Tuesday Closing Dairy Market Update - April Agricultural Price Report Shows Strong Price Increases

MILK

Milk futures showed some surprising strength even though there was limited price movement of underlying cash. Cull cow prices have increased in some areas and are debatable whether that will increase interest in culling more heavily. Most of the lower-end cows have likely been culled with current herds about where farmers want them to be. Replacements are tight and higher priced. Cows are being added to the herds either internally or by purchasing cows from herds that are being liquidated. This will make growth slower. USDA released the April Agricultural Prices report today which showed an increase in all average prices used in the calculation of income over feed. The average corn price for April was $7.08, an increase of $0.52 from March. This compares to $5.31 for April 2021. The average price for premium/supreme hay was $271.00 per ton, up $2.00 from March and up $60.00 per ton from a year ago. The All-milk price was $27.10 per cwt, an increase of $1.20 from March and $8.80 per cwt more than a year ago. As of the time of this writing, the Farm Service Agency has not yet updated the monthly average soybean meal price. I am not able to provide the income over feed price until this is updated. The May Federal Order class prices will be announced tomorrow and will show a record high Class III milk prices. .

AVERAGE CLASS III PRICES

3 Month:	$24.56
6 Month:	$24.27
9 Month:	$23.60
12 Month:	$22.90

CHEESE

Block cheese price moved to the lowest level it has been since March 30. This certainly does not mean that the trend has turned lower, but it indicates there is sufficient cheese available for demand. Buyers are not concerned over supply and are not as aggressive during spot trading purchasing the weakness. Barrels have followed a similar pattern and are maintaining a premium over blocks.

BUTTER

Price seems content to hang around this level for the time being. Churning is relatively active as cream supply is not as abundant as it had been a month ago yet sufficient for demand. There has been good interest on the daily spot market as a good volume of loads have been trading. Supply and demand seem to be balanced.

OUTSIDE MARKETS SUMMARY

July corn fell 23.75 cents closing at $7.5350. July soybeans fell 49 cents closing at $16.8325 with July soybean meal down $17.50 closing at $414.80 per ton. July wheat fell 70 cents closing at $10.8750. June live cattle declined $1.65 closing at $130.52. July crude oil declined $0.40 per barrel ending at $114.67. The DOW declined 223 points ending at 32,990 while the NASDAQ declined 50 points closing at 12,081.

Tuesday Midday Dairy Market Update - Milk Futures Higher Despite Cheese Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	26 Lower
SOYBEANS:	48 Lower
SOYBEAN MEAL:	$18.10 Lower
LIVE CATTLE:	$1.22 Lower
DOW JONES:	68 Points Lower
NASDAQ:	4 Points Higher
CRUDE OIL:	$2.47 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 3.25 cents, closing at $2.2475 with four loads traded. This adds to the loss of last week, resulting in a decline of 13.25 cents with Class III futures increasing over the past week. Barrel cheese price remained unchanged after posting an increase of 0.25 cent at one point during spot trading. There were nine loads traded. Dry whey price remained unchanged at 52.25 cents with no loads traded. Class III futures are 1 to 31 cents higher with February showing the greatest gain. Butter price increased 0.25 cent, closing at $2.88 with nine loads traded. Price was 2.50 cents lower at one point before buyers became more aggressive, moving price higher. Grade A nonfat dry milk price increased 0.50 cent, closing at $1.8650 with one load traded. Class IV futures are 1 to 16 cents higher. Butter futures are 0.62 to 3.07 higher, Dry whey futures are 0.20 cent lower to 1.00 cents higher. USDA will release the April Agricultural Prices report Tuesday afternoon, providing prices used in the calculation of income over feed. A payment under the Dairy Margin Coverage program is not expected for the month.

Milk production continues to lag from year ago

U.S. milk production continued to lag that of a year ago in April, the sixth month in a row to do so, as cow numbers and output per cow paused. The Agriculture Department’s latest preliminary data shows April output at 19.15 billion pounds, down 1.0% from Apr. 2021, and follows a revised 0.4% drop in March. April output in the top 24 producing states totaled 18.3 billion pounds, down 0.9%. Only five of the top 24 producing states showed an increase in milk output.

Revisions raised the original 50-State March estimate by 23 million pounds to 19.7 billion, 0.4% below a year ago, instead of the 0.5% originally reported.

Farmers added 13,000 cows to the milking string in February, and 22,000 in March, following a 7,000 head revision, hitting 9.4 million head. The April count was unchanged from March, but was 98,000 below a year ago.

April output per cow averaged 2,037 pounds, unchanged from April 2021.

California output totaled 3.6 billion pounds, down 21 million or 0.6% from a year ago, despite 2,000 additional cows in the string but output per cow was down 15 pounds. Wisconsin, at 2.6 billion pounds, was down 3 million or 0.1%. Cow numbers were down 1,000. Output per cow was unchanged from a year ago.

Idaho was again unchanged across the board. Michigan was down 3.4% on 17,000 fewer cows, though output per cow was up 10 pounds. Minnesota was down 1.4% on a 9,000 cow loss, while output per cow was up 10 pounds. New Mexico was down 12.9% on 41,000 fewer cows and a 15 pound loss per cow.

New York was off 0.8% on 6,000 fewer cows. Output per cow was up 5 pounds. Oregon was up 2.7% on a 20 pound gain per cow and 2,000 more cows. Pennsylvania was down 2.2%, on 8,000 fewer cows and a 10 pound drop per cow. South Dakota was up 16.7%, thanks to 25,000 more cows and a 5 pound gain per cow.

Texas remained the nation’s Number 3 producer, putting 4.7% more milk in the tank than a year ago, thanks to 23,000 more cows and a 20 pound gain per cow. Vermont was off 0.9% on a 5 pound drop per cow and 1,000 fewer cows. Washington State was down 5.4% on 12,000 fewer cows and a 20 pound drop per cow.

