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Wednesday, April 21, 2021

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 March 2020. February revised production, at 16.9 billion pounds, was down 1.1 percent from February 2020. However, production was 2.5 percent above last year after adjusting for the leap year. The February revision represented an increase of 36 million pounds or 0.2 percent from last month's preliminary production estimate. 

Production per cow in the 24 major States averaged 2,104 pounds for March, 19 pounds above March 2020. 

The number of milk cows on farms in the 24 major States was 8.95 million head, 93,000 head more than March 2020, and 7,000 head more than February 2021. 

January-March Milk Production up 1.0 Percent 

Milk production in the United States during the January - March quarter totaled 56.7 billion pounds, up 1.0 percent from the January - March quarter last year. 

The average number of milk cows in the United States during the quarter was 9.46 million head, 29,000 head more than the October - December quarter, and 80,000 head more than the same period last year.




Wednesday Closing Dairy Market Update - March Milk Production Up 1.8%

MILK

Milk futures weakened somewhat Wednesday, and rightly so. Block cheese and dry whey prices slipped. Not only that, but milk production increased in March about as expected. USDA reported milk production in the top 24 states increased 2.0% from March 2020, totaling 18.84 billion pounds. Production per cow averaged 2,104 pounds or 19 pounds more than the same month last year. Cow numbers totaled 8.95 million head. This was 7,000 head more than February and 93,000 more than March 2020. Milk output for the U.S. was 1.8% above March 2020, totaling 19.75 billion pounds. Milk production per cow reached 2,086 pounds, up 20 pounds per cow. Cow numbers totaled 9.468 million head, up 8,000 head from February and up 77,000 head from a year ago. The increase in milk production was expected, but the increase of cow numbers was quite a bit more than anticipated. First-quarter milk production increased 1.0% compared to the same period last year. Ten of the top 24 states showed production declines. Florida declined 7.3%, Vermont declined 4.3%, Arizona declined 3.1%, Utah declined 2.6%, Virginia declined 2.2%, Georgia declined 1.8%, Pennsylvania declined 1.5%, Washington declined 1.2%, New Mexico declined 1.1% and Oregon was down 0.9%. South Dakota showed the greatest percentage gain with an increase of 13.4% followed by Indiana, gaining 10.0%. The May Federal Order Class I price was announced at $17.10, up $1.59 from April.

AVERAGE CLASS III PRICES

3 Month: $18.68
6 Month: $18.92
9 Month: $18.80
12 Month: $18.57

CHEESE

Manufacturers are full of milk with some plants that have not implemented production restrictions urging their patrons to cut back on production or at least limit gains. Spot milk is running around $5 below class, primarily in the Midwest. Cheese demand is strong with buyers aggressively looking for supplies at times. The overall market is uncertain, which may move prices into a sideways range for a while.

BUTTER

There is some tightening of cream supplies, but for the most part, plants indicate there is steady supply of milk and cream to keep churns busy. Butter sales to the foodservice sector are improving while retail sales are showing some weakness. USDA will release the March Cold Storage report Thursday. It will be interesting to see how much inventory has increased or if the increase in restaurant demand has minimized the increase of stocks.

OUTSIDE MARKETS SUMMARY

May corn jumped 19 cents, closing at $6.2550. May soybeans jumped 25.25 cents, closing at $14.9725, with May soybean meal up $1.90, closing at $412.30 per ton. May wheat jumped 13.50 cents, closing at $6.3725. April live cattle declined $0.80, ending at $119.75. June crude oil fell $1.32 per barrel, closing at $61.35. The Dow gained 316 points, ending at 34,137, while the NASDAQ gained 160 points, ending at 13,947.




Wednesday Midday Dairy Market Summary - Block Cheese and Dry Whey Decline

Block cheese prices slipped 0.50 cents closing at $1.7950 with 4 loads traded. Barrel cheese price remained unchanged at $1.8050 with no loads traded. There was no interest in doing any business in barrels. There was an unfilled bid a little below the market in blocks. Butter price slipped 0.50 cents ending at $1.7925 with 2 loads traded. Grade A nonfat dry milk price gained a penny ending at $1.24. Dry whey declined 2 cents settling at 68.25 cents with one load traded. The weakness of blocks and dry whey turned Class III futures lower with contracts steady to down 27 cents with the greatest loss in May. Class IV futures are have not yet traded. Butter futures are unchanged to 0.12 cent lower. Dry whey futures are 2.67 cents lower to 0.20 cent higher. USDA will release the March Milk Production report Wednesday afternoon. I estimate milk production to be up 2.1% from March 2020 and cow numbers to be up 2,000 head from the previous month.



 

Tuesday, April 20, 2021

Tuesday Closing Dairy Market Update - Global Dairy Trade Declines 0.1%

MILK

August through December Class III contracts regained the losses of last week, establishing new contract highs Tuesday. Closer contracts still have their work cut out for them to move back up to where prices were early last week. Increasing grain prices seem to be providing some support as buyers of cheese are looking ahead to the possibility of tightening supplies if dairy farmers increase their desire to cull more heavily, reducing the number of cattle that need to be fed. The Global Dairy Trade auction trade-weighted average declined 0.1% on Tuesday's event. There were 157 participating bidders with 25,040 metric tons sold. Anhydrous milk fat price declined 3.3% to $6,003 metric tons or $2.72 per pound. Butter declined 0.6% to $5,736 per metric ton or $2.60 per pound. Cheddar cheese price increased 1.2% to $4,436 per metric ton or $2.01 per pound. Lactose declined 3.4% to $1,260 per metric ton or $0.57 per pound. Skim milk powder was unchanged at $3,365 per metric ton or $1.53 per pound. Whole milk powder increased 0.4% to $4,097 per metric ton or $1.86 per pound. Buttermilk powder was not offered on this event.

