has slowed a bit. Buyers are less aggressive with less trading being done on the daily spot market due to the ability of obtaining needed supplies out in the country through regular channels.

Butter:

Price has been supported holding the gains from February and early March. Exports are doing well increasing the movement through the market rather than rapidly building inventory. Demand from the food service industry has been strong but seems to have leveled off for now. Price will remain choppy.




Tuesday, March 23, 2021

Tuesday Closing Dairy Market Update - Milk Futures Continue to Erode

MILK

Class III milk futures have been slowly eroding due to the underlying cash calculation decreasing on nearly a daily basis. The July contract has now slipped below $18 and has been eroding daily for the past 1 1/2 weeks. Buyers of cheese have been less aggressive, and there has been less activity on the daily spot market. Business is being done in the country through other channels reducing or eliminating the need of buyers or sellers to come to the spot market on the CME to accomplish business. Fundamentals do not indicate any tightening of milk supply or product availability. So, without any concern in the market, there is no reason for buyers to be aggressive. There is no concern over tightening supply for the foreseeable future. Weather has been conducive for cow comfort, increasing output per cow. Farmers hold out high hopes for a good year and intend to push milk production to maintain or increase cash flow. Last year was a good year financially for most prompting improvements to facilities and the overall operation. Some have embraced the use of technology to improve management.

AVERAGE CLASS III PRICES

3 Month: $16.81
6 Month: $17.37
9 Month: $17.66
12 Month: $17.66

CHEESE

Reports of cheese demand are mixed. Curd demand is reported by some to have stalled to some extent. This is likely due to the food service pipeline being replenished to a desired level for now. One might believe the increase of demand from the food service industry should be increasing overall demand. However, if more people eat meals away from home, there will be a decrease of retail demand. This may keep overall demand somewhat steady. It then is possible the market might be oversupplied for a short period of time as cheese production increases.

BUTTER

Price has been moving in a sideways range since the beginning of March. The positive aspect is that price is holding at the higher level, indicating there is solid support for the time being. Cream supply is variable across the country with churning continuing to remain active. Retail demand for the Passover/Easter season has been satisfied for the most part as consumers have already prepared for the season.

OUTSIDE MARKETS SUMMARY

May corn gained 2.25 cents, closing at $5.5125. May soybeans gained 5.75 cents, closing at $14.2325, with May soybean meal up $2.20 per ton, closing at $398.80. May wheat gained 7.50 cents, ending at $6.3475. April live cattle increased $0.35, closing at $119.12. May crude oil fell $3.80, ending at $57.76 per barrel. The Dow fell 308 points, closing at 32,423, while the NASDAQ fell 150 points, closing at 13,228.




Milk production keeps rising

The Agriculture Department’s preliminary data reports February milk output hit 17.63 billion pounds, down 1.5% from February 2020.

However, February 2020 had an extra “Leap Day,” so adjusting for that, February output was actually up 2.0% from 2020. Output in the top 24 states was up 2.3%, when adjusted.

Revisions in January output were a big factor of interest in this report as January’s preliminary estimate was raised by 155 million pounds to 19.3 billion, up 2.4%, instead of the originally reported 1.6% increase.

February cow numbers were up for the eighth consecutive month, totaling 9.46 million head in the 50 states, up 3,000 from January’s count, which was revised up 5,000 head. The February herd was up 81,000 from February 2020.

February output per cow averaged 1,864 pounds, up 22 pounds or 1.2% from a year ago.

California’s February output was up 2.1% from a year ago, when adjusted, thanks to a 43-pound gain per cow, but with 3,000 fewer cows. The January total was revised up 94 million pounds, resulting in a 2.0% increase from January 2020, instead of the originally reported 0.7% decrease.

Wisconsin was up 3.2% in February on a 57-pound gain per cow but 2,000 fewer cows. January output was revised up 12 million pounds, resulting in a 3.6% gain from January 2020, instead of 3.1%.

Idaho was up 0.4%, despite a 2-pound drop per cow, but cow numbers were up 3,000 head. Revisions added 14 million pounds to Idaho’s January output, up 0.7% from a year ago, instead of the 0.3% drop originally reported.

Michigan was up 3.8%, on a 14-pound gain per cow and 13,000 more cows. Minnesota was up 5.8%, on a 51-pound gain per cow and 12,000 more cows. New Mexico inched 0.9% higher on 3,000 more cows with output per cow unchanged.

New York was up 1.7%, thanks to a 32-pound gain per cow. Cow numbers were unchanged.

Oregon was down 1.5% on 2,000 fewer cows but output per cow was up 2 pounds.

Pennsylvania was off 0.7%, on a drop of 8,000 cows, though output per cow was up 14 pounds.

Indiana again showed the biggest gain, up 10.4%, thanks to 17,000 more cows milked and a 14-pound per cow gain, but South Dakota was next again, up 9.6%, on 13,000 more cows and 7 more pounds per cow.

Texas was up 5.3%, on 30,000 more cows and 4 more pounds per cow, and that despite the weather challenges it endured.

Washington state was down 2.3% on 4,000 fewer cows, and an 18-pound drop per cow, as weather impacted that state as well.

Plenty to chew on

U.S. butter stocks climbed to 352.7 million pounds in February, up 20.8 million pounds or 6.3% from the January level, which was revised 3.5 million pounds higher than what was reported a month ago, and is a whopping 50.9 million pounds or 16.8% above Feb. 2020.

February was the 20th consecutive month that butter stocks topped those a year ago. However, the build was smaller than many expected. That is a positive but butter output remains strong and we’ll get more of that data in the February Dairy Products report issued April 1.

American type cheese hit 816 million pounds, up 6.9 million pounds or 0.9% from January, which was revised up 8.3 million pounds, and is 37.7 million or 4.8% above a year ago.

