Thursday, November 30, 2023

Thursday Midday Dairy Market Summary - Butter Shows Further Strength

OUTSIDE MARKETS SUMMARY:

CORN: 10 Higher
SOYBEANS: 3 Lower
SOYBEAN MEAL: $0.70 Higher
LIVE CATTLE: Unchanged
DOW JONES: 282 Points Higher
NASDAQ: 111 Points Lower
CRUDE OIL: $1.72 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined 5 cents, closing at $1.54 with nine loads traded. Much of the trading activity took place during the conditional extension trading period. Barrel cheese price increased 2.50 cents, closing at $1.51 with two loads traded. Dry whey price remained unchanged at 39.75 cents with no loads traded. Class III futures are 14 cents lower to 7 cents higher. Butter price increased for the third consecutive day, posting a gain of 3.25 cents closing at $2.65 with one load traded. There was an unfilled bid remaining at the close like yesterday which may indicate further strength on Friday.

Grade A nonfat dry milk price declined 2 cents, closing at $1.1750 with nine loads traded. The weakness of nonfat dry milk more than offsets the gain of butter. Class IV futures are 5 cents lower to 12 cents higher. Butter futures are 1.75 to 3.12 cents higher. Dry whey futures are steady to 1 cent higher.

USDA will release the October Agricultural Prices report today which will provide prices used in the calculation of income over feed for the Dairy Margin Coverage program.




Fluid Milk and Cream - Western U.S. Report 48

In California, temperatures were in the 60s for the Central Valley area, contributing to improved cow comfort. Stakeholders report increased milk production this week compared to last week. Handlers relay butterfat and protein levels in milk volumes are increasing. Some handlers note preliminary records indicate November 2023 milk production is up compared to October 2023, but down compared to November 2022. Processors note current November 2023 milk production as both below and above anticipated volumes. Processors indicate milk supplies are meeting manufacturing needs. Class I demand is stronger as educational institutions resume sessions. Class II demand is steady. Class III and IV demand is strong to steady. 

In Arizona, temperatures were in the 70s, contributing to similar cow comfort this week. Farm level milk output is steady. Manufacturers relay milk volumes are looser and meeting manufacturing needs. Demand for all Classes is strong to steady with educational institutions back from holiday breaks. 

Temperatures in New Mexico went down to the 40s with some light evening/early morning snow. Impacts to cow comfort were marginal and milk production is steady. Processors indicate milk volumes are meeting production needs, but spot loads are somewhat tight. Demand for all Classes is unchanged. 

In the Pacific Northwest, temperatures in some eastern parts of the area went down to the high 20s and this week had some more icy conditions. That said, handlers report current farm level milk output as steady and week to week differences as flat. Demand for all Classes is strong to steady. 

In the mountain states of Idaho, Utah, and Colorado temperatures went down to the low 30s in some areas and parts of the area received snow and/or ice. Handlers indicate milk production to be steady to slightly lower compared to recent weeks. That said, processors note milk volumes as plenty to ample for manufacturing needs. All Classes have strong to steady demand. 

Cream supplies are looser for most of the West and spot loads are more available. Cream demand is steady. Cream multiples moved lower on both ends this week. Condensed skim milk demand is steady and loads are available for spot buyers.  






Thursday Morning Dairy Market Update - Underlying Cash to Remain Choppy

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: Mixed
Soybean Futures: 3 to 5 Lower
Soybean Meal Futures: $1 to $2 Lower
Wheat Futures: 2 to 4 Lower

MILK:

November milk checks will be a little lower in most cases than was seen for October. This will tighten finances further. However, there have been reports of several expansions in some areas that are taking place as cows continue to shift and some processors have capacity. Culling has not increased as much as anticipated, but rather cows are moving from farm to farm. Some processing facilities have strict limitations on milk production increases while others seem to allow milk production to move from farm to farm and have the capacity to handle an increase of milk. Milk output continues to increase seasonally along with increasing components. USDA will release the October Agricultural Price report providing the numbers used in calculating income over feed for the Dairy Margin Coverage program.

CHEESE:

Barrel cheese price not being able to hold the high during spot trading yesterday could result in price slipping back today. The is little reason for cheese prices to trend higher in the near term as supply is sufficient for demand and buyers are not concerned over product availability.

BUTTER:

Price has increased 2 consecutive days moving to a level at which sellers may become more aggressive. No sellers showed up for spot trading yesterday. Once the current buyer interest is satisfied, price may drop back again. Most holiday demand has been fulfilled or is in the process of being shipped. Limited upside potential is expected.




Wednesday, November 29, 2023

Wednesday Closing Dairy Market Update - November Class III Price Announced At $17.15

MILK

Class III futures did not perform very well with contracts closing mixed. The gain of barrels was diminished due to the inability of price to hold the highs of the trading period. Class IV futures did well with gains across the board with some contracts posting double-digit gains. The November Federal Order prices were announced today. The Class II price was announced at $21.21, a decrease of $0.74 from October and down $3.46 from November 2022. The Class III price was announced at $17.15, up $0.31 from October and down $3.86 from a year earlier.

The Class IV price was announced at $20.87. down $0.62 from October and down $2.43 from November 2022. The South Dairy Trade report was released showing the prices of dairy products moving through ports in Argentina and Uruguay. Dairy products moving the port in Argentina for October 1-15 totaled 11,120.87 tons to 27 destinations. Whole milk powder increased 1.5% to $3,767.57 per ton or $1.48 per pound. Skim milk powder price increased 0.2% from the previous period at $3,108.87 per ton or $1.41 per pound. Semi-hard cheese decreased 2.9% to $4,132.35 per ton or $1.87 per pound. Hard cheese decreased 4.6% to $5,636.94 per ton or $2.56 per pound. Butter gained 2.2% to $4,549.44 per ton or $2.06 per pound. Dairy products moving through ports in Uruguay during the period from November 1-15 totaled 11,772.75 tons moving to 30 destinations. Whole milk powder decreased 2.1% to $3,170.73 or $1.44 per pound. Skim milk powder decreased 5.4% to $3,088.10 per ton or $1.40 per pound. Semi-hard cheese decreased 0.9% to $5,011.42 per ton or $2.27 per pound. Hard cheese decreased 12.5% to $5,644.85 per ton or $2.56 per pound. Butter increased 1.5% to $4,582.15 per pound. Buttermilk decreased 1.1% to $2,014 per ton or $0.91 per pound.