Average Class III Prices

3 Month: $18.77
6 Month: $19.01
9 Month: $18.89
12 Month: $18.64

CHEESE

The rebound of cheese prices has been quick as buyers stepped into the market to take advantage of the drop. It seems that much of the buying interest might be tied to the fear of lower milk supply due to higher feed prices. A lot can happen before the crop is in the bin, but the current perception is alive and well. That has also been a focus in the cattle markets over the past week. USDA will release the March Milk Production report on Wednesday, which will indicate strong milk output that may not go away for a while.

BUTTER

What is up -- or should I say "down" -- with butter? The decline Wednesday was completely unexpected. It could be an indication that the foodservice industry pipeline may be filled with demand settling to maintain the current level. The surge to meet the rising demand may be over. The next indication will be whether retail demand slows due to increased restaurant demand. It is unclear if inventory is growing along with strong demand. We will see this on the cold storage report on Thursday.

OUTSIDE MARKETS SUMMARY

May corn jumped 14.50 cents, closing at $6.0650. May soybeans jumped 22.25 cents, closing at $14.72, with May soybean meal up $2.90 per ton, closing at $410.40. May wheat gained 7.50 cents, ending at $6.5975. April live cattle gained $0.22, closing at $120.57. June crude oil fell $0.94, closing at $62.44 per barrel. The Dow declined 256 points, closing at 33,821, while the NASDAQ fell 129 points.





Dairy Market: Prices shaken then stirred

CME block Cheddar climbed to $1.86 per pound last Monday, highest it has been since Jan. 14, 2021, but word of the end of the food box program sent shockwaves through the markets.

The blocks fell to $1.74 Thursday, only to rally to a Friday close of $1.78, down a nickel on the week but 76.75 cents above a year ago when they hit bottom at $1.0125.

The barrels got to $1.7650 last Monday, fell to $1.6575 Thursday, but closed Friday at $1.69, 0.25 cents lower on the week, 68.50 cents above a year ago, and a closer to normal 9 cents below the blocks. Sales totaled 18 cars of block and 30 of barrel.

Monday’s market took the blocks up 2 cents to $1.80 and stayed there Tuesday as traders weighed the morning’s Global Dairy Trade auction and anticipated Wednesday’s March Milk Production report.

The barrels jumped 5.25 cents Monday and added 6.25 cents Tuesday, hitting $1.8050, highest they’ve been since Nov. 12, 2020, and an inverted 0.50 cent above the blocks.

Midwest cheese output is busier than it was this time last month, according to Dairy Market News. A number of producers who were running four- and five-day workweeks have added a day to their schedules in light of stronger demand and strengthening prices. Some have remained active throughout most of the year and still report being behind on orders, says DMN. Spot milk is tightening a bit, though prices reported mid-week remained below Class III. With spring flush underway, contacts are unsure what to expect as the warmer weather will assuredly bring lower overall milk output.

Western foodservice cheese demand continued to grow last week while retail demand held steady. Some contacts reported improvements at ports with getting vessel space and shipping containers, making it possible to move exports more readily. DMN says, “The announcement of the cancellation of the food box program is causing manufacturers to closely monitor cheese markets, watching cheese futures for any signal of price direction and subsequent demand. With the uncertainty of what government purchases may look like, the market tone within cheese markets is more unsettled than what it had been a few weeks ago.”

Spot butter made it to $1.9050 per pound on last Monday, highest since Jun. 10, 2020, but finished Friday at $1.85, down 3 cents on the week, though 66.25 cents above a year ago; 13 cars found new homes on the week.

Monday’s butter was up 2 cents but it tumbled 7.25 cents Tuesday to $1.7975, with 21 carloads exchanging hands on the day.

The StoneX Dairy Group stated in their April 12 Early Morning Update: “We lean bullish for butter."

"Longer-term strength is debatable but for now we won’t concern ourselves with fourth quarter pricing. Re-opening demand coupled with strong global demand continues to drive market dynamics.”

DMN reports that churning remains busy for now, but some butter producers suggest the time for active churning may be limited. Cream availability was notably tighter last week and has been tightening the past month. Ice cream producers are ramping up production and keeping cream from the churns. Butter sales are steady to robust, particularly in foodservice, says DMN.

Western cream is still plentiful. While some cream is flowing eastward, limited availability of tanker trucks was a barrier but butter production is seasonally active. Inventories are stable. Week after week foodservice demand continues to swell; some, but not all, market participants feel strongly that rebounding food service orders are the main force behind the higher butter prices. Retail butter demand is stable to strong and export demand is steady as contacts report that port congestion issues seem to be improving.

Grade A nonfat dry milk closed Friday at $1.2150 per pound, up a penny on the week and 36 cents above a year ago, with 27 sales reported on the week.

The powder gained 2 cents Monday, hitting $1.2350, highest since Feb. 10, 2020, but slipped back 0.50 cent Tuesday, to $1.23.

CME dry whey climbed back to its record 66 cent per pound perch last Tuesday but added 1.50 cents on Friday, setting a new CME record of 67.50 cents per pound, up 4.50 cents on the week and 28.50 cents above a year ago, on 5 sales.

Monday’s whey was unchanged but two unfilled bids took it up 2.75 cents Tuesday to 70.25 cents per pound, highest CME price ever and the highest whey price since January 2012.

GDT down 0.1%

The Global Dairy Trade auction’s weighted average slipped 0.1% on Tuesday, following a 0.3% uptick on April 6. Traders brought 55.2 million pounds of product to market, down slightly from the last event, and the smallest amount since July 21, 2020. Tuesday’s average winning price was $4,110, up from $4,081.

Lactose led the losses, down 3.4% after plunging 6.5% in the last event. Anhydrous milkfat was down 3.3%, after inching 0.8% higher last time. Butter was off 0.6%, following a 2.0% advance.

GDT Cheddar was up 1.2%, after posting a 2.2% gain last time, and whole milk powder inched 0.4% higher.

StoneX Group says the GDT 80% butterfat butter price equates to $2.5382 per pound U.S., down 1.8 cents, and compares to CME butter which closed Tuesday at a bargain $1.7975. GDT Cheddar, at $2.0120 per pound, compares to Tuesday’s CME block Cheddar at $1.80. GDT skim milk powder averaged $1.5265 per pound, down from $1.5272, and whole milk powder averaged $1.8583 per pound, up from $1.8531. CME Grade A nonfat dry milk closed Tuesday at $1.23 per pound.