High milk prices are incentivizing dairy farmers to keep cows in the milking string. Dairy culling dropped in April, according to the USDA’s latest Livestock Slaughter report. An estimated 237,800 head were sent to slaughter under federal inspection, down 59,400 or 20% from March, and 19,700 head or 7.7% below Apr. 2021. Culling in the first four months of 2022 totaled 1.06 million head, down 39,900 or 3.6% from the same period a year ago.

In the week ending May 7, 56,400 dairy cows were sent to slaughter, up 4,800 head from the previous week, but 400 or 0.7% below a year ago.

Tuesday’s Global Dairy Trade auction saw its fifth consecutive decline. The weighted average was down 2.9%, following the 8.5% drop on May 3. Traders brought 53.5 million pounds to the market, down from 55.5 million on May 3, and the average metric ton price was at $4,432 U.S., up from $4,419.

Event 308 was led by whole milk powder dropping 4.9%, following the 6.5% decline on May 3. Skim milk powder was down just 0.6%, after dropping 6.5%. GDT butter was down 1%, after leading the losses last time with a 12.5% plunge. Anhydrous milkfat inched up 0.6% after a 12.1% plunge last time. Cheddar rounded out the losses, down 0.1%, after dropping 8.6% las time.

StoneX says the GDT 80% fat butter price equates to $2.5446 per pound U.S., down 2.5 cents after dropping 36.9 cents in the last event, and compares to CME butter which closed Friday at $2.85. GDT Cheddar, at $2.5559, was down 0.8 cents, after losing 24.2 cents last time, and compares to Friday’s CME block Cheddar at $2.38. GDT skim milk powder averaged $1.8669 per pound, down from $1.8731. Whole milk powder averaged $1.7845 per pound, up from $1.7764. CME Grade A nonfat dry milk closed Friday at $1.80 per pound.
StoneX’s Dustin Winston says volume purchased by the North Asia region, which includes China, was again lower from the last event and last year. Every other region experienced an increase from last year’s volume with only Africa and North America declining from the last event.  

HighGround Dairy points out that buyers were taking advantage of China’s pullback while they can as China focuses on its Zero-COVID policy. To no one’s surprise, China’s April imports were down on just about every product except three, one of them ironically being infant formula. I’ll report details next week.

In other trade news; the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) called on the U.S. government this week to levy retaliatory tariffs on Canada after Ottawa made clear that it refuses to meet its signed treaty obligations under the U.S.-Mexico-Canada Agreement (USMCA) concerning dairy market access.

A USMCA dispute resolution panel initiated by the U.S. in January found that Canada’s dairy tariff-rate quotas (TRQs) system violated terms of USMCA. Canada issued a new proposal in March which included “inconsequential changes,” says NMPF, and “This week’s announcement shows no indication that Canada intends to comply with its USMCA commitments on dairy TRQs.

“Canada made a clear choice to thumb its nose at both the U.S. government and its international treaty obligations,” said NMPF’s Jim Mulhern.

Michael Dykes, president of the International Dairy Foods Association, stated; “Canada’s publication clearly shows they are ignoring their trade commitments agreed to in the USMCA and refusing to administer their dairy TRQs in a manner compliant with the agreement.”
Back home, the June Federal order Class I base milk price set another record high at $25.87 per hundredweight, up 42 cents from May, $7.58 above a year ago, and equates to $2.22 per gallon, up from $1.57 a year ago. The six month Class I average is at $23.32, up from $16.13 a year ago and $15.84 in 2020.

In other milk price news, dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Missouri, warns that, after plugging the latest WASDE data into the DMC formula, “2023 will be a tighter margin year for dairy producers. The first look at 2023 shows the margin over feed costs at $9.33 versus $12.58 for 2022. The 2022 $12.58 from this month’s report is down from April’s $12.85 due to lower milk prices and higher feed costs,” says Brooks.

Production costs are hitting “remarkable levels,” according to the May 13 Dairy and Food Market Analyst, “most notably in California where hay prices have risen to around $440 per ton. For a dairy purchasing 100% spot feed, we estimate breakeven milk prices are around $24.50 per hundredweight,” the Analyst stated.

The latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging, says “With the exception of spot second quarter, dairy margins weakened further over the first half of May as a combination of lower milk prices and steady to slightly higher feed costs weighed on forward profitability. Class III prices have been pressured by falling whey prices as export demand slows.”  

The MW detailed March export data, which I previously reported, and pointed to dairy exports to China being down 12% from last year and 9.5% lower for the first quarter. It stated; “A combination of China’s zero-tolerance Covid-19 policy with aggressive lockdowns and logistical issues have negatively impacted demand.” “Slumping profitability in China’s domestic hog sector during first quarter significantly pressured whey demand,” the MW stated, and “Each 6-cent decline in the price of whey equates to 30 cents for Class III milk, so the recent drop in whey prices equals almost $2.00 per cwt. loss in value.”

U.S. feed prices remain elevated, according to the MW, and planting is behind year ago levels, with “Significant delays in both Minnesota and North Dakota.”

The USDA’s latest Crop Progress report showed some progress in the fields as 49% of the U.S. corn crop was in the ground, as of the week ending May 15.

That’s up from just 22% the previous week, but still 29% behind a year ago and 18% behind the most recent five year average. The report shows 14% of the corn emerged, down from 38% a year ago, and 18% behind the five year average.

Soybean plantings are at 30%, up from 12% the previous week, but 28% behind a year ago, and 9% behind the five year average. The report adds that 9% have emerged, 10% behind a year ago, and 3% behind the five year average.

Cotton is 37% planted, 1% ahead of a year ago, and even with five year average.