The “other” cheese category jumped to 597.5 million pounds, up 19.6 million pounds or 3.4% from January and 37.8 million or 6.8% above a year ago.

The total U.S. cheese inventory stood at 1.44 billion pounds, up 27.8 million pounds or 2.0% from January and 74.1 million pounds or 5.4% above a year ago.

February was the fourth month in a row that total cheese stocks grew and revisions for January amounted to 10 million pounds, which HighGround Dairy says is “a report-to-report build of 38 million pounds, a more bearish number than the initial February data would suggest.”

With spring flush upon us, cheese output will no doubt rise and could push stocks to record highs.

Dairy prices weaken

CME dairy prices were weaker last week, with the exception of dry whey, which set a record high. The Cheddar blocks closed Friday at $1.79 per pound, unchanged on the week but 4.75 cents below a year ago.

The barrels rolled downhill to a Friday close of $1.4525, down a dime on the week but still 2.25 cents above a year ago. There were 6 sales of block and 13 of barrel last week at the CME.

Monday’s traders took the blocks down 3 cents and dropped them another 4.50 cents Tuesday, to $1.7150, as they absorbed the Cold Storage and China’s import data.

The barrels dropped 1.50 cents Monday but inched back up 0.25 cents Tuesday to $1.44, 27.50 cents below the blocks.

Cheese demand reports are mixed, according to Dairy Market News, but Midwestern cheesemakers report busier tones with some having trouble keeping up with demand. Inventories vary but some are balanced to tight. Export interests, renewed school lunch programs, and spring holidays have helped to keep market tones somewhat bullish, says DMN.

Retail cheese demand in the West has been slowing slightly while demand at food service has been picking up. Buyers are finding plenty of cheese available. Mozzarella is moving well, says DMN, and with March Madness and other televised spring sports tournaments, some contacts expected demand to pick up as viewers purchase both restaurant carry out and grocery pizzas.

Cheese is being produced in high volumes in the West, with plenty of milk available. International interest lessened as prices increased. Port issues have improved but still are not back to normal, says DMN.

Cash butter saw its Friday finish at $1.6650 per pound, down a nickel on the week and 9 cents below a year ago, with only 5 sales reported for the week.

The butter was unchanged Monday but jumped 3.50 cents Tuesday, hitting $1.70.

Central cream is tightening but churning is ongoing. Cream is nearing the peak of affordability for churners, says DMN, but butter availability remains bountiful. Market tones have retained solidity, thanks to consecutive weeks of positive food service demand which is described as “reminiscent of pre-COVID buying,” according to DMN, plus interest continues from export customers.

Spring flush is early in the West, says DMN, and cream is plentiful. Ice cream makers are pulling more heavily on cream but butter makers have ample supplies. And, there is a lot of butter in the cooler. Export interest is strong, food service demand is showing growth as restrictions relax, and retail accounts are building inventory to prepare for the upcoming spring holiday advertised sales.

Grade A nonfat dry milk closed Friday at $1.1525 per pound, down 1.75 cents on the week but 16.50 cents above a year ago when the powder fell 6.50 cents. There were 11 sales last week.

Monday’s powder was down 1.25 cents but regained a penny Tuesday, climbing back to $1.15 per pound.

Spot dry whey continued its record-breaking trek in CME trading, with small daily gains last week, and reached a Friday summit at 61.25 cents per pound, up 2 cents on the week, 28.25 cents above a year ago, and approached NASS-surveyed price levels not seen since 2014. Only 2 sales were reported last week at the CME.

The whey was unchanged both Monday and Tuesday.

China buying

China was the proverbial “bull in the china shop” when it came to the latest import data, which traders and analysts are poring over. Reminiscent of buying in 2014, data were released this week for both January and February, and HighGround Dairy says January marked the highest volumes on record for any month.

Whole milk powder imports in the two months totaled 530.4 million pounds, up 7.4% from 2020. Skim milk powder totaled 192.5 million pounds, up 35.9%. Butter, at 46.2 million, was down 18.8%, but cheese totaled 67.7 million pounds, up 33.7%, year to date. Whey product imports amounted to 277.1 million pounds, up 49.2% from the same period a year ago.

The biggest leap was in whole milk powder from New Zealand, according to HGD, and fluid milk and cream from the EU-27. China frontloaded both whole and skim milk powder in January, as they typically do, says HGD, “but it came at an even stronger pace than usual given global shipping uncertainty.”

HGD says that remembering why food prices are inflated in China helps to project upcoming dairy demand and points to “food shortages due to disease and weather, alongside rising needs and a growing middle class. China does not have enough productive farmland, keeping food imports critical. If a pandemic could not stop China from recording record dairy imports in 2020, consumption trends throughout this year will be strong as well. The country is turning to protein of any sort, including dairy, to meet needs, driving global values higher in recent weeks where they will stay until Chinese buyers are satisfied with inventory levels,” HGD concludes.

Fluid sales drop

U.S. fluid milk sales have returned to “normal,” meaning they fell again. USDA’s latest data shows 3.9 billion pounds of packaged fluid products were sold in January, down 4.9% from Jan. 2020, and follows a 1.5% gain in December.

Conventional product sales totaled 3.6 billion pounds, down 5.7% from a year ago. Organic products, at 255 million pounds, were up 8.1%, and represented 6.6% of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, down 2.7% from a year ago, and made up 33% of total fluid sales in January.

Skim milk sales, at 225 million pounds, were down 15.3% from a year ago.

Class I up 31 cents

The April Federal order Class I base milk price is $15.51 per hundredweight, up 31 cents from March, $1.13 below April 2020, and equates to about $1.33 per gallon, down from $1.43 a year ago.




From: Capital Press

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