AVERAGE CLASS III PRICES

3 Month: $16.36
6 Month: $17.04
9 Month: $17.49
12 Month: $17.78

CHEESE

Barrel cheese price could not hold the initial gain during spot trading. Even though price closed higher, the drop back from the high sent a little negative tone through the market as upside price potential could be limited. Traders do not seem to care about price strength but rather the long-term potential. That does not seem to be very positive at the present time. Cheese output is steady, meeting demand without difficulty and leaving buyers unconcerned over supply.

BUTTER

An unfilled bid moved price higher today with no sellers showing up to do business. There is a possibility that once that bid is filled, price could decline as buyers may not be willing to purchase for general demand at the higher price. Upside price potential is limited for the time being.

OUTSIDE MARKETS SUMMARY

March corn closed up 2.25 cents per bushel at $4.7575, January soybeans closed up 0.50 cent at $13.4700 and January soybean meal closed down $3.50 per ton at $427.00. March Chicago wheat closed up 13.75 cents at $5.8575. February live cattle closed up $0.65 at $173.48. January crude oil is up $1.31 per barrel at $77.72. The Dow Jones Industrial Average is up 13 points at 35,430 with the NASDAQ is down 23 points at 14,258.




Wednesday Midday Dairy Market Summary - Barrel Strength Cancels

OUTSIDE MARKETS SUMMARY:

CORN: 2 Lower
SOYBEANS: Unchanged
SOYBEAN MEAL: $5.40 Lower
LIVE CATTLE: $0.22 Higher
DOW JONES: 121 Points Higher
NASDAQ: 21 Points Higher
CRUDE OIL: $1.16 Higher

MIDDAY MARKET UPDATE:

Block cheese prices declined 2 cents, closing at $1.59 with no loads traded and only sellers showing up during spot trading. Barrel cheese price increased 5.75 cents, closing at $1.4850 with two loads traded. There was one unfilled bid with seven uncovered offers remaining at the close. The price initially gained 7.50 cents before selling pressure took it off the highs. This maintained a negative tone in the market along with the decline of blocks.

Dry whey price was unchanged at 39.75 cents with four loads traded. Class III futures are 9 cents lower to 8 cents higher with the only gains posted in the April and May contracts. Butter price gained 5.50 cents, closing at $2.6225 with no loads traded and only a buyer showing up during spot trading.

Grade A nonfat dry milk increased 0.50 cent, closing at $1.1950 with no loads traded. Class IV futures are steady to 28 cents higher. Butter futures are 2 to 3.87 cents higher. Dry whey futures are steady to 0.50 cent lower. USDA will release the November Federal Order class prices this afternoon.




Wednesday Morning Dairy Market Update - Markets Are Expected to Drift

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: Steady to 1 lower
Soybean Futures: 1 to 3 Higher
Soybean Meal Futures: $1 to $2 Higher
Wheat Futures: 4 to 6 Higher

MILK:

There just does not seem to be anything to get traders excited about in the dairy markets. Milk production is seasonally increasing. This allows for sufficient milk supply to meet the needs of both bottling and manufacturing. Buyers of cheese and butter are not concerned over supply. Dry whey and nonfat dry milk prices continue to hold in a range. Futures are expected to be choppy likely through the end of the year as they react to underlying cash trade. Traders will be cautious over any price strength as it tends to be short-lived. USDA will release the November Federal Order class prices this afternoon.

CHEESE:

The weakness of barrels yesterday does not indicate cheese prices will move lower, but that potential is there. There are some concerns prices could fall back near the lows of early July. The inability of price to increase during the holiday buying season is a cause for concern. Choppy trade may continue with traders remaining bearish overall.

BUTTER:

Buyers were looking for butter yesterday to fill orders. Unfilled bids remaining at the close could suggest further buying could push price higher until the demand is met. Price could then move back as sellers will continue to bring supply to the market rather than store it. Active butter production will continue to supply the market.




Tuesday, November 28, 2023

Tuesday Closing Dairy Market Update - Milk Futures Show Limited Volatility

MILK

Class III futures closed steady to lower across the board. Even though the decline of barrel cheese prices will have more impact on nearby months, later months also exhibited pressure. There is no solid support under the market as traders again saw that any price increase of underlying cash is short-lived. That is going to be a difficult pattern to break as we move through the end of the year.

Class IV futures closed steady to higher influenced by the gain of butter price. The market is in a give-and-take mode depending on the fluctuation of underlying prices. However, the overall attitude is bearish as demand is not expected to increase any time soon to reduce supply and tighten the market. The November Federal Order class prices will be announced Wednesday with the trade anticipating a Class III price of $17.13 and a Class IV price of $20.65.

AVERAGE CLASS III PRICES

3 Month: $16.49
6 Month: $17.10
9 Month: $17.54
12 Month: $17.83

CHEESE

Cheese prices seem to have nowhere to go. Barrel price moved to a new low since the last high was reached Oct. 23. Price is back to the lowest level since July and hopefully will find a level where it will stabilize. However, there is some concern that the price could reach back to the July low. The market is trying to find a level at which demand may improve or milk production will be curtailed. Hopefully, the earlier scenario is true.

BUTTER

Price made a nice bounce with buyer interest supporting the market. However, once the buying interest is satisfied, the price may fall back again as buyers are not expected to remain aggressive. The market may be trying to establish a bottom and at least trade sideways but it is too early to tell.

