Thursday, March 28, 2024

Thursday Closing Dairy Market Update - Class III Milk Futures Close Lower

MILK

Class III milk futures close the week lower with April, May and June months falling to new contract lows. The decline of American cheese stocks and the discovery of avian flu impacting some dairy herds did nothing to generate buying interest.

Sufficient milk supply and milk production increasing seasonally have buyers of dairy products on the spot market somewhat complacent. USDA released the Agricultural Prices report Thursday, using some of the prices for the calculation of income over feed for the Dairy Margin Coverage program.

The average corn price for February was $4.36 per bushel compared to $4.74 in January and $6.80 per bushel in February 2023. The premium/supreme hay price was $278 per ton compared to $274 in January and $324 a year ago. The all-milk price was $20.60, up $0.50 from January, and was $1 per cwt lower than February 2023. The average soybean meal price has not been released and likely will not be released until Monday morning. This is needed to calculate the income over feed price.

Other prices to make note of are that soybeans were $11.90 per bushel, compared to $12.80 in January and $15.10 a year ago. The alfalfa hay price was $202 per ton, up $2 from January but down from $264 a year ago. The Planting Intentions report Thursday was bullish for corn and a bit bearish for soybeans. The estimate is for 90.1 million acres of corn to be planted this year, a decline of 4.6 million acres. Soybean acres are expected to increase by 2.9 million acres from last year, totaling 86.5 million acres.

AVERAGE CLASS III PRICES

3 Month: $15.95
6 Month: $16.66
9 Month: $17.25
12 Month: $17.46

CHEESE

For the week, blocks increased by 2.50 cents with 25 loads traded. Barrels increased by 0.25 cent with 22 loads traded. Dry whey increased by 0.75 cent with one load traded. The markets are closed for Good Friday but will reopen Sunday night. Cheese buyers are not aggressive with price increases, mostly the result of orders needing to be filled or buying on price weakness. Price increases remain short-lived.

BUTTER

For the week, butter increased by 3.25 cents with 16 loads traded. Grade A nonfat dry milk price increased by 1.25 cents with 12 loads traded. Butter price remains choppy but is pushing to the top end of the range it has been in. Steady demand after Easter may push the price above the range even though inventory is increasing.

OUTSIDE MARKETS SUMMARY

May corn closed up 15.25 cents per bushel at $4.4200, May soybeans closed down 1 cent at $11.9150 and May soybean meal closed down $1.30 per ton at $337.70. May Chicago wheat closed up 12.75 cents at $5.6025. June live cattle closed up $1.58 at $180.25. May crude oil is up 1.82 per barrel at $83.17. The Dow Jones Industrial Average is up 47 points at 39,807 with the NASDAQ down 20 points at 16,379.




Fluid Milk and Cream - Western U.S. Report 13

Farm level milk production is trending steady to higher in the West. In California, contacts share milk production continues to rise seasonally. Mild weather in the Central Valley has aided cow comfort, and some contacts note they are beginning to see spring flush volumes. Contacts share milk production for this week is in line with forecasts and is above milk volumes recorded this week last year. Class I demand is strong in the area. Class II demand is expected to increase in the coming weeks. Class III demand is strong, as is Class IV demand. Both planned and unplanned plant downtime has made condensed skim availability loose, and contacts share spot milk prices are being reported as low as $4-under Class III. Cream supplies are ample. 

In Oregon and Washington, farm level milk production is trending higher. Contacts share they are above forecasted volumes for this time of year. Milk components are said to be strong, and plants are able to bring more cream into processing. 

In Idaho, farm level milk outputs are noted to be in line with recent weeks. Contacts expect spring flush volumes to peak in late April. Demand for all Classes is unchanged. Cream is available, but demand is noted to be lackluster. 

Milk production in Utah and Colorado is in line with recent weeks, but contacts share milk volumes are tighter than they were this time last year. 

Processors in Arizona note steady to stronger milk outputs at the farm level. Demand for all Classes is unchanged. 

In New Mexico, processors share milk volumes are able to meet production needs, but spot milk availability is tight. Demand for all Classes is steady. 