China shopping

The proverbial elephant was in the dairy aisle in March. China’s Customs Statistics show record highs for the month with notable gains from New Zealand, Germany, the U.S., Australia and Poland, according to HighGround Dairy’s analysis.

Whole milk powder imports totaled 182.6 million pounds, up 76.6% from March 2020, almost 93% of them from New Zealand. Skim milk powder totaled 69.6 million pounds, up 27.2%.

Whey imports amounted to a record 267 million pounds, up 76.7%, and while volumes from the U.S. were higher, the U.S. market share fell slightly from 2020. Other countries that reported a rise in market share were Poland, Belarus and Turkey, according to HGD.

China imported 25.5 million pounds of butter, up 41.5% from a year ago, and cheese imports totaled 44.8 million pounds, up 74.1%.

Fluid milk and cream demand remained strong with imports from New Zealand expanding, as well as from the E.U. The largest supplier within the E.U. was Germany, followed by Poland and France, says HGD.

Fluid sales struggle

U.S. fluid milk sales continued to struggle in February but eked out a small gain from a year ago. USDA’s latest data show 3.58 billion pounds of packaged fluid products were sold in the month, up 0.2% from Feb. 2020, when adjusted for the Leap Day, and follows a 4.9% drop in January.

Conventional product sales totaled 3.4 billion pounds, down 0.4% from a year ago. Organic products, at 227 million pounds, were up 10.9%, and represented 5.7% of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, up 0.3% from a year ago, but year to date sales were 2.9% below a year ago.

Skim milk sales, at 203 million pounds, were down 14.3% from a year ago and down 16.3% year to date.

Total packaged fluid milk sales for the two months amounted to 7.5 billion pounds, down 4.1% from 2020. Conventional product sales totaled 7.0 billion pounds, down 4.8%. Organic products, at 481 million pounds, were up 7.5%.

The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.




From: Capital Press

Tuesday Midday Dairy Market Summary - Barrel Cheese and Dry Whey Push Higher

Block cheese price initially moved a penny lower on an offer and remained that way until a few seconds before the close of spot trading. There was a trade at $1.79 and them immediately another trade at $1.80, unchanged for the day. Barrel price increased steadily throughout the trading period closing 6.25 cents higher at $1.8050 with 8 loads traded. It has been quite some time since barrels have been above blocks. Butter was not as fortunate with price falling 7.25 cents closing at $1.7975 with 21 loads traded. This is the largest one-day decline since Jan. 26. Grade A nonfat dry milk slipped 0.50 cent closing at $1.23 with 4 loads traded. Dry whey price increased 2.75 cents closing at 70.25 cents with no loads traded. Dry whey continues to add to the strong underlying support of Class III prices. Class III futures are 1 cent to 35 cents higher with September showing the greatest gain. Class IV futures have not yet traded. Butter futures are 0.50 cent to 5.20 cents lower. Dry whey futures are 2.05 cents to 3.08 cents higher. The Global Dairy Trade auction trade weighted average declined 0.1 percent Wednesday




DMI Announces Earth Day Strategy

Dairy farmers’ longstanding commitment to the environment and their stories of stewardship are taking center stage for Earth Day communications strategies. Following Earth Day on April 22 and continuing into May, Dairy Management Inc. will showcase tangible examples of real environmental progress being made on farms and throughout the dairy supply chain. DMI will use its channels, including USDairy.com and its social media properties, to publish sustainability-related content, such as videos, articles and infographics highlighting farmer stories. Other strategies include cultural influencers publishing dairy sustainability content via their social channels and the recent release of a video from media partner Vox examining what happens to nutrition and the environment if the U.S. dairy cow herd was removed. Finally, the checkoff has led efforts to build awareness with audiences about dairy's vital role in sustainable, equitable and secure food systems over the past six months, sparked by the announcement of the 2050 Environmental Stewardship Goals and Net Zero Initiative.





Tuesday Morning Diary Market Update - Grain Prices Provide Underlying Support

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 3 to 6 Higher
Soybean Futures: 12 to 20 Higher
Soybean Meal Futures: $3 to $4 Higher
Wheat Futures: 4 to 6 Higher

MILK:

Class III futures are trying to regain the losses of last week. May through July futures closed back above $19.00 reacting from the strength of underlying cash. The front-month April contract may not move very much other than adjusting for the weekly AMS prices. May is beginning to be priced but is wide open to react to the movement of underlying cash. Milk plants report increasing milk receipts as spring flush gears up. So far, increasing milk production is being absorbed with the discounted price of spot milk holding well. Increasing grain prices continue to be a concern and provides underlying support to the market. The Global Dairy Trade auction take place Tuesday.

CHEESE:

Price may be developing a higher trading range, but the market will need more time to solidify that trend. Fundamentals do not suggest a continued increase of prices as we move through spring flush. However, overall strong demand in the market might limit inventory growth. Cheese buyers might be near their price threshold.

BUTTER:

Price is holding well as both retail and restaurant demand remains strong. Exports continue to run well above last year. Churning has been active, but is slowing due to a tighter cream supply. Ice cream production is absorbing more cream pushing cream prices higher. There may be a point at which plants may limit production and sell cream due to a good price, but that may be limited due to continued strong demand for butter. Price is expected to be choppy.




Monday, April 19, 2021

Monday Closing Dairy Market Update - Futures Fail to Keep Pace With Cash

MILK

Futures price movements were nothing to write home about Monday, being rather subdued based on the increase of cash prices. The steep decline will not be forgotten, and traders are not buying back into the market quickly because of two days of cheese price increases. There is concern that once buyer interest is again filled, there might be another void under the market. Milk production is increasing as spring flush is gearing up. Weather is good for cow comfort. There is increasing concern over the dry weather in many areas and just how much that will expand as the growing season progresses. The potential for significantly higher grain prices and the impact it might have on milk production is keeping the market on edge. This may keep buyers more aggressive in the spot market as they increase ownership of supply for projected upcoming demand. However, milk output is not expected to slow anytime soon as the potential for higher milk prices is strong. This will keep the market choppy and will keep traders wound up and quick to jump in and out of the market.

