Thursday, April 15, 2021

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.




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