Thursday Midday Dairy Market Summary - Butter, Cheese Post Minor Gains

OUTSIDE MARKETS SUMMARY:

CORN: 15 Higher
SOYBEANS: 1 Lower
SOYBEAN MEAL: $1.40 Lower
LIVE CATTLE: $1.62 Higher
DOW JONES: 37 Points Higher
NASDAQ: 18 Points Lower
CRUDE OIL: $1.67 Higher

MIDDAY MARKET UPDATE:

Block cheese price increased a penny, closing at $1.4175 with six loads traded. Barrel cheese price increased 0.75 cent, closing at $1.4275 with seven loads traded. Dry whey price remained unchanged at 40.25 with no loads traded. The gains were not enough to move Class III milk futures into positive territory. Futures prices range from 1 cent to 16 cents lower. Thankfully, futures are up about 10 cents from their lows of the day.

Butter price increased 0.25 cent, closing at $2.0425 with four loads traded. Grade A nonfat dry milk price remained unchanged at $1.12 with one load traded. Class IV futures have only been traded in the August contract with the price 3 cents lower. Butter futures are 1.87 cents lower to 0.47 cent higher. Dry whey futures are steady to 1.30 cents lower. USDA will release the February Agricultural Prices report today. 




Thursday Morning Dairy Market Update - Milk Futures Remain Under Pressure

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Class III milk futures suffered a blow Wednesday due to the decrease in cheese prices. Traders had anticipated recent reports and the discovery of bird flu in a few dairy herds would provide greater support to the market. However, overall milk production is increasing seasonally and buyers of dairy products on the daily spot market have not been aggressive. April through June Class III futures made new contract lows overnight as selling pressure continued. Trading volume was higher than usual again for an overnight session. Several reports may impact the market. The Planting Intentions and Quarterly Grain Stocks reports may provide an indication of feed prices for the coming year. Thursday afternoon, USDA will release the February Agricultural Prices report, which will provide the average prices for the month used in the calculation of income over feed for the Dairy Margin Coverage program. None of these reports will be direct market movers.

CHEESE:

Traders will be apprehensive over spot trading Thursday. It has been very unpredictable as cheese prices have been choppy. Buyers and sellers of cheese are taking care of business on an as-needed basis rather than on perception. Buyers want to keep a supply on hand but do not want to build inventory ahead of time and pay for storage. With current supply readily available for demand, there is little concern over supply tightness.

BUTTER:

Butter price seems comfortable in the current price range it has been in for the past month. Even though the higher demand period for Easter has been filled, cash price remains supported as regular demand is expected to remain strong, and buyers have been building inventory as a hedge against tighter supply and higher prices, preparing for later demand. 




Wednesday, March 27, 2024

Wednesday Closing Dairy Market Update - Milk Production is Steadily Increasing

MILK

Class III milk futures took a beating again today with the May contract falling to a new contract low. June and July contracts fell to new lows. The market remains bearish with little to make it move higher at present. This may not change much until we move through spring flush as there is sufficient milk for demand from both bottling and manufacturing. Milk production is improving seasonally resulting in spot milk prices in the Midwest running as much as $6.00 below class with most loads from $3.50 below to steady with class. Lower milk output than a year ago should be tightening the market, but reduced demand keeps this from becoming an issue. Demand should increase during the second half of the year, which may then tighten supply, but it will be up to demand to provide price support. Wishing the market moves higher will not get it done. There is strong demand for replacement heifers even at the current milk prices. Farmers continue to try to keep barns full and milk output strong.

AVERAGE CLASS III PRICES

3 Month: $16.03
6 Month: $16.76
9 Month: $17.36
12 Month: $17.35

CHEESE

Dairy Market News indicates that demand for cheese has been a bit more active recently. This may be based on certain varieties of cheese and not just overall demand. However, the increase in demand is not tightening supply. American cheese inventory decreased in February indicating good demand compared to production, but buyers of cheese are not stepping up very aggressively. Blocks might move to a new low again soon which would put the price back to the level of July 2023.

BUTTER

Retail demand is reported to be strong as the Easter weekend is near. Retail has already prepared to meet the increased demand. Retailers will need to restock shelves after the holiday which could bring buyers into the spot market more aggressively at the beginning of next week. However, there is sufficient supply to meet the demand. Plentiful cream supplies at reasonable prices will keep churning active.

OUTSIDE MARKETS SUMMARY

May corn closed down 5.75 cents per bushel at $4.2675, May soybeans closed down 6.50 cents at $11.9250 and May soybean meal closed down $.80 per ton at $339.00. May Chicago wheat closed up 4.00 cents at $5.4750. June live cattle closed up $0.30 at $178.68. May crude oil is up $.09 per barrel at $81.71. The Dow Jones Industrial Average is up 478 points at 39,760 with the NASDAQ is up 84 points at 16,400.