OUTSIDE MARKETS SUMMARY

December corn closed down 4 cents per bushel at $4.5150, January soybeans closed up 16.75 cents at $13.4650 and January soybean meal closed down $6.10 per ton at $430.50. March Chicago wheat closed up 11 cents at $5.7200. February live cattle closed up $4 at $172.83. January crude oil is up $1.55 per barrel at $76.41. The Dow Jones Industrial Average is up 84 points at 35,417 with the NASDAQ is up 41 points at 14,282.




Tuesday Midday Dairy Market Summary - Barrels Increase, Then Fall Back

OUTSIDE MARKETS SUMMARY:

CORN: 3 Lower
SOYBEANS: 17 Higher
SOYBEAN MEAL: $6.60 Lower
LIVE CATTLE: $3.45 Higher
DOW JONES: 41 Points Higher
NASDAQ: 6 Points Lower
CRUDE OIL: $1.89 Higher

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.61 with no loads traded. Barrel cheese price declined 4.25 cents, closing at $1.4275 with seven loads traded. Price initially increased 0.25 cent before falling back under selling pressure. An unfilled bid for a load of blocks and an uncovered offer for a load of barrels remained at the end of the trading period. There were four unfilled bids for barrels and one uncovered offer at the close.

Dry whey price remained unchanged at $39.75 with no loads traded. Class III futures slipped back and are generally lower with only the January contract showing a gain of one cent. Butter price increased 6.75 cents, closing at $2.5675 with five loads traded. There were two unfilled bids and two uncovered offers remaining. Grade A nonfat dry milk price remained unchanged at $1.19 with no loads traded. Class IV futures are steady to 5 cents higher. Butter futures are 1.17 cents lower to 3.25 cents higher. Dry whey futures are unchanged to 0.50 cent lower.

Today is the last day to trade November futures and options with the November Federal Order class prices being announced Wednesday.




Tuesday Morning Dairy Market Update - Limited Volatility Anticipated

OPENING CALLS:

Class III Milk Futures: Steady to 8 Higher
Class IV Milk Futures: Mixed
Butter Futures: Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 1 to 2 Higher
Soybean Futures: 6 to 9 Higher
Soybean Meal Futures: $2 to $4 Higher
Wheat Futures: 2 to 3 Higher

MILK:

Milk futures are not expected to move much even if there is further price strength of cheese today. Traders have become accustomed to price increases being short-lived. This will change at some point, but it is not likely under current market fundamentals. Cash and futures are expected to drift along possibly into next year as milk production will keep sufficient supply available for demand. Culling may increase in time but likely not in the near term. If underlying cash holds in the vicinity of where it is currently later contracts will roll down as premium erodes. Today is the last trading day for November futures and options with the November Federal Order prices being announced on Wednesday.

CHEESE:

Cheese prices could see further strength today at least until the immediate demand of buyers is satisfied. Upside price potential is anticipated to be limited. Fill-in buying for orders that come in ahead of the holidays will provide some price strength, but not a trend higher.

BUTTER:

Price may see limited movement with the market possibly remaining in a sideway range for the time being. Buyers will not be very 




Monday, November 27, 2023

Monday Closing Dairy Market Update - Milk Futures Mixed

MILK

One must wonder whether cheese prices are low enough to stimulate buying interest for aging programs or just have some on hand for fill-in buying over the next month. That may take place but it is not expected to improve prices very much in the near term.

Traders remain bearish and it may take a monumental effort to overcome the negativity. It will also take an increase in demand or a decrease in milk production to tighten supply. That may not happen for the next few months as the beginning of the year is a time of slower demand. Milk production will continue to increase seasonally as cows settle in for the winter with improved feed consumption. Tomorrow is the last day to trade November futures and options with the November Federal Order prices to be announced on Wednesday.

AVERAGE CLASS III PRICES

3 Month: $16.62
6 Month: $17.01
9 Month: $17.43
12 Month: $17.74

CHEESE

The 14-cent spread between blocks and barrels is not an indication of market strength or weakness. The spread between the two is somewhat meaningless as each category runs on its own fundamentals. Cheese supply is sufficient for demand with most of the needs for the holiday season shipped or ready to be shipped leaving buyers complacent for the time being. Prices may continue to chop with no direction.

BUTTER

Price may remain sideways for a period as supply is sufficient and churning active. Butter futures are mostly in line with cash. December shows a little premium while later contracts show a slight discount. Price might move back near the range it remained in for the first half of the year before it finds some stability.

OUTSIDE MARKETS SUMMARY

December corn closed down 7.75 cents per bushel at $4.5550, January soybeans closed down 1 cent at $13.2975 and January soybean meal closed up $2.50 per ton at $436.60. March Chicago wheat closed down 16.25 cents at $5.61. February live cattle closed down $2.15 at $168.83. January crude oil is down $0.68 per barrel at $74.86. The Dow Jones Industrial Average is down 57 points at 35,333 with the NASDAQ down 10 points at 14,241.




Monday Midday Dairy Market Summary - Cheese Shows Strength

OUTSIDE MARKETS SUMMARY:

CORN: 8 Lower
SOYBEANS: 2 Higher
SOYBEAN MEAL: $3.30 Higher
LIVE CATTLE: $1.07 Lower
DOW JONES: 52 Points Lower
NASDAQ: 39 Points Higher
CRUDE OIL: $0.02 Lower

MIDDAY MARKET UPDATE:

Cheese price finally found some support at least for today. Blocks increased 2 cents, closing at $1.61 with two loads traded. The barrel cheese price increased 3 cents, closing at $1.47 with three loads traded. These gains did little to trigger buying interest in Class III futures with contracts mixed ranging from 14 cents lower to 3 cents higher. Traders are not convinced prices will see continued strength.

Dry whey price remained unchanged at 39.75 cents with no loads traded. Butter price remained unchanged at $2.50 with no loads traded. Grade A nonfat dry milk price increased 0.50 cent, closing at $1.19 with no loads traded. Class IV futures are 3 to 11 cents lower. Butter futures are 0.50 cent lower to 3.97 cents higher. Dry whey futures are 2.35 cents lower to 0.85 cent higher.