CME block Cheddar closed Friday at $2.38 per pound, up 7.25 cents on the week, and 81 cents above a year ago when they dropped 15.50 cents to $1.57.

The barrels climbed to $2.45 per pound Tuesday, highest since Nov. 5, 2020, but closed Friday at $2.3475, down 4.75 cents on the week, 74 cents above a year ago. There were 6 sales of block on the week at the CME and 21 of barrel.

Concern over milk supply appears to be outweighing concern about any slowdown in demand. The National Oceanic and Atmospheric Administration’s latest 90-day forecast of above normal temperatures is not helping.

Storms slammed the Northern Plains with high winds and heavy rain the week of May 9 and the Daily Dairy Report’s Sarina Sharp wrote in the Milk Producers Council newsletter that three cheese plants in South Dakota and Iowa were shuttered by power outages. She said the plants can process more than 12 million pounds of milk per day. Some producers dumped milk and the plants will have to discard the cheese they were in the process of making before the shut down so “There may be a little less cheese for sale in Chicago over the next 30 days, which could briefly lift the spot Cheddar market,” according to Sharp..

Meanwhile, cheese demand is mixed according to Midwestern cheesemakers who told Dairy Market News that “The previous weeks’ block market dips may have affected customers’ approaches. This week’s markets buoyed, so some buyers may look to get ahead of potentially bullish markets in the next weeks.” Cheddar makers are finding milk at levels similar to previous weeks and production is active. Mid-week prices ranged from $2.50 under to 75 cents over Class III, according to DMN, but “May has been a very active month in regards to spot milk making its way into cheese vats.” Cheese availability is balanced to tight, says DMN, “But as notable amounts of milk clear to the vats, with Class I demand ebbing, inventories could continue to increase.”

Domestic demand for cheese is steady to higher in the West. Retail sales were unchanged from the previous week but food service purchasing was trending higher. International demand is strong, though port congestion continues to cause delays. A shortage of truck drivers and available shipping containers also remains troublesome.

Cheese inventories are available and plants are running busy schedules, as milk is available but some continue to run below capacity due to labor shortages and delayed deliveries of production supplies, says DMN.

Butter closed at $2.85 per pound, up 14.50 cents on the week, highest since Feb. 5, and 98 cents above a year ago, with 37 cars sold, most since mid-December 2021.

Butter plant managers say spot cream availability has begun to shift from pricey to out of reach for churning, particularly from sources within the region. Butter demand has quieted down the past few weeks. Butter production remains active as plants focus on inventory for the late summer upticks and fall demand season.

Cream inventories are available in the West, with purchasers from other regions looking to buy cream but ice cream makers are running busy schedules and pulling cream. Churns are active, though some plants are limited by labor shortages. Retail butter demand is steady to lower, while food service is steady.

Grade A nonfat dry milk saw its Friday finish at $1.80 per pound, 7 cents higher on the week, highest since Apr. 18, and 50.25 cents above a year ago on 6 sales

StoneX cited a Reuters story entitled “Mexico to Suspend Import Duties on Food Staples to Tackle In?ation.” Dairy is included, warned StoneX. “At ?rst blush this looks to invite competition as Mexico doesn’t have a tarif on U.S. product thanks to NAFTA/USMCA, but they did have tarifs on product from New Zealand and the EU. It looks like the tarif on powdered and liquid milk are going to zero for all countries for the next year,” according to StoneX.

Dry whey fell to 48.50 cents per pound Monday, lowest since Aug. 4, 2021, but closed Friday at 50.75 cents, down 2.50 cents on the week and 13.75 cents below a year ago, on 21 sales, highest total since the week of Jun. 22, 2020.

Demand for dry whey has been lower, largely led by China hitting the brakes, says StoneX, “But production is also likely higher and manufacturers remain looking for a home for this excess dry whey.”

 

Tuesday Morning Dairy Market Update - Limited Trading Activity Expected

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 6 Higher
Soybean Futures:	5 to 8 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	18 to 22 Higher

MILK:

It may be slow going Tuesday morning after an extended weekend. Traders may hesitate to become too involved in trading prior to seeing the results of spot trading. There is an overall optimism over milk prices as the year progresses. However, Class III futures hold a discount to cash as the year progresses while Class IV shows a premium through the third quarter. All schools will be closed for the summer by the end of this week with milk already having been diverted to manufacturing as some schools have already been closed depending on the area. Forage harvesting has been and will be in full swing this week with forage quality expected to be very good. This will certainly help on the feed bill. Milk production continues to improve in many areas while other areas have seen a leveling of production growth. USDA will release the April Agricultural Prices report Tuesday afternoon. This will have the average prices used in the calculation of income over feed for the Dairy Margin Coverage program. No payments under the program are expected.

CHEESE:

Prices declined last week and may struggle again this week. Demand has been good but there is indication of a slight slowing taking place as inflation may be having a greater impact. Cheese production is increasing with more milk coming from bottling. This should satisfy demand and add to inventory.

BUTTER:

Price may retrace now that buyers have been satisfied and price is high. The weakness from the end of the week is expected to carry over this week. More cream was available over the weekend for churning with more potentially available as long as ice cream manufacturers have difficulty sourcing some of their key ingredients for production. This may keep churns more active than anticipated for this time of year.