Wednesday Midday Dairy Market Summary - Cheese Shows Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN: 6 Lower
SOYBEANS: 7 Lower
SOYBEAN MEAL: $0.90 Lower
LIVE CATTLE: $0.52 Higher
DOW JONES: 253 Points Higher
NASDAQ: 16 Points Higher
CRUDE OIL: $0.38 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined 1.75 cents closing at $1.4075 with three loads traded. Barrel cheese price declined 1.75 cents, closing at $1.42 with one load traded. Dry whey price gained 0.25 cent closing at 40.25 cents with no loads traded. Class III futures are unchanged to 32 cents lower. The weakness triggered selling as those who had been bullish recently liquidated their positions. Butter price increased a penny closing at $2.84 with one load traded. Grade A nonfat dry milk price slipped 0.25 cent closing at 1.12 with four loads traded. Class IV futures show trade in only the September contract with the price 5 cents higher. Butter futures are 0.10 lower to 4.50 cents higher. Dry whey futures are 0.42 cent lower to 0.30 cent higher. The markets are just not ready to establish long-term support and may continue to chop around.




Wednesday Morning Dairy Market Update - Traders Wait for Further Fundamental Direction

OPENING CALLS:

Class III Milk Futures: Steady to 5 Lower
Class IV Milk Futures: 2 to 6 Lower
Butter Futures: Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 3 to 5 Lower
Soybean Futures: 4 to 6 Lower
Soybean Meal Futures: Steady to $1 Lower
Wheat Futures: 2 to 4 Lower

MILK:

The increase in milk futures may have run its course for the time being. It seems underlying cash is not supportive of stronger prices at present. Traders are anxious to find support due to the extended period of low milk prices. However, the market is not ready to trend higher. There are some longer-term positive fundamentals, but the time of year is not right to find solid support. Some have been trading the price swings in the hope of making a profit. This heightens the movement of futures. The milk production and cold storage reports have been digested with a focus on daily spot prices. The February Slaughter report did not indicate culling is increasing as much as anticipated.

CHEESE:

Cheese prices may remain choppy as supply and demand seem to be balanced for now. Some manufacturing plants are running at or near capacity as spring flush progresses. Some plants are short of milk due to farms being lost or milk production decreasing. Spot milk prices remain reasonable and generally below class, allowing plants that need more milk to find some for purchase at reasonable prices. Buyers of cheese do not show concern over supply at present.

BUTTER:

Butter supply in cold storage was a little more than expected, which may have caused buyers to be less aggressive in the spot market on Tuesday. However, the current supply is not burdensome with much of the price movement of cash being regular business being done. Price may remain in a range for a time.




Tuesday, March 26, 2024

Tuesday Closing Dairy Market Update - Dairy Cattle Slaughter Declines

MILK

Class III prices were able to close higher despite the little negativity of the spot market. Blocks showing weakness and barrels not being able to hold the highs resulted in some pressure on the market but not enough to close lower. The market will need to prove itself before prices trend higher. It seems like some factors may provide support as the year progresses, but the current market may remain choppy. Concern over the disease on some farms in Texas and Kansas has been identified and press releases are available. It appears it is not widespread and is under control currently. There is no anticipation of heavy culling of cattle and no threat to the milk supply. Since the news became available, there has been little impact on milk futures or the underlying cash prices. Milk futures have reacted more to the perception of milk production or cold storage reports than the news of the disease.

February dairy cattle slaughter totaled 252,700 head which was an increase of 2,550 head from January, but down 13,800 head from February 2023. Slaughter is not increasing as had been anticipated due to the lower milk prices. Interestingly, this February had one extra day than February 2023, but the slaughter was lower.

AVERAGE CLASS III PRICES

3 Month: $16.21
6 Month: $16.96
9 Month: $17.52
12 Month: $17.67

CHEESE

Barrels moved higher during spot trading but could not hold the high and slipped back. Price remained higher but it did add a bit of caution to the market as buyers did not remain aggressive. It appears cheese prices may chop around for a period and the market seems to be balanced with supply and demand. Buyers and sellers will do business as they need. They are not concerned about supply later in the year at this point.

BUTTER

The weakness of butter indicates buyers and sellers are comfortable with the price where it currently is. Business is being done without any fanfare or concern over supply. The increase in inventory in February may have had some influence as buyers held back, but the weakness was likely the result of sellers being more aggressive as they needed to move supply.