Western demand strong from retail cheese purchasers

Dairy product prices were mixed the week before Thanksgiving. CME cheddar block cheese closed Friday at $1.60 per pound, unchanged on the week but 63.25 cents below a year ago. The barrels climbed to $1.68 Tuesday, highest since Oct. 27, but plunged 11 cents Friday, closing at $1.56, 9 cents lower on the week, 36.75 cents below a year ago and a more normal 4 cents below the blocks. There were 14 sales of block on the week at the CME and nine of barrel.

Cheese prices are disappointing considering that we’re approaching the biggest selling season of the year. StoneX said on its Nov. 13 Early Morning Update, “In November, the seasonal tendency is for the block-barrel spread to widen, so it’s a bit odd that is inverting.” The Nov. 10 Weekly Wire said, “Too much milk isn’t the issue here. Too little demand is driving the narrative.”

Dairy Market News reported that spot milk availability remained similar to much of early fall this week, meaning tight and/or closer to balanced. Mid-week spot milk price highs were at $1 over Class III. A number of cheesemakers say milk offers have defied their expectations as they have not begun to come in ahead of the holiday week. Nonfat dry milk usage in cheese processing has increased as a result. Cheese demand in the Midwest is either unchanged or improving. Cheddar and Italian pizza-style cheesemakers say orders have picked up in recent weeks.

Western demand from retail cheese purchasers is strong, DMN said. Some contacts note that grocers have been utilizing retail ads to entice customers ahead of Thanksgiving. DMN’s Retail Report released Nov. 9 underscored that as the total number of ads for conventional and organic cheese increased from the prior week’s survey by over 60%. Food service cheese sales in the region are softening somewhat as consumers are, reportedly, foregoing dining out due to high menu prices. Contacts say cheese produced domestically is priced at a premium to that produced internationally and thus contributing to light export demand, DMN said.

After plunging almost 51 cents the previous week, CME butter regained a little ground and climbed to $2.69 per pound Tuesday but closed Friday at $2.49, down 11 cents on the week, 32 cents below a year ago and $1.0125 below its recent record high. Sales totaled 10 loads for the week.

Butter market tones started to brace after a precipitous drop the past few weeks, DMN said, but processors said demand has not been as negatively impacted as some would expect. Butter manufacturers continue to report upticks in cream availability, but some are still running micro-fixing schedules for retail demand. Churning rates are expected to increase near-term as cream tankers trade at lower multiples week to week. Mid-week spot multiples remained in the low 1.20s for high end, but the low end slipped to 1.15, DMN said.

Cream spinoff is increasing in the West because of seasonally rising butterfat in farm milk, and more loads are available. Butter manufacturers in the West are utilizing available spot cream to increase production. Others are shifting their focus from retail to bulk butter. The number of retail ads for conventional and retail butter also increased in DMN’s Retail Report.

Grade A nonfat dry milk climbed to $1.22 per pound Monday, highest since Oct. 23, as global prices have strengthened, but then gave it back Wednesday and closed Friday at $1.1925, down 0.75 cents on the week and 23.50 cents below a year ago. There were 13 sales reported for the week.

Dry whey climbed to 42 cents per pound Tuesday, highest since April 4, but it closed Friday at 41 cents, 1.25 cents higher on the week but 3 cents below a year ago, with 10 loads finding new homes on the week.

November’s Ag & Dairy Market Outlook from StoneX said, “While there are pockets of good demand, recent scanner data is pointing toward a slowdown at retail for butter and cheese, and shipments of nonfat dry milk to Mexico have slowed. The slower retail sales could be temporary blips from consumers who are a little long on product after some aggressive retail promotions over the summer, or they could be a signal that consumer spending is slowing/shifting. Mexico is also a tough read. Their imports were running well above trend and a slowdown makes some sense, but the pullback for August and September is bigger than expected.”

Inflation reportedly cooled in October, with the U.S. Department of Labor reporting an increase of 3.2% in the Consumer Price Index. However, the Nov. 10 Weekly Wire said, “Federal Reserve Bank of New York data showing massive increases in third quarter consumer credit card balances and rising delinquency rates don’t spark confidence in an immediate turnaround.”

Dairy margins were mixed over the first half of November as Class III Milk futures were steady while Class IV contracts firmed, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

“Corn prices were steady while soybean meal continued to advance sharply on concerns of growing drought conditions in key soybean production regions of Brazil,” MW said. “The U.S. Department of Agriculture reported total dairy export shipments of 460 million pounds during September, down 12% from last year with cumulative 2023 year-to-date shipments down 7.5% from a year ago. Cheese exports were the notable exception at a record 81.3 million pounds for the month of September, up 4.3% from last year led by strong sales to Mexico.”

“U.S. exports of nonfat dry milk at 117.4 million pounds were down 20.1% from a year ago and the lowest total for September since 2018,” MW said. “Butter exports of 4.4 million pounds fell 58.4% year-over-year while whey exports of 95 million pounds were down 26.7% from last year and the lowest September total since 2019. Poor hog margins in China and continued struggles with African swine fever have negatively impacted whey demand from Asia.”

MW also reported highlights from the latest Dairy Products report and said, “Our clients continue monitoring targets to extend margin coverage in deferred marketing periods with flexible strategies that will allow for further margin improvement over time.” For details, visit www.cihmarginwatch.com.

September total cheese disappearance was up from August and a year ago, according to HighGround Dairy economist Betty Berning in the Nov. 20 Dairy Radio Now broadcast, based on the latest Dairy Supply and Utilization report.

Cheese disappearance, at 1.2 billion pounds, was up 0.9% from September 2022, and Berning mainly credited “rebounding domestic consumption of American-style cheese, which was up 6.2%, following a dismal August.” That plus impressive “other-cheese” exports, which marked the highest September volume on record with data back to 2011, did the job, she said.