AVERAGE CLASS III PRICES

3 Month: $18.64
6 Month: $18.79
9 Month: $18.66
12 Month: $18.45

CHEESE

Overall cheese prices are in an uptrend, but it may take some time to push through the high of Jan. 11. Demand has been strong as the pipeline for the foodservice industry is replenished. Much of that has been accomplished, leaving it up to regular demand to carry the baton. There is no shortage of milk for manufacturing, keeping plants running at capacity.

BUTTER

Butter has strong price support. Both retail and export demand has been doing well. Much of the butter being manufactured is moving to the market will little moving to inventory. This is certainly supportive to price for the near term. The market may begin to stabilize for a period as higher price is having some impact on demand. Price has been very competitive on the world market, and the Global Dairy Trade auction Tuesday will indicate whether world price remains strong.

OUTSIDE MARKETS SUMMARY

May corn gained 6.50 cents, closing at $5.92. May soybeans jumped 16.50 cents, closing at $14.4975, with May soybean meal price up $5.30 per ton, closing at $407.50. May wheat slipped 0.25 cent, ending at $6.5225. April live cattle declined $0.50, ending at $120.35. May crude oil gained $0.25, closing at $63.38 per barrel. The Dow declined 123 points, ending at 34,078, while the NASDAQ declined 138 points, closing at 13,915.




Monday Midday Dairy Market Summary - Cash Extends Gains

Buyers were not shy about trying to purchase more cheese again, taking advantage of the price drop from last week. The rally could be running out of steam as buyers of blocks got what they needed, leaving 2 offers on the table. Block cheese price increased 2 cents closing at $1.80 with 7 loads traded. Barrel cheese price increased 5.25 cents closing at $1.7425 with 5 loads traded. Butter price increased 2 cents closing at $1.87 with 8 loads traded. Grade A nonfat dry milk price gained 2 cents closing at $1.2350 with one load traded. Dry whey price remained unchanged at 67.50 cents with no loads traded. Class III futures are 9 cents lower to 16 cents higher. Class IV futures have not yet traded. Butter futures are 0.50 cent to 2.00 cents higher. Dry whey futures are 0.50 cent to 1.10 cents higher. Milk futures have not jumped as much as would have been expected due to the gains in cash prices. Increasing cash activity may satisfy buyers rather quickly keeping upside price potential limited.




Monday Morning Dairy Market Update - A Top May Have Been Reached

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 6 to 10 Higher
Soybean Futures: 8 to 12 Higher
Soybean Meal Futures: $2 to $3 Higher
Wheat Futures: 3 to 6 Higher

MILK:

Milk futures were able to rebound Friday, stopping the huge sell-off that took place. Cheese prices were low enough to bring buyers back in as they wanted to increase ownership of supply. It will be interesting to see whether that buying will continue or if the upper price threshold is now lower. Even after the huge decline of milk futures last week, prices continue to hold at good levels. This is a topic of discussion due to stronger grain prices, but it will not impact milk production for a period of time as production will continue to remain strong for a while. The March Milk Production report that will be released on Wednesday is expected to show strong output and large cow numbers. There is sufficient milk available. It will be up to demand to determine the potential for prices.

CHEESE:

The rebound of cheese prices on Friday was welcomed. Whether it will continue Monday, or this week is a question that has been mulled over during the weekend. Food service demand has increased significantly, but the pipeline has been mostly filled leaving demand somewhat steady from that area of the industry. One must remember that one area of bullish support is being eliminated by the discontinuation of the Food Box program.

BUTTER:

Price has been moving lower since April 12 but is not expected to see much downside. With the food service pipeline being filled settling down to maintaining supply to that area and retail demand remaining strong.




Friday, April 16, 2021

Friday Closing Dairy Market Update - Dry Whey Posts Solid Weekly Gain

MILK

Spring flush is beginning in some areas of the country while the West and South are near the peak of flush. Spot milk prices in the upper Midwest are running $1 to $5 under class, showing a slight reduction from the previous week. Most plants are running at full capacity with strong demand utilizing what is being produced. The limiting factor this year might be processing capacity rather than a lack of demand. Some plants have implemented production limits, but I have not heard as much of this as I have heard of over the past few years. This is not taking into account last year after COVID hit, which resulted in drastic production cuts and milk dumped. Class I milk sales are stable as spring breaks have ended for school systems. Foodservice sales are strong and have increased more than anticipated over a short period of time. U.S. City Average Retail Price for whole milk in March average $3.35 per gallon. This is an increase of 10 cents per gallon over March 2020 but a decrease of 2 cents per gallon from February.

AVERAGE CLASS III PRICES

3 Month: $18.58
6 Month: $18.76
9 Month: $18.65
12 Month: $18.42

CHEESE

For the week, blocks declined 5 cents with 18 loads traded. Barrel declined 0.25 cent with 30 loads traded. Losses of the week were trimmed with the gains Friday. Dry whey gained 4.50 cents with five loads traded. This is the highest dry whey price since the week of Sept. 17, 2014. That is when only weekly prices were recorded. Daily spot trading for dry whey did not begin until March 2018. The U.S. City Average Retail Price for natural cheese in March was $5.68, up $0.35 per pound from last year and up $0.08 from February. The average process cheese price was $4.15, up $0.24 from a year ago, but down a penny from February.

BUTTER

For the week, butter declined 3 cents with 13 loads traded. Grade A nonfat dry milk increased a penny with 27 loads traded. Butter production is mostly steady in most regions, but cream supply is tightening as ice cream manufacturing increases. Retail and food service demand is strong, keeping butter moving through the market, limiting the amount of supply going to inventory.