OUTSIDE MARKETS SUMMARY

May corn closed down 5.25 cents per bushel at $4.3250, May soybeans closed down 10.25 cents at $11.9900 and May soybean meal closed down $1.90 per ton at $339.80. May Chicago wheat closed down 11.50 cents at $5.4350. June live cattle closed down $3.23 at $178.38. May crude oil is down $0.33 per barrel at $81.62. The Dow Jones Industrial Average is down 31 points at 39,282 with the NASDAQ down 69 points at 16,316.




Tuesday Midday Dairy Market Summary - Butter and Blocks Slip

OUTSIDE MARKETS SUMMARY:

CORN: 3 Lower
SOYBEANS: 9 Lower
SOYBEAN MEAL: $1.20 Lower
LIVE CATTLE: $2.85 Lower
DOW JONES: 83 Points Higher
NASDAQ: 46 Points Higher
CRUDE OIL: $0.14 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined by 0.25 cent to close at $1.4250 with nine loads traded. Barrel cheese price gained 0.75 cent closing at $1.4375 with five loads traded. Dry whey price increased by 0.50 cent, closing at 40 cents with one load traded. Class III futures backed off their highs during and after spot trading. Futures are currently 1 cent lower to 10 cents higher. Butter price declined 3.25 cents, closing at $2.83 with two loads traded. Grade A nonfat dry milk price remained unchanged at $1.1225 with no loads traded. Class IV futures have not yet been traded. Butter futures are 0.25 to 2.50 cents lower. Dry whey futures are 0.57 cent lower to 1.10 cents higher.




Tuesday Morning Dairy Market Update - Good Volume and Higher Prices in Overnight Dairy Trade

OPENING CALLS:

Class III Milk Futures: 10 to 15 Higher
Class IV Milk Futures: 5 to 10 Higher
Butter Futures: 1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

The gains in milk futures on Monday extended through the overnight trade. Overnight trade may have been supported by the fact that American cheese inventory declined in February. Inventory generally increases as production exceeds demand and stocks are built. If milk production continues to remain below a year earlier and demand increases as the year progresses, higher milk prices may unfold. However, eating away from home is more expensive which may limit restaurant traffic and higher prices may impact consumer buying habits. Lower milk production may be sufficient to satisfy lower demand. Overnight trading in Class III futures showed good volume with prices ranging from 10-21 cents higher.

CHEESE:

The increase in cheese prices resulted in higher Class III futures prices as traders initially liquidated their short positions. The February Cold Storage report showed a decrease in inventory for American cheese but an overall increase in total cheese stocks. The buying of underlying cash may not be impacted much by the report, but it may provide overall support to the market.

BUTTER:

Butter inventory increased significantly in February but is not unusual for this time of year. Manufacturers wanted to build inventory to prepare for upcoming demand. This is not expected to be bearish for the market but may make buyers more comfortable with current supplies. Price is expected to remain choppy.



Monday, March 25, 2024

Wildfires wreak havoc on southern US dairy industry

The U.S. Department of Agriculture lowered its milk production forecast in its fifth consecutive World Agriculture Supply and Demand Estimates report, citing a smaller dairy cow inventory and slower growth in output per cow.

2024 production and marketings were projected at 227.3 and 226.3 billion pounds, respectively, down 900,000 pounds on both from last month’s estimate. If realized, both would only be up 900,000 pounds, or 0.4%, from 2023.

Cheese is expected to average $1.71 per pound in 2024, up 2 cents from last month’s estimate, and compares to $1.7593 in 2023 and $2.1122 in 2022.

Butter was projected to average $2.80 per pound, up 3 cents from last month’s estimate, and compares to $2.6170 in 2023 and $2.8665 in 2022.

Nonfat dry milk will average $1.21 per pound in 2024, down 2.50 cents from a month ago, and compares to $1.1856 in 2023 and $1.6851 in 2022.

The dry whey average was projected at 45 cents per pound, down 3 cents from a month ago, and compares to 36.18 cents in 2023 and 60.57 cents in 2022.

Class III milk is expected to average $17.15 per hundredweight in 2024, up a nickel from last month’s estimate, and compares to $17.02 in 2023 and $21.96 in 2022. The Class IV average, at $20.10, is up a dime from a month ago, and compares to the 2023 average of $19.12 and $24.47 in 2022.

The WASDE lowered world ending stocks of corn and soybeans but left U.S. stocks unchanged. The corn outlook was unchanged, but the season-average corn price was lowered to $4.75 per bushel. Global coarse grain production was forecasted 2.7 million tons lower to 1.5 billion.