Friday Closing Dairy Market Update - Fluid Milk Sales Decline

MILK

It was interesting to see June Class III milk slightly higher than a week ago. July was slightly lower while August and later contracts were higher for the week. This does not make sense when looking at the movement of cash this week. However, the psychology of the market is bullish with traders anticipating stronger prices as time moves on. This attitude is based on reduced milk production and steady to stronger demand both domestically and internationally. The other side of the coin is whether inflation and a possible recession will have an impact on demand. Lower production would then still leave sufficient supply for demand. Fluid milk sales in March decreased 3.4%. Conventional whole milk sales increased 1.6%; flavored whole milk sales increased 0.8%; reduced fat milk fell 9.9%; Lower fat milk fell 8.8%; fat-free slim milk declined 8.5%; flavored fat-reduced milk sales jumped 17.2%; buttermilk declined 34.1% with other fluid milk product sales down 9.7%. Organic whole milk sales declined 1.2%; organic flavored whole milk increased 2.6%; organic reduced fat milk sales declined 2.2%; organic low fat milk sales fell 13.6%; organic fat-free skim declined 7.9% and organic flavored fat-reduced milk sales fell 29.3%.

AVERAGE CLASS III PRICES

3 Month:	$24.77
6 Month:	$24.46
9 Month:	$23.90
12 Month:	$23.17

CHEESE

For the week, blocks declined 10 cents with only 3 loads traded. Barrels declined 5.50 cents with 11 loads traded. Dry whey increased 2.50 cents with 10 loads traded. Cheese buyers did not see the need to aggressively purchase product. They have some already purchased ahead and have been a little concerned over the impact a recession might have on demand. Global prices have stalled over the past two months which may impact exports.

BUTTER

For the week, butter gained 2.75 cents with 33 loads traded. Grade A nonfat dry milk price increased 6 cents with 26 loads traded. Price almost reached back to the high of earlier this year but declined over the past two days. Price resistance was reached with buyers stepping back again. Lower output may keep price supported for the time being. Markets will be closed on Monday for Memorial Day.

OUTSIDE MARKETS SUMMARY

July corn jumped 12.25 cents closing at $7.7725. July soybeans gained 5.75 cents closing at $17.3225 with July soybean meal up $4.10 closing at $432.30 per ton. July wheat gained 14.25 cents closing at $11.5750. June live cattle declined $0.22 ending at $132.17. July crude oil gained $0.98 closing at $115.07 per barrel. The DOW jumped 576 points closing at 33,213 while the NASDAQ jumped 390 points closing at 12,131.

Friday Midday Dairy Market Summary - Butter Shows Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	13 Higher
SOYBEANS:	6 Higher
SOYBEAN MEAL:	$4.20 Higher
LIVE CATTLE:	$0.30 Lower
DOW JONES:	355 Points Higher
NASDAQ:	306 Points Higher
CRUDE OIL:	$0.61 Higher

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged with an unfilled bid at the closing price. Barrels increased a penny to $2,2550 with an unfilled bid setting the closing price. Dry whey increased 0.50 cent, closing at 52.25 cents with one load traded. Butter price declined 1.25 cents, closing at $2.8775 with four loads traded. Price initially fell 4 cents before buyers stepped back in more aggressively. This moved price back to unchanged just before the end of spot trading with a quick retracement lower right in the last few seconds. Grade A nonfat dry milk price increased 0.50 cent, closing at $1.86 with seven loads traded. Class III futures are one cent lower to 27 cents higher. The loss was in front-month May as it trades within a tight range. The last trading day for the May contract will be on Tuesday. Class IV futures are 9 cents lower to 16 cents higher. Butter futures are 0.02 to 0.37 cent higher. Dry whey futures are 0.35 to 0.67 cent higher.

Diary Industry Supports USDA Container Program for Ag Exports

The National Milk Producers Federation and the U.S. Dairy Export Council welcome the USDA plan to offer additional support to agricultural exporters through the Commodity Container Assistance Program. The initiative will provide funding from the Farm Service Agency to exporters to reduce the costs of sourcing containers at the Oakland and Seattle-Tacoma “pop-up” port locations. “We’ve been asking for relief from these ocean shipping challenges for two years,” says NMPF president and CEO Jim Mulhern. “While we continue to seek solutions from carriers and Congress, these steps demonstrate USDA understands the challenges. This should offer immediate relief for exporters.” The pop-up sites are intended to offer off-terminal locations for empty container storage, increase access for agricultural shippers to use them, and free up port terminal space for freight operations. The FSA payments will help cover the costs of moving the containers between ports and pop-up yards, as well as storage at the pop-up sites.

Friday Morning Dairy Market Update - Choppy Trading Activity Expected

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	2 to 5 Lower
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	4 to 8 Higher

MILK:

Class III futures have declined so far this week, but not as much as would have been anticipated given the weakness of cheese prices. Some of the decline was already factored in with some support stemming from ongoing optimism. Class IV futures have strengthened during the week with ongoing support from butter and nonfat dry milk. Milk production is either holding steady or continuing to improve, depending on the location in the country. Reports are that components are good and in some cases above year-ago levels. The school year is winding down with nearly all schools being closed by the end of next week. Manufacturing is receiving more milk. Markets will be closed on Monday for the Memorial Day holiday.

CHEESE:

The action of spot cheese trading Thursday does not suggest a rebound in prices Friday. Spot prices could be steady or mixed as prices may be low enough to establish a level at which buyers will be interested in purchasing more aggressively. More milk available for manufacturing will put more cheese on the market. However, increased production will not overwhelm supply.

BUTTER:

The slight weakness of spot butter Thursday could open the door for further decline as buyers may step back a bit as the buying frenzy may have run its course for now. Food service demand is holding well while there is some weakness seen in retail demand. Butter futures hold a discount to cash.