OUTSIDE MARKETS SUMMARY

May corn declined 4.50 cents, ending at $5.8550. May soybeans jumped 15 cents, ending at $14.3325, with May soybean meal up $0.30 per ton, closing at $402.20. May wheat slipped 1.25 cents, closing at $6.5250. April live cattle declined $0.75, ending at $120.82. May crude oil declined $0.33, closing at $63.13 per barrel. The Dow gained 165 points, ending at 34,201, while the NASDAQ gained 14 points, closing at 14,052.




Friday Midday Dairy Market Summary - Cheese Prices Rebound

Block cheese price increased 4 cents settling at $1.78 with 10 loads traded. Barrel cheese price gained 3.25 cents closing at $1.69 with 7 loads traded. Buyers became more aggressive in order to take advantage of the lower prices, resulting in quite a bit more activity. Butter declined 2.75 cents closing at $1.85 with 2 loads traded. Grade A nonfat dry milk price increased 0.25 cent ending at $1.2150 with 5 loads traded. Dry whey price increased 1.50 cents closing at 67.50 with one load traded. Class III futures are 7 cents to 56 cents higher with May posting the greatest gain. Class IV futures are 20 cents lower to 2 cents higher. Butter futures are steady to 1.75 cents lower. Dry whey futures are 1.05 cents to 2.65 cents higher.



Friday Morning Dairy Market Update - Futures Move in Line with Cash

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 1 to 3 Higher
Soybean Futures: 6 to 10 Higher
Soybean Meal Futures: $1 to $2 Higher
Wheat Futures: Mixed

MILK:

It has been a brutal week so far as not only has declining cheese prices put pressure on Class III futures, but also the discontinuing of the Farmers to Families Food Box program. The Food Box program news seems to have been absorbed by the market, but the weakness of spot cheese might continue. There is more concern developing over the potential for lower milk prices relative to current or possibly higher feed prices. That will not impact milk production anytime soon as there is still a lot of time for acres to be planted. It will be up to weather to determine prices. Current milk production is strong and continues to improve. The current level of milk futures is relatively good through the rest of the year, which will keep cow numbers high and milk production strong. The March Milk Production report will be released next week Wednesday.

CHEESE:

Cheese prices have moved back down into the sideways range they had been in for quite some time. Whether further weakness will unfold is yet to be seen but anticipated. Buyers have not shown up to purchase blocks for the past three days. They are waiting for lower prices as demand for fresh cheese has been satisfied for the time being.

BUTTER:

Butter demand continues strong from both the domestic market as well as the international market. Price remains competitive on the world market, which has been keeping exports strong. Demand from the food service industry has improved substantially over the past few months. Price may begin to settle into a sideways trading range for a period of time.




Thursday, April 15, 2021

Thursday Closing Dairy Market Update - Milk Futures Post Third Day of Losses

MILK

Milk futures did put in quite a swing Thursday with substantial weakness through the morning. Once spot trading was finished, Class III futures rebounded from the lows still posting losses but trimming those losses. There are two questions that are being asked by many right now. One is just how far cheese prices will weaken before buyers will step back up to the plate more aggressively. The other is about the impact higher grain prices will have on milk production and milk prices as the year progresses. There is no way to predict either one of these right now. Block cheese has only had sellers offer price lower for the past three days without any interest from buyers. Unfilled bids in barrel indicate there may not be much buying interest until 6-8 cents lower. The impact of grain prices may not have much of an impact, as most of the crop has not yet been planted, and it is possible some percentage of feed has already been contracted for a portion of this year. We will not have any idea of production and inventory for several months, so there is much that can happen. Milk production is currently on track to remain higher than last year with increasing milk production per cow.

AVERAGE CLASS III PRICES

3 Month: $18.21
6 Month: $18.39
9 Month: $18.33
12 Month: $18.17

CHEESE

There is uncertainty in the market over what cheese purchases for government food programs might look like now that the Food Box program will be discontinued. The market is more unsettled now than it has been for some time. Dairy Market News reports that barrel cheese supplies have tightened, while blocks are more readily available. However, the current weakness is having an impact on both categories of cheese. Cheese production is strong with many plants running at capacity.

BUTTER

Churning is active, but with ice cream manufacturers increasing production, more cream will move toward that area, reducing the amount of cream that will be available for butter production. This may tighten supply and increase cream price, but this is seasonal and nothing out of the ordinary. There will remain sufficient cream for butter production and sufficient butter to meet demand.

OUTSIDE MARKETS SUMMARY

May corn declined 4 cents, ending at $5.90. May soybeans gained 8.25 cents, closing at $14.1825, with May soybean meal up $3.70 per ton, closing at $401.90. May wheat gained 5.75 cents, closing at $6.5375. April live cattle declined $0.50, ending at $121.60. May crude oil gained $0.31, closing at $63.46 per barrel. The Dow gained 305 points, closing at 34,036, while the NASDAQ gained 181 points, closing at 14,039.




Thursday Midday Dairy Market Summary - Milk Futures Plummet

Block cheese declined 2 cents closing at $1.74 with no loads traded. This is the third day block price fell with sellers unable to uncover any buyer interest. Barrel cheese price declined 2.25 cents closing at $1.6575 with 2 loads traded. Price initially declined to $1.6475 before it came back by the close. There were 3 unfilled bids remaining under the market with those bids posted 6 cent to 8 cents lower. Butter price remained unchanged at $1.8775 with 2 loads traded. Grade A nonfat dry milk price gained 0.75 cent ending at $1.2125 with 8 loads traded. Dry whey price remained unchanged at 66 cents. Class III futures are 32 cents lower to 10 cents higher. The gain is in front-month April as the contract is basically priced by the trade and should flat-line for the next 2 1/2 weeks until the price announcement. Other contacts are quite a bit off their lows that were established early in the day. Class IV futures are 10 cents higher. Butter futures are 1.70 lower to 0.72 cent higher. Dry whey futures are 0.30 cent to 1.75 cents higher.