Butter utilization totaled 170.7 million pounds, up 6.1%, thanks to domestic disappearance being up 10.6%. Exports were down a whopping 57%. Usage dropped from August to September, according to HGD, “going against the five-year average increase of 1.3%.”

Nonfat dry milk utilization, at 182.5 million pounds, was up 1.4% from August’s nearly five-year low, but down 20.7% from a year ago. HGD said, “Month-on-month, domestic consumption moved in opposition to exports. However, stateside nonfat dried milk demand remained well below the prior year, while exports tanked to the smallest volume since August 2019.”

Dry whey disappearance totaled 81.3 million pounds, up 6.8%, with domestic use up 78.4%, while exports, at 34.2 million, were down 31.2%. Exports to China and Southeast Asia were off, said HGD, keeping year-on-year and year-to-date volumes down. Berning credited increased demand for whey protein concentrate and whey protein isolates for the overall increase in whey product demand.

When asked why cheese prices aren’t better than they are, Berning cited HGD’s November Outlook and said, “There’s been a few different dynamics playing out.” She said they too are surprised prices are lingering around $1.60. However, she also said new processing capacity has come on line, and exports, while better than August, were not great, and they have seen changes in product mix. Demand isn’t that great, and the rally typically seen in the fall period just did not materialize. “We still have Christmas coming, Hanukkah, and all the holidays, plus the Super Bowl, so perhaps we’ll see some lift and demand will pick up,” Berning said.

This week’s GDT Pulse auction saw mixed sales on Fonterra skim milk powder and whole milk powder. 2,180 metric tons, or 96.9% of the total 2,250 MT on offer, was sold. HighGround Dairy’s analysis shows 440 MT more of Instant WMP was sold and 74 MT less of regular WMP was sold versus the last GDT Event. 100% of the 1,000 MT of SMP on offer was sold in this auction, according to HGD.

StoneX said, “Skim milk powder prices fell 3.9% relative to last week’s GDT Pulse while whole milk powder was up 1.7%. There is still some uncertainty as to how much weight GDT Pulse will have given the light volume in each pulse event. Also, given how GDT Pulse is still relatively new, there may be a few buyers/sellers still not participating in the Pulse events just yet.” 

Cooperatives Working Together member cooperatives accepted one offer of export assistance this week that helped capture sales contracts for 231,000 pounds of butter. The product is going to customers in Asia in December.

That put CWT’s 2023 exports at 41.7 million pounds of American-type cheeses, 1.1 million pounds of butter, 26,000 pounds of anhydrous milkfat, 39 million pounds of whole milk powder and 7.8 million pounds of cream cheese. The products are going to 25 countries and are the equivalent of 756.8 million pounds of milk on a milkfat basis.

The 2023 U.S. harvest is winding down. The latest Crop Progress report shows corn was 88% complete, as of the week ending Nov. 12, up from 81% the previous week, 4% behind a year ago and 2% ahead of the five-year average. Soybeans were 95% harvested, up from 91% the previous week, 1% behind a year ago but 4% ahead of the five-year average.

Culling continues to slow. The week ending Nov. 4 saw 55,800 dairy cows go to slaughter, up 300 from the previous week, but 4,200, or 7%, below a year ago. YTD 2,656,800 have been culled, up 75,800, or 2.9%, from a year ago.

The annual meeting of the National Milk Producers Federation, National Dairy Promotion and Research Board, and United Dairy Industry Association took place this week in Orlando. NMPF’s incoming president and CEO, Gregg Doud, told attendees, “The future of U.S. dairy farming is bright as global growth and American capacity for innovation and production combine to create a powerhouse. In terms of the world of protein, dairy is a huge part of the future.”

Doud, who takes over NMPF’s reins Jan. 1, 2024, is a former chief agricultural trade negotiator for the Office of the U.S. Trade Representative. He said, “Opportunities are there for U.S. dairy’s taking with robust outreach and appeals to consumers worldwide. My message to you today is very simple. Let’s go. Let’s get it in gear.”

A NMPF press release said, “Dairy producers in the past year have faced operating margins at their lowest since the federal dairy safety net was adopted in its current structure in 2014 as prices plummeted from record highs.” In a panel of NMPF economists, forecasts showed an improving price outlook next year, even as inflation continues to pose challenges for consumers. 

“We see a road to recovery in 2024,” said Will Loux, head of the joint economics unit serving NMPF and the U.S. Dairy Export Council. “Things aren’t all roses, we still have really significant headwinds on the demand side both here at home and abroad, but we look at the world with a lot of optimism, especially in the long run.”

Meanwhile, Congress passed a continuing resolution this week to keep the government open. NMPF praised the measure and said, “Along with continuing critical programs for dairy farmers, the legislation allows the Dairy Margin Coverage program to continue operating without the uncertainty of a potential disruption. DMC is an important and effective safety net for dairy farmers nationwide. This legislation includes the 2019 production history update as part of the program, and we look forward to 2024 DMC signup in the coming weeks.”

Michael Dykes, DVM, president and CEO of the International Dairy Foods Association said, “The resolution includes an extension of the 2018 farm bill that will allow important dairy-related programs to continue to operate until Sept. 30, 2024. The Healthy Fluid Milk Incentives Projects, a dairy nutrition incentive program for SNAP participants, will be eligible to receive additional appropriations to continue its significant expansion to reach more communities across the country in 2024.”

“In addition, the farm bill extension permits USDA to restart the Dairy Forward Pricing Program as soon as the legislation is signed into law by the president of the U.S., avoiding the need for a time-consuming rulemaking process similar to the one that was required to ‘restart’ the program after it lapsed in 2018,” Dykes said.

“While the bill gives Congress another year to pass a strong farm bill, it only keeps the lights on at USDA and FDA for another two months,” Dykes said. “IDFA urges Congress to pass a FY2024 funding bill that fully funds Healthy Fluid Milk Incentives projects, retains milk and dairy benefit levels for WIC moms and children, and maintains dairy’s central role in the federal school meals program.”