Thursday Closing Dairy Market Update - More Milk Moves to Manufacturing

MILK

Class III milk futures moved through the morning rather cautious, but garnered some support as spot trading drew near. However, that support faded as underlying cheese prices declined. The weakness was offset to some extent by the increase of dry whey. Class IV futures were mixed into the close due to the weakness of butter after a strong trend higher. Traders will take a wait-and-see attitude through the overnight and tomorrow until spot trading resumes. Front month May milk futures adjusted higher today after the numbers on the AMS weekly dairy products report were released yesterday. Prices will flat line tomorrow and Tuesday until the May contract ceases trading. There will be no trading on Monday due to Memorial Day. The extended weekend is not expected to impact the business that will take place tomorrow. There is quite a bit more fluid milk moving to manufacturing which should bolster the supply of cheese. Spot milk is running $1.50 to $2.50 below class in the Central region of the country. Some areas of the West report spot milk prices $3.00 to as much as $6.00 under class as labor shortages abound.

AVERAGE CLASS III PRICES

3 Month:	$24.60
6 Month:	$24.27
9 Month:	$23.72
12 Month:	$23.02

CHEESE

Cheese prices have declined over the past three days, and one has to wonder whether that trend will continue tomorrow. Based on the trading action today, traders will be cautious due to blocks not being able to hold the highs during spot trading and barrels bouncing back from their lows. Food service demand for cheese has been rather stabile while retail demand is reported to be softer. Dairy Market News reported that buyers from Asia are purchasing loads of cheese for shipment in early 2023. That is really thinking ahead.

BUTTER

Cream is more available at present time as Memorial Day approaches. Some plants are scheduling maintenance and will be diverting some cream during downtimes. The slight weakness of spot butter today might indicate the upward momentum of price might have run its course for the time being. Butter futures did not move in step with the increase spot price and hold a discount to the current cash price.

OUTSIDE MARKETS SUMMARY

July corn declined 7.25 cents closing at $7.65. July soybeans jumped 45.50 cents closing at $17.2650 with July soybean meal up $4.00 per ton closing at $428.20. July wheat declined 5 cents closing at $11.4325. June live cattle increased $0.10 ending at $132.40. July crude oil jumped $3.76 closing at $114.09 per barrel. The DOW jumped 517 points closing at 32,637 while the NASDAQ gained 306 points closing at 11,741.

Thursday Midday Dairy Market Update - Butter Shows Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	49 Higher
SOYBEAN MEAL:	$5.70 Higher
LIVE CATTLE:	$0.17 Higher
DOW JONES:	601 Points Higher
NASDAQ:	332 Points Higher
CRUDE OIL:	$3.91 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 2 cents, closing at $2.28 with 2 loads traded. Price traded up to $2.2850 before an offer pushed price lower for the final trade of the spot market. There were no bids or offers remaining at the close. Barrel cheese price declined 1.50 cents with six loads traded and an offer remaining at the close. Dry whey price increased a penny closing at 51 cents with one load traded. Butter price cracked today with a slight decline of 0.50 cent after eight consecutive days of gains. There were eight loads traded with an unfilled bid remaining at the close. It is possible price may have reached resistance and may retrace, but it is too early to tell. Grade A nonfat dry milk price increased 1.25 cents closing at $1.8550 with four loads traded. This moves price to the highest level it has been since March 24. Class III futures are 9 cents lower to 13 cents higher. Class IV futures are 1-19 cents higher. Butter futures are 1 cent lower to 1.57 cents higher. Dry whey futures are 1.75-2.40 cents higher.

Fluid Milk and Cream - Western U.S. Report 21

Farm level milk production is steady to lower, as contacts report that output is declining     from seasonal peaks. Stakeholders say that milk production is down compared to this time     last year. Spot loads of milk are available, and some handlers say they are sending loads to     nearby states with tighter supplies. Demand for Class I has continued to decline as summer     holidays are approaching for educational institutions in the state. Class II and III demands     are unchanged. 

Arizona milk production is steady to lower, as warmer weather is contributing to a reduction in cow comfort. Processors in the state say that they have reduced purchasing from nearby states as they prepare for the upcoming holiday weekend. Demand is steady to lower across all Classes. 

Milk production has continued to decline in New Mexico this week. Milk inventories remain available for the state. Stakeholders say that sales of milk to nearby states have slowed as some processing facilities prepare for downtime during the upcoming holiday weekend. Across all Classes demand has softened this week. 

Pacific Northwest milk production is unchanged this week. Supplies of milk are readily available for production in the area. Stakeholders say that processing facilities have long wait times for unloading due to labor shortages and the large quantities of milk. Spot sellers say that loads of milk are primarily moving locally as they are unable to find truck drivers and tankers available to move loads further away. Across all Classes, demand is steady. 

In the mountain states of Idaho, Utah and Colorado, farm level milk production is steady to higher. Loads of milk are available on the spot market, with sellers reporting prices from $6 to $3 under class. Some purchasers in other regions are sourcing loads of milk from the area.     Handlers say that limited tanker availability is reducing their ability to move increased     volumes of milk further distances. Demand is unchanged across all Classes. 

Spot sales of condensed skim have declined this week, as some production facilities are preparing for downtime during the upcoming holiday weekend. Stakeholders say that contract sales of condensed skim are unchanged. The upcoming holiday is contributing to lighter cream demand and increased availability this week. Stakeholders say that cream demand following the     holiday weekend is strong as ice cream and butter makers are working to build inventories.     Western cream multiples are unchanged at the bottom, while the top moved upward.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0000 - 1.3100

U.S. Dairy Supports U.S. Pursuit of Full Canadian USMCA Compliance

The National Milk Producers Federation and U.S. Dairy Export Council Wednesday applauded the Biden administration for its initiation of a second U.S.-Mexico-Canada Agreement dispute panel. The dispute panel focuses on Canada’s ongoing refusal to meet its USMCA dairy trade obligations. The first USMCA dispute panel launched by the U.S. government determined in January that Canada violated the agreement's dairy tariff-rate quota provisions. On May 16, Canada published its final revised USMCA dairy TRQ approach, which failed to fix its USMCA-violating practices. To address the additional problems Canada’s revised approach has raised and to defend the integrity of the agreement, the U.S. Trade Representative’s Office has brought an additional case. NMPF President and CEO Jim Mulhern says, “Canada continues to flout these trade commitments and plays games rather than meet its signed treaty commitments.” The dairy groups say Canada’s updated TRQ system continues to block key stakeholders in the Canadian food and agriculture sector from accessing the TRQs.