Fluid Milk and Cream - Western U.S. Report 15

Milk production in California is steady and following seasonal patterns. Rate of increase     seems to be slowing, leading some industry contacts to believe output is hitting peak flush     this week. Class I demand is steady. The spot market is tight, and milk sale outlets are     still limited on finding open drying capacity. 
Class I demand is high in Arizona. Some processors are bringing in milk from out of state. Local cream supply is tightening a little as the weather warms up, but temperatures dropped slightly this week. Cows are comfortable in this respite from the heat, and milk output is ample. 
Milk output in New Mexico is steady, and Class I orders are flat. Holdover numbers are high but dropping as balancing plants maintain active schedules to work through heavy volumes of milk. 
Component levels are high and milk production is up in the Pacific Northwest. However, much of the additional output is being absorbed. Oregon public schools are refilling pipelines as in-person instruction resumes, and bottling operations are playing catch up following the shortage of milk jug resin. 
Cow comfort is optimal in the mountain states of Idaho, Utah, and Colorado. Milk production is increasing. Bottling is steady, and other dairy manufacturing activity is high. Contracted condensed skim is steady; spot sales, and requests for spot sales, are limited. 
Western cream is plentiful. Some is moving out of the region, but limited tanker    availability prevents heavier volumes from traveling east. Cream demand is leveling off;     industry contacts anticipating more pullback after the spring holidays have relayed that     this has not happened yet. Cream multiples for all classes are steady.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2800



USDA Announces Dairy Donation Effort to Start Soon

Implementation of the Dairy Donation Program (DDP) as established in the Consolidated Appropriations Act 2021 to "facilitate the timely donation of dairy products to nonprofit organizations that distribute food to persons in need and prevent and minimize food waste" will be coming soon, USDA said Tuesday.

USDA has provided an advance notice of minimum provisions to be included in the program to encourage the dairy industry to process and donate surplus milk supplies as it moves through the spring surplus milk production season.

While noting the regulations for the effort have not been published in the Federal Register, USDA laid out minimum requirements for the program that was included in law. Those minimum requirements include: 1) a donation and distribution plan must be submitted and approved by USDA; 2) the reimbursement will be at least equivalent to the minimum classified value of milk used to make the donated product on the date of manufacturing; 3) records related to donating and receiving products must be maintained and available for review and/or audit; 4) eligibility is open to dairy farmer cooperatives and processors who "account to" a Federal milk marketing order (FMMO) and donate dairy products to any private or public nonprofit food distribution entity.

The regulations for the dairy effort have also not been sent forward from USDA to the Office of Management and Budget (OMB) for the usual interagency review.




Thursday Morning Dairy Market Update - Further Weakness Expected

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 3 to 6 Higher
Soybean Futures: 3 to 7 Higher
Soybean Meal Futures: $2 to $3 Higher
Wheat Futures: 4 to 6 Higher

MILK:

Milk futures have taken a beating the past two days. Weakness of cash as well as the announcement of the discontinuation of the Farm to Families Food Box program resulted in heavy selling. Cash still seems weak and further downside is expected Thursday. It is unclear what the impact may be from the discontinuation of Food Box program. USDA indicated that the focus will be on other programs the government already has in place such as Supplemental Nutrition Assistance Program (SNAP), Special Supplemental Nutrition Assistance Program for Women, Infants, and Children (WIC) and school nutrition programs. Increasing food distribution through these programs may take up some of the loss from the Food Box program. The impact is unclear at this point. We only know that the Food Box program provided a large boost to dairy prices last year.

CHEESE:

The decline of block cheese over the past two days on only offers might indicate further weakness will be seen again Thursday. Buyers are willing to purchase, but at lower prices. Demand remains strong for cheese, but fresh cheese might have reached the point where the current supply and demand is balanced, and buyers are able to obtain what they need through regular channels.

BUTTER:

Price has been weakening but holding well. Buyers are more willing to purchase at current prices as a hedge against potentially higher prices as the year progresses. Butter can be frozen and held for demand later in the year. Churning may slow a bit down the road as ice cream manufacturers are increasing production to summer demand.




Wednesday, April 14, 2021

Wednesday Closing Dairy Market Update - No Extension of Food Box Program

MILK

Milk plants are receiving a steady supply of milk, which is keeping most running at full capacity. There have been a few reports of some challenges for milk haulers, as either they have a longer wait time before they can unload and/or reduce availability of trucks. Weather has been good for cows, keeping milk production steadily improving. Milk futures declined substantially over the past two days due to the decline of cheese prices. Now, it seems difficult for sellers to find buyers on the spot market. Increased pressure Wednesday likely came from a news report from Reuters that the Biden administration is canceling the Farmers to Families Food Box program. The fifth round of this program was set to expire at the end of this month, and it was unclear if this program would be extended. Secretary of Agriculture Tom Vilsack said they are not going to continue or replace the program. The focus will be on different initiatives that currently exist under government food distribution programs. The Food Box program provided quite a bit of support for the dairy industry over the past year, and the elimination of this program is likely to have a significant impact on dairy demand. However, some of this will be offset by increasing demand from the foodservice industry and some may be offset by the potential to expand already-exiting government food programs.

AVERAGE CLASS III PRICES

3 Month: $18.42
6 Month: $18.54
9 Month: $18.43
12 Month: $18.24

CHEESE

Manufacturing schedules have been increasing at many production facilities, as there is more milk to process and more demand to fill. There are reports that some plants are running behind on filling current orders. It will be interesting to see how the supply/demand balance will fare over the next few months as higher milk production will be available to the market. Block cheese developed a price void under the market with price declining 10 cents over the past two days with no buyers showing any interest in purchasing. This is not a good sign.

BUTTER

Butter has come under some selling pressure, but not nearly as much as cheese. The market is in a different posture and should remain stronger. Price is competitive on the world market, keeping exports strong. The overall butter market is firm as demand is good both domestically and internationally.