The foreign grain outlook is for reduced production, larger trade and smaller ending stocks. Foreign corn production was lowered due to declines in South Africa, Ukraine, Mexico, Venezuela and Russia, partly offset by increases for Argentina and Syria. South Africa was down, reflecting lower yield prospects. Mexico was cut based on expectations of lower winter corn area. Ukraine and Russia were reduced based on reported harvest results to-date, while Argentina was raised based on higher expected area.

The soybean outlook was also unchanged as were the season-average soybean and soybean meal price forecasts. Global soybean production was reduced 1.4 million tons on lower production in Brazil and South Africa. Global supply and demand forecasts included lower beginning stocks, lower production, lower crush, higher exports and lower ending stocks compared to last month, according to the WASDE.

The week ending March 2 saw 59,800 dairy cows go to slaughter, down 400 from the previous week and 7,100, or 10.6%, below a year ago. Year-to-date, 516,700 head have been culled, down 89,400, or 14.8%, from a year ago.

In an update from HighGround Dairy’s Betty Berning and her report two weeks ago on the wildfire in Texas, Berning said, “Dairy farmers are reporting sick cattle in the Panhandle. Symptoms vary, but a consistent part of the reports is a drop in milk production ranging, on average, from 10-30 pounds per cow across the herd, according to Dr. Alexis Thompson with the Texas A&M Veterinary Medical Diagnostic Laboratory. A thick, gel-like milk, resembling mastitis, has been observed in the sick cows. Some bounce back after being sick, returning to normal milk output, but some do not come back fully, and some come back very marginally.

“The extent of the problem is still under evaluation. Not every farm in the area is affected, and even among the impacted herds, only a portion of the cows are showing signs of illness, estimated at around 5%-20%. The cause of the ailment is under investigation by Texas A&M and the state veterinarian. Some in the industry have cited a common ailment, winter dysentery, as the likely disease, but tests have been negative.”

Cash cheese prices appeared to reverse direction the second week of March. The cheddar blocks, after losing 9 cents the previous week, fell to $1.4350 per pound Monday, lowest since Jan. 5, then jumped to $1.4725 Thursday, but closed Friday at $1.47, up a penny on the week, though 52.75 cents below a year ago when they gained almost 22 cents and hit $1.9975.

The barrels, after plunging 16.25 cents the previous week, fell to $1.42 Tuesday, also the lowest since Jan. 5, but reversed direction Wednesday after not seeing a gain in 11 consecutive sessions, and closed Friday at $1.4425. That’s down 4.50 cents on the week, 51.75 cents below a year ago and a typical 2.75 cents below the blocks. There were 13 loads of block traded on the week and 23 of barrel.

Dairy Market News reports that cheese demand is edging higher. Cheese plant contacts differ on what’s behind the bearish prices. Eastern region buyers have begun to add to their orders, for both retail and pizzeria cheese. Milk availability is growing. Mid-week spot milk prices ranged $3.50-under to 50 cents-over Class III; however, there were offers as low as $6-under Class. Last year, they ranged $12- to $4-under Class. Increased spot milk access was attributed to a number of factors, according to DMN, most notably: multiple cheese plants are on scheduled downtime, school districts’ current and upcoming spring break has Class I plants pulling less milk, and seasonal upticks in farm milk output.

Western cheese demand remains steady. Cream cheese demand is picking up. Export channels are steady to stronger, and second and third quarter shipments continue to be booked, DMN said. Class III milk is readily available, and vats are running strong to steady schedules, so there is plenty of cheese available.

StoneX blamed low demand for the falling cheese prices. 

“Whether it’s a slowdown in mid-tier foodservice restaurants (crippled by higher costs and fewer workers at that price point), general inflation slowing retail demand for cheese, Ozempic (and similar weight loss drugs) killing appetites, hand-to-mouth buying at the wholesale level due to increased cost of money, or some combination of these and other factors, the demand side of the cheese equation remains lackluster,” StoneX said.

HighGround Dairy’s Eric Meyer warned in the March 8 Cheese Market News of the additional cheese capacity that came online in late 2023 with more to come through the first half of 2025. That could invoke sustained pressure on price, he said. 

“Recent estimates suggest this new production equates to around 6% of present annual cheese output,” Meyer said. “That’s a lot of product that will need to find a home. Second, while the U.S. stock market and Bitcoin keep making all-time highs, cheese consumption trends this past year have not been bright.

“Dairy Management Inc.’s Total Dairy Retail Report stated that national retail cheese volume was virtually flat in 2023 versus the prior year, with growth in reverse each year since 2020. The consumer’s return to restaurants post-COVID has contributed to a portion of that decline, but inflation and, as a result, shrinkflation (smaller package sizes) have also contributed to the retail struggles.”