Thursday Morning Dairy Market Update - Class IV Futures at New Highs

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	10 to 13 Lower
Soybean Futures:	2 to 4 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	25 to 30 Lower

MILK:

Class III milk futures were able to bounce Wednesday despite the weakness of cheese during spot trading. This leaves the market in a sideways pattern. Front-month May will adjust to better-than-expected prices on the weekly AMS product price report. No trading in the contract took place overnight but the current bid is 7 cents higher than the close Wednesday. Class IV futures have regained the losses suffered in the second half of April and have made new contract highs, supported by the strength of butter and nonfat dry milk. Trading activity is expected to be light as there is uncertainty surrounding the current weakness of cheese and whether butter may have run its course.

CHEESE:

The action of cheese during spot trading Wednesday does not give the indication of a market that has found support. Buyers may hold back again Thursday as they have concern over demand over the next few months. Demand has been steady but there have been some reports of a slight slowing. This may be variety specific but a slowing, nevertheless.

BUTTER:

Butter has had an impressive price increase over the past two weeks. Buyers seem to have been pulled in from the sidelines as price has steadily increased. This tends to make them more aggressive as they want to purchase what they can before price rises further. Once buyers are satisfied, price tends to settle back. Price may be near that level.

Wednesday Closing Dairy Market Update - Supply Chain Disruptions Continue

MILK

Class I orders have slowed as bottlers reduce the amount bottled for school accounts. This leaves sufficient milk available for processing needs. There is little concern over tight milk supply at present as milk production continues to increase seasonally. Traders anticipate overall strong demand will continue with milk consumption increasing at the retail level as more milk will be consumed at home rather than at school. However, higher prices at the retail level may reduce some of the purchasing that may have otherwise taken place. I know this may sound a bit bearish, but it may be a reality as some purchases and consumption may move to other choices due to prices. However, this may be negligible in the overall market. Milk remains a staple for consumption and good health. Class III milk futures defied underlying cash today closing strongly higher. Class IV futures closed higher based on the strength of underlying cash.

AVERAGE CLASS III PRICES

3 Month:	$24.59
6 Month:	$24.24
9 Month:	$23.68
12 Month:	$22.99

CHEESE

Manufacturing plants continue to deal with labor shortages as well as supply chain issues. Plants are running at capacity relative to the labor force and not at total capacity. It is probably a good thing that milk production is not exceeding year-ago levels or there would be much more milk on the spot market. Retail sales are reported to be firm with some areas indicating a slight slowing of demand. Buyers have stepped back from the market over the past two days as they already have some purchased ahead and see no need to become overly aggressive.

BUTTER

Price continues to work higher seemingly with the goal of reaching back to the high of the year established in January at $2.9350. Buyers have been aggressive over the past two weeks filling orders or increasing ownership for later demand as they see production slowing seasonally with concern over inventory not gaining on last year. However, churns may have more cream available than usual this summer as some ice cream manufacturers have reduced cream usage due to problems getting other ingredients for ice cream production.

OUTSIDE MARKETS SUMMARY

July corn closed 0.50 cents higher closing at $7.7225. July soybeans declined 12 cents ending at $16.81 with July soybean meal down $2.90 per ton ending at $424.20. July wheat declined 6.50 cents closing at $11.4825. June live cattle declined $0.42 ending at $132.30. July crude oil gained $0.56 closing at $110.33 per barrel. The DOW closed 192 points higher at 32,120 while the NASDAQ gained 170 points closing at 11,435.

Wednesday Midday Dairy Market Summary - Cheese Weakness Continues

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	18 Lower
SOYBEAN MEAL:	$4.60 Lower
LIVE CATTLE:	$0.35 Higher
DOW JONES:	71 Points Lower
NASDAQ:	48 Points Higher
CRUDE OIL:	$0.17 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 4 cents, closing at $2.30 with one load traded. Barrel cheese price declined 3 cents, closing at $2.30 with one load traded. There were no unfilled bids remaining at the close with buyers going home satisfied. Dry whey price increased 0.50 cents, closing at 50 cents with three loads traded. Even with lower cheese prices, Class III futures are steady to 20 cents higher. Butter price increased a penny, closing at $2.8950 with 10 loads traded. There was an ebb and flow throughout the trading period as activity took the price both higher and lower. Price did trade up to $2.90 but could not hold that level. Grade A nonfat dry milk price gained 2.25 cents, closing at $1.8425 with eight loads traded. Class IV futures are 10 to 28 cents higher. Butter futures are 0.15 to 2.25 higher. Dry whey futures are unchanged to 0.50 cent higher.

Dairy Sustainability Alliance Meeting Addresses Marketplace Opportunities

Navigating social, environmental and economic issues facing dairy businesses in a world shifting from COVID-19 restrictions took center stage at the 2022 Dairy Sustainability Alliance Spring Meeting. The Dairy Sustainability Alliance is a multi-stakeholder initiative of the checkoff-founded Innovation Center for U.S. Dairy and includes more than 165 companies and organizations. More than 270 representatives of the dairy value chain organizations, including 25 dairy farmers, attended in person or virtually, last week. Many of the organizations have adopted the U.S. Dairy Stewardship Commitment signaling support for farmers, cooperatives and processors who voluntarily advance sustainability leadership and transparently report progress. Dairy Management Inc. and Innovation Center CEO Barbara O’Brien says, “never has it been more urgent as we work to meet the growing demands and expectations of both customers and consumers around personal wellness, environmental sustainability and food security.” The event showcased many topics in dairy sustainability, highlighting the work of the alliance.