The IDFA also announced its annual Dairy Forum will take place Jan. 21-24, 2024, at the JW Marriott Phoenix Desert Ridge Resort in Phoenix, Arizona. The forum attracts dairy farmers, processors and dairy business executives from around the world.

Speakers and sessions will focus on leadership, labor, artificial intelligence and supply chain digitization, food as medicine, carbon insetting, consumer trends, the global dairy market and dairy policy.



Monday Morning Dairy Market Update - Overnight Trade Points to Further Weakness

OPENING CALLS:

Class III Milk Futures: 3 to 8 Lower
Class IV Milk Futures: 4 to 8 Lower
Butter Futures: 1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures: Steady to 1 Higher
Soybean Futures: 4 to 6 Higher
Soybean Meal Futures: $2 to $6 Higher
Wheat Futures: 1 to 3 Higher

MILK:

There was little change fundamental over the extended weekend or for the past while for that matter. Underlying cash prices are not expected to change much in the near term. If cash prices remain where they are, later Class III futures contracts will need to roll down eliminating any premium they might contain relative to cash. Class IV will do the same if butter price falls further through the end of the year. Buying interest of underlying cash is not likely to develop anytime soon if milk production remains at current levels. Milk components are improving which is allowing for increased cheese yield and increased cream supply.

CHEESE:

Cheese prices were at this level in July as they rebounded from the low in June. Hopefully, demand will be strong enough to result in another rebound as lower prices may increase demand. However, the time of year is not favorable as demand generally slows in the early part of the year.

BUTTER:

It is uncertain whether butter price has found a bottom. It is nearly at the level at which the price remained in a sideways range for the first half of the year. This could be where the market will find value moving into the next year. However, if the price pattern is repeated, it would mean price may decline further before reaching that level.




Wednesday, November 22, 2023

Wednesday Midday Dairy Market Summary - Barrel Cheese Falters

OUTSIDE MARKETS SUMMARY:

CORN: 1 Lower
SOYBEANS: 21 Lower
SOYBEAN MEAL: $0.90 Lower
LIVE CATTLE: $0.30 Lower
DOW JONES: 170 Points Higher
NASDAQ: 97 Points Higher
CRUDE OIL: $0.81 Lower

MIDDAY MARKET UPDATE:

Block cheese price held steady at $1.59 with no loads traded. There were two unfilled bids 5 cents below the market which is a concern that further loss might be possible. Barrel cheese price declined 5.50 cents, closing at $1.44 with eight loads traded. There were six unfilled bids remaining below the market with one uncovered offer. Like yesterday, sellers may need to lower offers to move supply.

Dry whey price remained unchanged at 39.75 cents with no loads traded. Class III futures are taking it in stride with contracts under pressure but not quite as much as would have been anticipated with prices 9 cents lower to 7 cents higher with only July and front-month November showing gains. The butter price declined 3 cents, closing at $2.20 with five loads traded and an unfilled bid remaining below the market. Grade A nonfat dry milk price gained 1.25 cents, closing at $1.1850 with three loads traded. Class IV futures are 5 to 9 cents lower. Butter futures are 0.12 cent to 1.15 cents higher. Dry whey futures are unchanged to 0.37 cent lower. USDA will release the October Cold Storage and Livestock Slaughter reports this afternoon.




Fluid Milk and Cream - Western U.S. Report 47

In California, temperatures have been in the 60s/70s recently, contributing to improved cow comfort. Stakeholders report farm level milk output as flat to slightly lower for this week compared to last week. That said, processors indicate milk supplies are ample for meeting manufacturing needs. Some handlers note preliminary records indicate November milk production is up slightly compared to October, but marginally under anticipated levels for November thus far. Class I demand is lighter as educational institutions have their breaks for the current holiday week. Class II and III demands are steady. Class IV demand is strong to steady. 

In Arizona, temperatures decreased to the lower 80s/70s. Milk production is steady. However, manufacturers say milk volumes are somewhat tight. Stakeholders suggest availability of spot milk loads will improve for upcoming weeks with some downtime during the current holiday week and decreasing temperatures. Demand for all Classes is steady. 

Recent temperatures in New Mexico ranged from mid 60s to low 50s with some thunderstorm activity. Farm level milk output in New Mexico is steady. Handlers indicate enough milk volumes are available to meet manufacturing needs, but also that milk volumes are somewhat tight for spot load buyers. Demands for all Classes are strong to steady. 

In the Pacific Northwest, temperatures in some eastern parts of the area reached low enough for early morning icy conditions on the coldest day of this week. That said, handlers report current milk production is steady to higher and in line with anticipated levels. Class I use is lighter with current week holiday breaks at educational institutions. Demands for Classes II and III are steady. Demand for Class IV is strong to steady. 

Farm level milk output in the mountain states of Idaho, Utah, and Colorado is reported as steady to higher. Some manufacturers in Idaho indicate milk volumes available for spot purchasing are looser, which is keeping full processing schedules going. A few handlers in the state note milk volumes slightly below anticipated levels and suggest some farmers are being more conservative with farm operation expenditures. Class I demand is lighter with the holiday week at hand. Class II demand is steady. Class III and IV demand is strong. 

Cream is looser throughout the West and spot load availability increased this week. Demand for cream is strong to steady. Cream multiples moved slightly lower on the top end of the range for all Classes. Contracted condensed skim milk sales are steady, and spot loads are available. However, some stakeholders note less activity from spot load buyers, with some manufacturers planning downtime during the current holiday week





Wednesday Morning Dairy Market Update - Limited Price Movement of Cash Expected

OPENING CALLS:

Class III Milk Futures: 3 to 5 Higher
Class IV Milk Futures: Mixed
Butter Futures: Mixed

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Traders took the October Milk Production report in stride focusing on supply and demand rather than anticipating what may happen down the road. Milk production continues to slowly improve keeping supply readily available. Spot milk has increased in availability, which has reduced the price to as much as $2.50 below class. The market certainly is not tight, which is keeping buyers of dairy products complacent. Much of the demand for the holidays has been accounted for with always some fill in orders to be covered. Cheese and butter prices are low, but that has not triggered any aggressive buying as end users see no need to be concerned over supply. Manufacturers want to move production quickly rather than hold for higher prices that may not develop for a while. USDA will release the October Livestock Slaughter report which will provide information on the level of dairy cattle culling for the month. Today is the final day to trade dairy futures and options for the week. Dairy markets will be closed on Friday.