January’s Dairy Supply and Utilization report added confirmation. Total cheese consumption, at 1.2 billion pounds, was down 2% from a year ago. Domestic disappearance was down 2.9% while exports, thankfully, were up 12.7%.

HighGround Dairy’s Alyssa Badger, speaking in the March 18 Dairy Radio Now broadcast, said cheese consumption was not only down from 2023 levels but from 2022 as well. 

“That weak stateside demand kept the market under a bit of pressure,” Badger said, as CME prices were trading $1.40-$1.50 per pound then.

Butter usage, at 175.8 million pounds, was the exact opposite, Badger said, up 8.5%, driven by a 15.7 million pound, 10.5% increase in domestic demand and reminiscent of the demand bubble of 2022. It also accounted for 97% of total butter consumption, as butter exports were down 33.3% from a year ago.

“Butter stocks are not as aggressively thin as they were in January 2022, but the elevated use and general nervousness about tight milk and fat supplies have kept prices trending at similar levels for this time of year,” Badger said.

Nonfat dry milk utilization fell to 190.9 million pounds, down 7.7%, lowest January volume since 2020, according to Badger, who blamed struggling international demand. Exports dropped 14%, in large part due to a 22% decline in shipments to Mexico alone, which supported exports in 2023. Domestic use was up 9%.

Whey disappearance amounted to 79.8 million pounds, up 2.6%, with domestic use up 2.5% and exports up 2.8%. Whey protein concentrate disappearance was up for the 11th month over the last 12, according to Badger. 

“Stocks narrowed in January, and prices continued climbing,” Badger said.

CME butter climbed to $2.8475 per pound Thursday but closed Friday at $2.8225, up 2 cents on the week and 42.25 cents above a year ago. There were eight sales reported on the week at the CME.

Butter production is somewhat steady with previous weeks, DMN said, but churning has slowed as more plants increase microfixing (thawing 68-pound blocks and cutting them into 1 pound blocks or quarter-pound sticks). Cream remains available, and most butter plants have cream intakes locked in for the month. Cream demand from other manufacturers is trending seasonally higher.

Western butter makers are running strong to steady production, DMN said. Some are working to make inventory goals ahead of summer maintenance projects along with meeting remaining first quarter demand. Processors say cream yields in milk and cream demand are strengthening. Cream availability is tighter, but there are no shortages. Domestic butter usage is strong, and earlier spring holidays are encouraging more consistent demand, although food service demand is weakening. Canadian purchasers are showing stronger interest, but demand is more moderate elsewhere, according to DMN.

Grade A nonfat dry milk saw its Friday finish at $1.1625 per pound, down 0.75 cents on the week and a quarter-cent below a year ago, with 11 sales reported.

Dry whey climbed to a Friday close at 44.50 cents per pound, up 3.50 cents on the week on unfilled bids, but that’s 2.25 cents below a year ago.

Tuesday’s GDT Pulse saw 4.4 million pounds of product sold, up from 4.28 million Feb. 27, with 100% of the total offered sold. There was 544,536 pounds more instant whole milk powder and 105,820 pounds more regular whole milk powder sold versus the last Pulse, with 22,000 more pounds of skim milk powder on offer sold in this auction.

The Consortium for Common Food Names reports that U.S cheesemakers did well at this year’s World Championship Cheese Contest, winning 84 best in class finishes in Madison, Wisconsin. A total of 25 countries participated in what is billed as the world’s premier cheese, butter and yogurt competition. The Wisconsin Cheese Makers Association has hosted the biennial contest since 1957.

Schuman Cheese’s Lake Country Dairy processors in Turtle Lake, Wisconsin, won both best of class and second award in the parmesan division, beating out an Italian competitor, and won top billing for its Cello Artisan extra aged asiago, ahead of a Danish entry. Additionally, Lactalis Belmont from Belmont, Wisconsin, won top brie over a French processor, and U.S. cheesemakers swept the Havarti category, beating two Danish contestants.

“The results are especially notable due to the European Union’s ongoing campaign to confiscate these cheese terms as geographical indications that can only be used by European producers,” said Jaime Castaneda, executive director of the consortium. “While the EU would like to think that its producers own the exclusive right to make and sell parmesan, Havarti, asiago and other types of cheeses, it’s clear that U.S. and other cheesemakers can match their quality and then some.