Wednesday Morning Dairy Market Update - Cheese May See Further Weakness

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:	7 to 10 Lower
Soybean Futures:	5 to 8 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	25 to 30 Lower

MILK:

Class III futures were under pressure Tuesday. Initial pressure stemmed from the Cold Storage report with further pressure also coming from the weakness of cheese prices. This leaves futures trading within the range it has been in for the past few months. Class III futures may continue to move within that range as the market balances supply with demand. There is some indication demand for dairy is slowing slightly. This may not result in milk prices falling substantially lower but may limit the upside potential for prices. The May Class III price will set a record and will be announced a week from now. Class IV futures have rebounded back to the highs on the strength of butter and nonfat dry milk. Futures have the potential to move higher.

CHEESE:

The decline of cheese prices was a bit disappointing to traders. Buyers may step back for a brief period as they see sellers being more aggressive. There is some indication that demand may be slowing, resulting in buyers being more cautious with their forward purchases for later this year. More milk is moving to manufacturing, which will provide sufficient supply for demand.

BUTTER:

Price continues to find support, moving closer to the high of the year. Buyers seem to be more aggressive as churning slows. Cream is available, but not as abundant as it had been due to greater demand for cream cheese and ice cream production. Inventory continues to remain below a year ago and is not expected to catch up anytime soon. This should provide support.

Tuesday Closing Dairy Market Update - Class III Futures Decline

MILK

Class III futures lost ground Tuesday, moving contracts back into the middle of the trading range that has unfolded since the beginning of March. Milk prices remaining at current levels throughout spring flush would be positive. Buyers continue to increase ownership as a hedge against the potential for a tighter milk supply later in the year. This may keep the market rangebound as higher prices will reduce buying interest, while lower prices will increase buying interest. South Dairy Trade exports and prices were released Tuesday. These are dairy products moved through ports in Argentina and Uruguay during a two-week period. Argentina moved 7,047.87 tons to 28 destinations at an average price of $4,268.39 per ton. Whole milk powder decreased 0.3% to $4,268.41 per ton or $1.93 per pound. Skim milk powder increased 3.7% to $3,747.49 per ton or $1.70 per pound. Semi-hard cheese increased 2.8% to $4,202.68 per ton or $1.91 per pound. Hard cheese decreased 3.5% to $5,970.81 per ton or $2.71 per pound. Butter decreased 5.2% to $5,017.26 per ton or $2.28 per pound. Buttermilk decreased 4.6% to $2,927.55 per ton or $1.33 per pound. Uruguay moved 8,672.25 tons of dairy products to 28 destinations at an average price of $4,253.40 per ton. Whole milk powder increased 4.4% to $4,197.87 per ton or $1.91 per pound. Skim milk powder decreased 0.1% to $3,693.91 per ton or $1.68 per pound. Semi-hard cheese decreased 0.4% to $4060.19 per ton or $1.84 per pound. Hard cheese increased 2.9% to $6,077.03 per ton or $2.76 per pound. Butter increased 1.8% to $5,676.10 per ton or $2.58 per pound, Buttermilk jumped 14.2% to $3,349.40 per ton or $1.52 per pound.

AVERAGE CLASS III PRICES

3 Month:	$24.52
6 Month:	$24.10
9 Month:	$23.53
12 Month:	$22.83

CHEESE

The weakness of cheese does not change the market but is just a matter of buyers holding back, waiting for lower prices again. Buyers reached a threshold at which they were comfortable with the amount of product on hand. Lower prices will stimulate the interest in buying again. Initial weakness Tuesday stemmed from the revision of stocks of American cheese for March as well as an increase of supply in April.

BUTTER

Price continues to remain supported as buyers want to obtain supply to fill orders and increase ownership. It will be difficult to say just how much product they will be purchasing ahead until they feel comfortable with supply.

OUTSIDE MARKETS SUMMARY

July corn fell 14.50 cents, closing at $7.7175. July soybeans gained 6 cents, ending at $16.93, with July soybean meal up $4.60 per ton, ending at $427.10. July wheat fell 35.25 cents, closing at $11.5475. June live cattle slipped $0.05, closing at $132.72. July crude oil declined $0.52, closing at $109.77 per barrel. The Dow gained 48 points, closing at 31,929, while the NASDAQ fell 271 points, closing at 11,264.

Tuesday Midday Dairy Market Summary - Cheese Prices Decline

OUTSIDE MARKETS SUMMARY:

CORN:	19 Lower
SOYBEANS:	3 Higher
SOYBEAN MEAL:	$4.80 Higher
LIVE CATTLE:	$0.02 Higher
DOW JONES:	305 Points Lower
NASDAQ:	373 Points Lower
CRUDE OIL:	$0.89 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined 4 cents, closing at $2.34 with no loads traded. There were two uncovered offers remaining at the close. Barrel cheese price declined 1.75 cents, closing at $2.33 with four loads traded. There was one unfilled bid and three uncovered offers remaining at the close. Dry whey price increased a penny, closing at 49.50 cents with no loads traded. Class III futures are lower with contracts unchanged to down 40 cents with July showing the greatest pressure. Futures were lower prior to spot trading, moving little after the trading session. Butter price increased 2 cents, closing at $2.8850 with eight loads traded. Grade A nonfat dry milk price increased 1.50 cents, closing at $1.82 with two loads traded. Class IV futures are 18 cents lower to 35 cents higher. Butter futures are 0.75 cent lower to 2.15 cent higher. Dry whey futures are steady to 0.75 cent lower.