OUTSIDE MARKETS SUMMARY

May corn jumped 14 cents, closing at $5.94. May soybeans jumped 20.50 cents, closing at $14.10, with May soybean meal up $3.20 per ton, closing at $398.20. May wheat jumped 18.25 cents, ending at $6.48. April live cattle slipped $0.30, closing at $122.10. May crude oil jumped $2.97, closing at $63.15 per barrel. The Dow increased 54 points, closing at 33,731, while the NASDAQ fell 138 points, ending at 13,858.




Wednesday Midday Dairy Market Summary - Milk Futures Plummet

Block cheese price declined 4.50 cents closing at $1.76 with no loads traded. Blocks have fallen during the past two days on offers with no buyers to be found. Barrel cheese price declined 4 cents closing at $1.68 with 2 loads traded and an offer for a load remaining at the close of trading. This put further pressure on Class III futures, but a large part of the pressure stemmed from the announcement that the Farm to Families Food Box program was being cancelled. According to the Secretary of Agriculture, Tom Vilsack, it is not going to be replaced. This struck a blow to the market. Class III futures are 4 cents to 75 cents lower with June posting the limit loss. Butter price declined 1.75 cents closing at $1.8775 with 6 loads traded. Grade A nonfat dry milk remained unchanged at $1.2050 with no loads traded. Dry whey price remained steady at 66 cents with no loads traded. Class IV futures are 29 cents to 38 cents lower. Butter futures are 0.10 cent to 4.95 cents lower. Dry whey futures are 0.10 cent to 1.40 cents lower.




Wednesday Morning Dairy Market Update - Further Weakness Expected

OPENING CALLS:

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

Outside Market Opening Calls:

Corn Futures: 4 to 7 Higher
Soybean Futures: 7 to 10 Higher
Soybean Meal Futures: $2 to $4 Higher
Wheat Futures: 6 to 9 Higher

MILK:

The substantial decline of milk futures Tuesday put the brakes on the bullishness that had developed in the market. Underlying cash may have run to high, to fast driven by buyers of cheese leapfrogging over each as they needed to increase ownership as quickly as possible. Milk futures jumped in anticipation of continued strength. Underlying weakness quickly impacted milk futures as prices were higher than necessary. Milk production is not slowing down, but rather increasing seasonally as spring flush gets under way. Higher grain prices could have some psychological influence, but it is the income over feed costs that will be the determining factor of milk production. More plants may initiate milk production restrictions for a period of time as they may not be able to handle the increased milk production. Milk futures are expected to trade lower Wednesday as there is a strong possibility of lower cash again.

CHEESE:

Cheese prices may be to high for this time of year. Demand has been good, and the food service pipeline may be filled for the time being. Ongoing demand will then need to be satisfied, keeping prices more in line with production. Price weakness Tuesday may carry over Wednesday as buyers may step back and fill orders on price weakness rather than aggressively chase the market higher as they have been.

BUTTER:

Butter may follow a similar pattern as cheese if the food service pipeline has been rebuilt to a level at which it will now need to be maintained. However, price should remain above cheese due to significantly better international demand than cheese at the present time.




Tuesday, April 13, 2021

Tuesday Closing Dairy Market Update - Largest One-Day Price Decline Since January

MILK

Nearby Class III futures suffered some of the largest one-day losses seen in quite some time. We have seen quite a few substantial price swings, but total losses for a day were quite a bit less. For example, the May contract lost 50 cents. The last time there was a one-day decline of this magnitude for the contract was on Jan. 26. It is unclear if pressure will continue, but many times, weakness of cheese price will result in buyers pulling back as they wait to see how aggressive sellers will be at higher prices. The sharp gain of milk futures might bring hedgers out more aggressively as $19-$20 milk prices are very attractive. Milk production is increasing seasonally, which will keep the market sufficiently supplied. There is concern over grain production and feed prices this year, which will keep grain futures volatile. The large increase of corn futures Tuesday seemed to be tied to current dryness in corn-producing areas of Brazil. The current estimate is for a record-large corn crop in Brazil, but continued dry weather may trim production. Then, there will be the U.S growing season to move through and the impact of weather on production. That has been providing some underlying support to milk prices. The recent large futures increase over the past two weeks was initially triggered by the Prospective Plantings report at the end of March.

AVERAGE CLASS III PRICES

3 Month: $18.88
6 Month: $18.98
9 Month: $18.80
12 Month: $18.53

CHEESE

Buyers were not interested in purchasing block cheese Tuesday with no one standing in line even at lower prices. This would suggest further losses Wednesday as buyers may hold back for a period. Cheese demand is strong, but there is no indication of any tightness of supply. Buyers seemed to have been caught up in the exuberance of rising prices and kept buying cheese until they were satisfied.

BUTTER

Price has shown some recent weakness, but that certainly is no indication of a change in trend. Exports are strong and the foodservice industry active. More cream volumes are moving to ice cream production. However, there is sufficient supply to keep churns active. Buyers will remain active as orders need to be filled.

OUTSIDE MARKETS SUMMARY

May corn gained 11 cents, closing at $5.80. May soybeans gained 7.50 cents, ending at $13.8950, with May soybean meal down $6.90, closing at $395.00 per ton. May wheat gained 1.75 cents, closing at $6.2975. April live cattle declined $0.32, ending at $122.40. May crude oil increased $0.48, closing at $60.18 per barrel. The Dow declined 68 points, closing at 33,677, while the NASDAQ gained 146 points, ending at 13,996.



Dairy Market: Estimate of milk production increases

More milk is on its way. The Agriculture Department raised its estimate of 2021 milk production in the latest World Agricultural Supply and Demand Estimates report issued April 9, based “primarily on increased cow numbers.”

2021 production and marketings were estimated at 227.7 billion and 226.7 billion pounds, respectively, up 400 million pounds on both. If realized, 2021 production would be up 4.5 billion pounds or 2.0% from 2020.

Dairy product price forecasts were raised on improving demand, both domestically and in international markets. Prices of cheese, butter, nonfat dry milk, and whey were raised, boosting both Class III and Class IV milk prices.

Look for a 2021 Class III price average of about $17.10 per hundredweight, up 35 cents from last month’s estimate, and compares to the 2020 average of $18.16 and $16.95 in 2019.