“Just like in 2017, in the United Kingdom, when an American parmesan won out over all other parmesan entries, including every Parmigiano Reggiano contestant, this year’s World Cheese Awards showed the strength of U.S. cheeses when unleashed to compete on a level playing field. We’re thrilled to see American cheesemakers get the recognition that they deserve, and we look forward to continuing to fight for them and their rights to sell their award-winning cheeses all around the world.”

In politics, Green Bay-based American Dairy Coalition called on U.S. Secretary of Agriculture Tom Vilsack and AMS Dairy Programs Deputy Administrator Dana Coale this week to grant the American Farm Bureau Federation’s official request for an emergency decision to return the Class I skim price formula to the higher of.

“The AFBF request was read into the record on the last day of the Federal Milk Marketing Order hearing Jan. 30 by Farm Bureau economist Danny Munch,” ADC said. “Nearly five years of the ‘average of’ method has resulted in net losses to farmers of $1.1 billion in Class I revenue, alone, which is predicted to exceed $1.6 billion by the end of 2024.”

More than 30 state, regional and national dairy organizations, state farm bureaus and cooperatives as well as nearly 200 individual dairy producers and allied industry service providers have signed the ADC letter along with ADC president Walt Moore, a Pennsylvania dairy farmer. Signatories cover 33 states from coast to coast.

“This is an emergency,” ADC said. “The 2022 Ag Census showed a staggering 40% drop in the number of U.S. dairy farms in five years. The move away from the higher of is contributing to dairy margin losses and negatively impacting dairy farm families and the rural communities that rely on them.”



Monday Midday Dairy Market Summary - Cash Shows Strength

OUTSIDE MARKETS SUMMARY:

CORN: 2 Lower
SOYBEANS: 14 Higher
SOYBEAN MEAL: $1.80 Higher
LIVE CATTLE: $1.32 Lower
DOW JONES: 151 Points Lower
NASDAQ: 16 Points Lower
CRUDE OIL: $1.14 Higher

MIDDAY MARKET UPDATE:

Block cheese price gained 3.50 cents, closing at $1.4275 with seven loads traded. Barrel cheese price gained 0.50 cent, closing at $1.43 with nine loads traded. This triggered buying interest in Class III futures about 20 to 30 cents higher during spot trading. However, futures have trimmed some of those gains as the kneejerk reaction ran its course. It will take more cash strength to turn traders bullish in the longer term. Current Class III futures are 1 cent lower to 21 cents higher. Butter price increased 5.50 cents, closing at $2.8625 with nine loads traded. Grade A nonfat dry milk price increased 1.50 cents, closing at $1.1225 with seven loads traded. Class IV futures have not yet been traded. Butter futures are 0.80 cents lower to 2.47 cents higher. Dry whey futures are 0.50 to 0.85 cent higher. USDA will release the February Cold Storage report Monday afternoon. There will be no Dairy Revenue Protection prices released due to the report.




Monday Morning Dairy Market Update - Active Overnight Trading

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Class III milk futures will have much to recover from after the decline last week. The anticipation of strength due to lower milk production compared to last year was short-lived as buyers on the spot market did not share the same concern. For now, there is sufficient milk supply to meet bottling and manufacturing needs. Milk production is slowly increasing seasonally, which eliminates the concern over supply for the time being. Lower prices will cure lower prices, but the duration of the lower prices will be difficult to predict.

CHEESE:

Cheese prices should find a bottom as prices may move to levels at which buyers will be willing to purchase and pay for storage. The milk supply may not be as available during the summer and fall when demand generally increases, which then would improve milk prices. The futures market has some of that already factored in with cheese futures around $0.40 per pound above the current spot price.

BUTTER:

Price is expected to remain in a range for a time. Easter demand has been filled and regular demand is now a factor in the market. Supply and demand seem to be balanced for the time being. USDA will release the February Cold Storage report Monday afternoon, comparing inventory to January and a year ago.



Friday, March 22, 2024

Friday Closing Dairy Market Update - Global Dairy Trade Auction Average Down 2.8%

MILK

The first half of the week was positive for milk futures, but the optimism traders had with the milk production report quickly dissipated without support of underlying cash. April and May Class III futures made new contract lows as cheese prices fell back. All categories showed a decline in price this week except barrels.