Tuesday Morning Dairy Market Update - Milk Futures Lower in Reaction to Cold Storage

OPENING CALLS:

Class III Milk Futures:	10 to 20 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 4 Lower
Soybean Futures:	2 to 5 Higher
Soybean Meal Futures:	Steady to $2 Lower
Wheat Futures:	8 to 10 Higher

MILK:

Stable cheese prices support Class III futures. The Cold Storage report Monday could indicate there might be some weakness of underlying cash which could put some pressure on the market. Cheese certainly is not over abundant. But increasing milk production and more milk becoming available for manufacturing due to schools closing for the summer may reduce the concern over supply. Weather has been good for cow comfort overall. Production is running below year earlier levels but is increasing seasonally, leaving sufficient supply available for demand. Class III may continue to move in the range it has been in since early March.

CHEESE:

Steady cheese prices Monday left traders guessing as to market direction. Prices may have a difficult time moving much higher under current market fundamentals and may consolidate for a time. The increase of American cheese stocks in April may have indicated a slight slowing of demand which may continue during the current inflationary period.

BUTTER:

Price has been trending higher as buyer interest has increased. It seems buyers are again wanting to increase ownership for later demand due to inventory being unable to gain over last year's levels. Even though inventory is increasing, stocks remain 23% below a year ago. Price is 7 cents from the high this year established in January.

Monday Closing Dairy Market Update - Class III, IV Futures Mixed

MILK

Milk futures closed mixed as there was limited direction from underlying cash. Traders were uncertain whether cheese prices might increase or decrease from here and reflected that in the futures market Monday. Milk futures received a boost from lower milk output during April on the milk production report last week. However, the cold storage report was a bit negative, only in the fact that American cheese stocks increased for the first time this year. Class III milk futures came under increased pressure after the cold storage report was released Monday. Overnight trade may reflect this weakness. Milk production has been running lower but increasing seasonally. Milk receipts continue to increase as spring flush continues. More milk will be available for manufacturing over the coming weeks as schools close for the summer. This will be welcomed by many plants as they might be able to build inventory in preparation for increased demand later in the year. Spot milk is expected to be less expensive for a period as plants may not be able to handle the extra milk due to labor shortages, resulting in increased amounts of extra milk being available. This will not cause a problem for manufacturing capacity as there is ample space available.

AVERAGE CLASS III PRICES

3 Month:	$24.75
6 Month:	$24.33
9 Month:	$23.70
12 Month:	$22.94

CHEESE

American cheese inventory increased 7.8 million pounds, totaling 836.3 million pounds in April, according to the Cold Storage report. This was the first month-over-month increase for American cheese so far this year. There was a large revision in March, which put inventory 6.2 million pounds higher than what was previously stated with the April increase added to that. Inventory is now 1% above a year ago. Swiss cheese increased 776,000 pounds, totaling 24.0 million pounds. Other cheese stocks increased 6.3%, totaling 620.5 million pounds. This put total cheese inventory at 1.481 billion pounds, up 2% from a year ago.

BUTTER

Butter stocks gained 16.8 million pounds, totaling 299.6 million pounds. The increase was rather light for this time of year, putting stocks 23% below a year ago. Stocks were revised slightly lower for the month of March.

OUTSIDE MARKETS SUMMARY

July corn gained 7.50 cents, ending at $7.8625. July soybeans declined 18.25 cents, closing at $16.87, with July soybean meal down $7.40 per ton, closing at $422.50. July wheat gained 21.25 cents, closing at $11.90. June live cattle gained $1.20, ending at $132.77. July crude oil gained $0.01, ending at $110.29 per barrel. The Dow gained 618 points, closing at 31,880, while the NASDAQ gained 181 points, closing at 11,535.

Monday Midday Dairy Market Summary - Butter Continues Higher

OUTSIDE MARKETS SUMMARY:

CORN:	7 Higher
SOYBEANS:	18 Lower
SOYBEAN MEAL:	$7.70 Lower
LIVE CATTLE:	$1.12 Higher
DOW JONES:	624 Points Higher
NASDAQ:	142 Points Higher
CRUDE OIL:	$0.38 Lower

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $2.38 and $2.3475 respectively. There were loads traded with only an offer for a load of blocks posted. Dry whey price fell back today eliminating the gains of last week closing at 48.50, down 2.25 cents. Butter price increased 1.50 cents closing at $2.8650 with 3 loads traded. Grade A nonfat dry milk price increased 0.50 closing at $1.8050 with 5 loads traded. Class III future are 2 cents lower to 16 cents higher. Class IV futures are one cent lower to 4 cents higher. Butter futures are 0.85 -- 1.22 cents higher. Dry whey are steady. USDA will release the April Cold Storage report this afternoon.

Monday Morning Dairy Market Update - Cold Storage Report Released Monday

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 6 Higher
Soybean Futures:	5 to 8 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	18 to 22 Higher

MILK:

Class III milk futures were lower Friday in response to the weakness of barrel cheese. Futures are hovering near the top that had been set in March and April with optimism still evident after the release of the milk production report last week. Traders may be cautious prior to spot trading Monday as blocks provide no indication as to direction. There is hope that stability in blocks on Friday will provide support for barrels, bringing price back up. Milk production continues to increase seasonally, but at lower levels than a year ago. There is sufficient supply for demand with the anticipation of more milk becoming available on the spot market as schools close for the summer.

CHEESE:

USDA will release the April Cold Storage report Monday. American cheese inventory will be the one to watch to see whether it increased from March. So far this year, American cheese inventory has declined on a month-over-month basis. The report could either compliment the milk production report or offset it, which could keep the market choppy for a time.

BUTTER:

Price made an impressive run higher last week. It is possible the strength may be near to running its course for the time being. Buyers may have picked up sufficient supply to fill orders as well as for later demand. If there has been strong growth on the Cold Storge report, price may stall for a time.