The 2021 Class IV milk price is now estimated to average $15.15, up 70 cents from a month ago, and compares to $13.49 in 2020 and $16.30 in 2019.

Exports strong

The U.S. had a good February. StoneX Dairy reported that U.S. milk equivalent exports were up 16.3% from February 2020 when adjusted, and broker Dave Kurzawski talked about it in the April 12 “Dairy Radio Now” broadcast.

Nonfat dry milk-skim milk powder exports hit 157.8 million pounds, up 36.1% from a year ago, adjusted for the Leap Day, and up 11.2% year to date. Kurzawski said that powder exports to Mexico were up 27%.

Dry whey exports were good, thanks to China likely being the largest buyer of U.S. dry whey right now, up 22% from a year ago, according to Kurzawski.

Cheese exports totaled 66.5 million pounds, up just 1.1% from a year ago but down 3.9% for the two-month period. However, February Cheddar exports were up 23.7%, according to Kurzawski.

Butter exports, which pale in comparison to powder, for example, totaled 7.6 million pounds, but were up a hefty 120.4% from a year ago and up 102.3% year to date.

Kurzawski admitted that we are comparing against some weaker numbers a year ago and that may account for some of the percentage increases this year. However, “the absolute numbers are above our expectations,” he said.

Also, the much talked about shipping logistic problems seemed to have little impact, he said, and February shipments showed strength even as there was one less day for deliveries compared to the 2020 leap year.

The discussion of late has been on rising foodservice demand, he said, and retail demand remains consistent, though he cautioned, “We’re still in this pandemic. We don’t know if we will have another shutdown, retailers know that and want to keep their shelves stocked. We may be exporting more than we think, but they’re all good signs for demand.”

Planting underway

The Agriculture Department’s Crop Progress report shows 4% of the U.S. corn crop was in the ground, as of the week ending April 11. That’s 1% ahead of a year ago as well as the latest five-year average. The data is from 18 states that planted 92% of 2020 corn acreage.

Prices strengthen

Cash 40-pound block Cheddar cheese closed the second Friday of April at $1.83 per pound, up 5.50 cents on the week. It was an impressive 77.50 cents above a year ago when it fell 9.50 cents to $1.0550, as the COVID effect enlarged its hold.

The 500-pound Cheddar barrels jumped 10.75 cents on Friday to close at $1.6925 per pound, up 18 cents on the week and 69.25 cents above a year ago when they hit bottom at $1 per pound. They also closed the gap a little Friday, creeping to a spread of 13.75 cents below the blocks. Trades included 21 loads of block and 13 of barrel for the week.

Monday’s traders took the blocks up 3 cents on 8 trades, to $1.86, highest CME price since Jan. 14, 2021. But, they fell 5.50 cents Tuesday on 2 offers, to $1.8050.

The barrels shot up 7.25 cents Monday on 10 trades, hitting $1.7650, highest since Nov. 12, 2020, but gave up 4.50 cents Tuesday, rolling back to $1.72, on 9 trades. They are now 8.50 cents below the blocks.

Block and barrel cheese producers reported strengthening food service demand last week, according to Dairy Market News. Some barrel producers said that April and May interests kept them from bringing loads to the spot market. Some Cheddar and jack cheese makers reported similar buyer interest.

Cheese production is steady to ticking higher in plants throughout the Midwest, though spot milk availability varies. Some milk prices were above the previous few weeks but some were $5 under Class. A number of contacts suggest growing foodservice demand has kept milk availability a little tighter and “cheese market tones are steady to slightly bullish,” says DMN.

Western demand for retail cheese held steady last week. Foodservice cheese demand is trending upwards with some contacts reporting that buyers are purchasing farther out to hedge against price increases.

More children are returning to full-time in-person schooling so demand for dairy has been increasing. Plenty of milk is available and cheese producers are running at or near capacity while cheese inventories are mixed.

CME butter fell to $1.8150 per pound last Wednesday, but rallied Thursday and Friday and closed at $1.88, up 3.50 cents on the week and 63.25 cents above a year ago. There were 23 trades of butter recorded for the week.

The butter was bid up 2.50 cents Monday to $1.9050, highest CME price since June 10, 2020, but it eased back a penny Tuesday to $1.8950.

Central butter producers tell DMN that the culmination of spring holidays did not move the needle regarding general week-to-week activities.

Cream multiples were similar to previous weeks, though cream was still tighter than it was throughout most of first quarter. Still, butter makers report there are cream multiples in the low/mid 1.20s, but they are becoming more limited. Butter plant managers say food service sales have maintained strength for three to four consecutive weeks but retail sales are on a steady seasonal decline.

With considerable production downticks noted in the February Dairy Products report, butter market tones received an additional shot in the arm, says DMN. Since the onset of the new crop butter rule on March 1, market tones have been in mostly bullish territory.

Meanwhile, cream is ample in the West and some of it is moving to eastern markets. Ice cream, dips, and whips are pulling some fat away from churns but butter production is active, and inventories remain stable.

Foodservice demand continues to flourish; restaurant sales are especially strong. Retailers are refilling cooler shelves after consumers took advantage of spring holiday butter promotions. Healthy export interest also persists, says DMN.

Grade A nonfat dry milk finished Friday at $1.2050 per pound, up 1.50 cents on the week and 30.75 cents above a year ago, with 7 cars finding new homes on the week.

Monday’s powder gained a penny, hitting $1.2150, highest since Feb. 12, 2020, but it gave back a penny Tuesday, slipping to $1.2050.

CME dry whey saw its first price decline since March 10 last week and slipped to a Friday close of 63 cents per pound, 3 cents lower on the week but 28 cents above a year ago. There were two trades on the week at the CME.

The whey was up 2 cents Monday and added a penny Tuesday, climbing back to 66 cents per pound.

A quick footnote. There’s a lot of concern about growing outbreaks of African Swine Fever in China, according to StoneX Dairy, “which has implications for dairy as well as grain markets.”



From: Capital Press

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...