CHEESE:

There could be further weakness in barrels today if sellers want to move supply. The lower bids on Tuesday indicated willing buyers, but only at lower prices. The October Cold Storage report will be released today and is expected to show cheese inventory above a year ago.

BUTTER:

Price is expected to have limited upside potential. Once the current buying interest is satisfied, the price may settle back. If October inventory is higher than a year ago, it may put further pressure on price. Cream supply is plentiful keeping churning active.




Tuesday, November 21, 2023

Tuesday Closing Dairy Market Update - Spot Milk Prices Fall Below Class

MILK

Milk futures were mixed for the day, which could be considered positive but certainly not a victory. There is little reason for the market to do much of anything different at the present time. The lower prices have resulted in some buyers stepping up a bit to purchase cheese to rebuild aging programs. This may be somewhat earlier than usual. Spot milk this week is reported to average $2.50 under class. It has been a few months since spot milk was available under class. This was expected during this time of year with milk prices likely available below class through the rest of the year. This is not necessarily bearish to the market, but rather what takes place during this time of year. Milk production continues to improve, keeping sufficient milk available to the market.

AVERAGE CLASS III PRICES

3 Month: $16.68
6 Month: $17.12
9 Month: $17.50
12 Month: $17.80

CHEESE

Weakness continues to permeate through the cheese market. Much of the cheese that has been contracted for the holidays has been shipped or is in process of being shipped shortly. Buyers will remain less aggressive unless unexpected demand surfaces. Cheese supplies may have increased during October due to increased output because of increased milk production. The October Cold Storage report will be released on Wednesday which will show us whether demand may have kept pace with production or whether inventory of cheese increased.

BUTTER

Price increased for the second consecutive day, but traders remain cautious as upside is expected to be limited. Cream is readily available keeping churns busy. Some plants will curtail production over the holiday leaving cream available at reduced prices to those who want it. Most of the end of the year demand has already been fulfilled with some focus turning to contracting for the first quarter. Inventory in October may be higher than a year ago which if that is the case, inventory may close the year higher than a year ago.

OUTSIDE MARKETS SUMMARY

December corn closed up 0.50 cent per bushel at $4.7000, January soybeans closed up 10.00 cents at $13.7725 and January soybean meal closed down $1.30 per ton at $442.00. March Chicago wheat closed up 12.25 cents at $5.8275. February live cattle closed down $0.58 at $176.08. January crude oil is down $0.03 per barrel at $77.80. The Dow Jones Industrial Average is down 63 points at 35,088 with the NASDAQ down 85 points at 14,200.




Tuesday Midday Dairy Market Summary - Cheese Unable to Find Support

OUTSIDE MARKETS SUMMARY:

CORN: Unchanged
SOYBEANS: 3 Higher
SOYBEAN MEAL: $2.50 Lower
LIVE CATTLE: $0.42 Lower
DOW JONES: 308 Points Higher
NASDAQ: 245 Points Higher
CRUDE OIL: $0.24 Lower

MIDDAY MARKET UPDATE:

Cheese prices did not do much of anything with further weakness unfolding. Block price declined a penny to $1.59 with no loads traded. Barrel cheese price declined 1.50 cents, closing at $1.4950 with one load traded. There were six unfilled bids for barrels below the closing price, indicating to sellers that they will need to lower offers to move supply. There was one uncovered offer which set the closing price.

Dry whey price declined 0.50 cent, closing at 39.75 cents with two loads traded. Class III futures are 8 cents lower to 5 cents higher. Butter price increased for the second consecutive day, posting a gain of 1.25 cents at closing at $2.53 with eight loads traded. Sellers remain adamant at moving product. Grade A nonfat dry milk price declined 2 cents, ending at $1.1725 with one load traded. Class IV futures have not yet traded with wide bid and offers placed and held. Butter futures are 1 cent lower to 1.25 cents higher. Dry whey futures are steady to 0.90 cent lower.




Tuesday Morning Dairy Market Update - Cheese Production Increases

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 2 to 4 Higher
Soybean Futures: 7 to 10 Higher
Soybean Meal Futures: $4 to $6 Higher
Wheat Futures: 2 to 3 Higher

MILK:

Milk futures began the day stronger on Monday, but the weakness of underlying cash turned the market lower with December, January, and February making new lows. The milk production report showed milk production below a year ago with lower cow numbers, but that is not expected to have much, if any, influence on the market today. It is unlikely there will be much movement of underlying cash leaving milk futures floundering without support. More milk has been moving to manufacturing as schools will be closed the rest of the week. This milk will be handled easily as plants have sufficient capacity. Some still indicate being understaffed which is limiting the ability to increase production.

CHEESE:

The weakness of barrel cheese has been a surprise with the price declining 16 cents in 2 days. That is a real concern at this time of year when there should be better prices due to increased demand. Prices are likely to find some support at some point but are not expected to trend higher anytime soon.

BUTTER:

The strength of butter on Monday is not expected to continue as buyers see no reason to be very aggressive. Much of the buying for the holidays is complete with regular demand and fill-in orders dominating much of the market. Overall demand is steady with some indication that restaurant demand has slowed a bit. The October Cold Storage report will be released on Wednesday giving an idea if supply is growing.




Monday, November 20, 2023

Monday Closing Dairy Market Update - October Milk Production Down 0.5%

MILK

The milk market is very concerning with no support being found in underlying cash. December, January and February Class III contracts have made new contract lows again Monday with lower futures prices through July. Class IV futures fared better but closed lower in numerous contracts.

