Monday, March 13, 2023

Monday Closing Dairy Market Update - NMPF Supports Higher of Class I Pricing

MILK

The increase of cheese and butter prices Monday did not get much attention by the trade. Closer Class III contracts were able to close higher, but the gains were minimal in comparison to underlying cash. Traders are not convinced prices will trend higher anytime soon. Price increases have been short-lived for quite some time, and current fundamentals do not suggest a change anytime soon. March prices are basically set, as far as the trade is concerned, with minor movement generally from adjustments after the weekly AMS prices are released on Wednesdays up until the Federal Order prices are announced. The National Milk Producers Federation has endorsed returning to a Class I milk pricing formula based on the "higher of" of Class III and Class IV prices. This pricing formula was used previously and then changed in the 2018 Farm Bill. This has had a significant impact on milk prices since then with an estimated loss of revenue to dairy farmers since then of $922 million.

AVERAGE CLASS III PRICES

3 Month: $17.83
6 Month: $18.30
9 Month: $18.72
12 Month: $18.78

CHEESE

Current reports indicate cheese movement is good but not as good as had been hoped. However, even with cheese production higher than the previous year and inventory not growing in January, it does indicate demand is strong. The hope is that it will continue that way as increased milk production takes place during spring flush. Barrel cheese continued to show buyers remain willing even though price increased 17.50 cents last week. There were unfilled bids at the close of spot trading, suggesting further buying interest Tuesday.

BUTTER

Price bounced but is not expected to move very much in the near term. Supply and demand are balanced with the increase in inventory welcomed after the decrease of inventory last year and the resulting concern over supply and the move to record-high prices. Higher prices last year did not necessarily reduce demand, but they increased production. The industry is comfortable with growing inventory at this point, as it wants to build a cushion of supply.

OUTSIDE MARKETS SUMMARY

March corn gained 0.25 cent, closing at $6.2450. March soybeans declined 13 cents, closing at $15, with March soybean meal down $6.60 at $492.25. March wheat gained 5.50 cents, ending at $6.7225. April live cattle declined $0.72 ending at $163.55. April crude oil declined $1.88 per barrel, closing at $74.80. The Dow declined 91 points, while the Nasdaq closed 50 points higher.




Friday Closing Dairy Market Update - USDA Releases Federal Milk Marketing Order Changes

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