USDA released the October Milk Production report which showed milk production in the top 24 states down 0.4%, totaling 17.9 billion pounds. Milk production per cow was 3 pounds below October 2022, totaling 2,013 pounds. Cow numbers declined 5,000 head from October with cow numbers 19,000 head less than a year ago. Milk production in the U.S. was down 0.5%, totaling 18.7 billion pounds. Milk production per cow was 1,997 pounds, down 1 pound from October 2022. The total number of cows in the country was 9.37 million head and was 42,000 less than a year ago.

Ten of the top 24 states show a decline in milk output. The largest percentage decline of milk production took place in New Mexico, down 9%. This was followed by Oregon with a decline of 4.1%. Colorado was down 3.4% with California down 2.6%. The rest of the states posting a decline were down less than 2%.

South Dakota showed the largest increase with milk production up 6.6%. This was followed by a 6.2% increase in Florida. Arizona gained 3.7% with all the other gains being less than 3%.

AVERAGE CLASS III PRICES

3 Month: $16.68
6 Month: $17.12
9 Month: $17.51
12 Month: $17.82

CHEESE

The barrel price fell 16 cents over the past two days, setting a very negative tone in the market. Sellers continue to offer cheese at lower prices to move supply. With current supply and the inability to raise prices during the time of year during which increased buying generally takes place, it is unlikely there will be much upside price potential for the foreseeable future. Supply is higher than demand.

BUTTER

The increase in butter price today is likely not going to hold. There is no reason for the butter price to rise as churning has increased due to an increased cream supply. Much of the buying for the holidays has already been done. Manufacturers have no interest in holding supplies for a possible price increase or a concern over a possible tighter supply. The cold storage report to be released Wednesday will provide a clearer indication of supply and demand in October.

OUTSIDE MARKETS SUMMARY

December corn closed up 2.50 cents per bushel at $4.6950, January soybeans closed up 27 cents at $13.6725 and December soybean meal closed up $6.90 per ton at $460.20. December Chicago wheat closed down 7.25 cents at $5.4350. February live cattle closed down $0.15 at $176.65. January crude oil is up $1.79 per barrel at $77.83. The Dow Jones Industrial Average is up 204 points at 35,151 with the NASDAQ is up 159 points at 14,285.




October Milk Production in the United States down 0.5 Percent

October Milk Production down 0.4 Percent 

Milk production in the 24 major States during October totaled 17.9 billion pounds, down 0.4 percent from October 2022. September revised production, at 17.5 billion pounds, was up 0.1 percent from September 2022. The September revision represented an increase of 17 million pounds or less than 0.1 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 2,013 pounds for October, 3 pounds below October 2022. The number of milk cows on farms in the 24 major States was 8.91 million head, 19,000 head less than October 2022, and 5,000 head less than September 2023. 

October Milk Production in the United States down 0.5 Percent 

Milk production in the United States during October totaled 18.7 billion pounds, down 0.5 percent from October 2022. Production per cow in the United States averaged 1,997 pounds for October, 1 pound below October 2022. The number of milk cows on farms in the United States was 9.37 million head, 42,000 head less than October 2022, and 6,000 head less than September 2023. 







Monday Midday Dairy Market Summary - Barrels Under Further Pressure

OUTSIDE MARKETS SUMMARY:

CORN: 1 Higher
SOYBEANS: 25 Higher
SOYBEAN MEAL: $6.20 Higher
LIVE CATTLE: $0.22 Lower
DOW JONES: 188 Points Higher
NASDAQ: 149 Points Higher
CRUDE OIL: $2.23 Higher

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.60 with no loads traded. Barrel cheese prices declined 5 cents, closing at $1.51 with four loads traded. Dry whey prices slipped 0.75 cent, closing at 40.25 with no loads traded. Class III futures are mixed but mostly lower with prices ranging from 19 cents lower to 2 cents higher. Butter price increased 2.75 cents, closing at $2.5175 with two loads traded. Grade A nonfat dry milk price remained unchanged at $1.1925 with no loads traded.

Class IV futures are 7 to 10 cents lower. Butter futures are 0.50 to 3.50 cents lower. USDA will release the October Milk Production report this afternoon. I estimate milk production to be about even with a year ago and cow numbers to be up 2,000 head from September.




Monday Morning Dairy Market Update - Some Short Covering May Take Place

OPENING CALLS:

Class III Milk Futures: 3 to 10 Higher
Class IV Milk Futures: Mixed
Butter Futures: Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures: Mixed
Soybean Futures: 2 to 5 Higher
Soybean Meal Futures: $4 to $6 Lower
Wheat Futures: 2 to 3 Lower

MILK:

It was a rough last half of last week which will make it more difficult to overcome. Strength in the dairy complex has not taken place as it generally does over the past few months as holiday buying supports prices. Without that taking place this year, it is unlikely prices will move much higher through the end of the year. Prices remaining low might increase culling and impact milk output, but that may take a little time to unfold as farms are content with current cow numbers. USDA will release the October Milk Production report today. I estimate milk production to be near steady with a year ago. I estimate cow numbers to be up 2,000 head from September. It is a short trading week with the dairy markets being closed Thursday and Friday.

CHEESE:

There is not much anticipation of a price rebound as fundamentals do not suggest a change anytime soon. Much of the holiday buying has been completed with fill-in demand needing to be met as it unfolds. Buyers of cheese have not had to be aggressive as sellers continue to move product as quickly as possible. This may continue through the end of the year.

BUTTER:

It would seem butter price may be at the lows after the large decline on Friday. However, many times the market overcorrects before price stabilizes. High price does not appear to have impacted demand. It is a matter of sufficient supply for demand with churning increasing.




Monday Closing Dairy Market Update - Butter Inventory Declines Substantially

MILK: Trading volume in milk futures was light with only the January and February contracts showing a few hundred contracts trading ...