The milk production report showed lower production in February but that was already absorbed into the market. The GDT auction took place earlier this week and showed the trade-weighted average declining 2.8% from the previous event. There were 19,655 metric tons (mt) sold during the event. Anhydrous milk fat price increased 2.5% to $6,794 mt or $3.08 per pound. Butter decreased by 1.4% to $6,408 mt or $2.91 per pound. Cheddar cheese price decreased 1.9% to $4,192 mt or $1.90 per pound. Lactose decreased 4.4% to $778 mt or $0.35 per pound. Mozzarella decreased 1% to $3,905 mt or $1.77 per pound. Skim milk powder decreased 4.8% to $2,517 mt or $1.14 per pound. The whole milk powder price decreased 4.2% to $3,143 mt or $1.43 per pound.

AVERAGE CLASS III PRICES

3 Month: $16.05
6 Month: $16.81
9 Month: $17.37
12 Month: $17.55

CHEESE

For the week, blocks declined 7.75 cents with 24 loads traded. Barrels were unchanged from last Friday with three loads traded. Dry whey price declined 5 cents with seven loads traded. It turned out to be a negative week, even though traders began the week with a fair amount of optimism. Action this week indicates it may be a while before milk prices trend higher.

BUTTER

For the week, butter declined 1.50 cents with six loads traded. Grade A nonfat dry milk price declined by 5.50 cents with 13 loads traded. Price is expected to remain in range for much of the year's first half. USDA will release the February Cold Storage report on Monday indicating the amount of butter in storage and how much was added during the month.

OUTSIDE MARKETS SUMMARY

May corn closed down 1.50 cents per bushel at $4.3925, May soybeans closed down 19.50 cents at $11.9250 and May soybean meal closed down $5.20 per ton at $339.10. May Chicago wheat closed up 8 cents at $5.5475. June live cattle closed down $1.60 at $182.90. May crude oil is down $0.44 per barrel at $80.63. The Dow Jones Industrial Average is down 305 points at 39,476 with the NASDAQ up 27 points at 16,429.



Friday Midday Dairy Market Summary - Cheese Remains Under Pressure

OUTSIDE MARKETS SUMMARY:

CORN: 1 Lower
SOYBEANS: 19 Lower
SOYBEAN MEAL: $5 Lower
LIVE CATTLE: $0.95
DOW JONES: 201 Points Lower
NASDAQ: 44 Points Higher
CRUDE OIL: $0.40 Lower

MIDDAY MARKET UPDATE:

Block cheese price decreased by 0.50 cent, closing at $1.3925 with 13 loads traded. The barrel cheese price decreased 4.50 cents to close at $1.4250 with two loads traded. Dry whey price decreased a penny to close at 39.50 cents with two loads traded. Class III futures are 18 cents lower to 1 cent higher. Butter price decreased by 1.25 cents to close at $2.8075 with one load traded. The Grade A nonfat dry milk price remained unchanged at $1.1075 with one load traded.

Class IV futures are steady with trading activity only in the June contract. Butter futures are steady to 2.50 cents higher. Dry whey futures are 0.75 cent lower to 0.25 cent higher.

The Department of Trade and Consumer Protection released a statement Friday on the illness seen in Texas dairy. This is part of their statement, "An unknown cause of illness has been reported in dairy cows in Texas. Affected cows presented with decreased milk production, decreased feed consumption and reduced rumen motility. While there is limited information available about the cases at this time, older, late-lactation cows appear most likely to be affected. There are no reports of increased death losses and young stock is not reported to be affected. USDA APHIS Veterinary Services is working closely with Texas Animal Health Commission and neighboring states as they continue to investigate potential cases."



Friday Morning Dairy Market Update - Traders Uncertain of Cash Strength

OPENING CALLS:

Class III Milk Futures: Mixed
Class IV Milk Futures: 4 to 6 Lower
Butter Futures: Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 2 to 3 Lower
Soybean Futures: 8 to 12 Lower
Soybean Meal Futures: $2 to $3 Lower
Wheat Futures: 2 to 4 Lower

MILK:

The April, May, and June Class III milk contracts established new lows Thursday in reaction to the weakness of cheese. Even though those same contracts are higher overnight, there may be further pressure Friday due to the selling interest remaining in the spot market at the close of trading. Traders are using the volatility of futures to take a quick profit if one is realized. Futures may be choppy ahead of spot trading as the anticipation of strength due to lower milk production in February does not currently seem to be a factor. A winter storm is moving across numerous states but that is not expected to have any real impact on the market as delays will be minimal and milk will be processed.

CHEESE:

The large number of uncovered offers remaining at the close of spot trading on Thursday suggests selling may be more aggressive Friday. With that interest in selling, buyers may hold back to see how aggressive sellers will be as they have cheese to move to the market. There may be further weakness in cash.

BUTTER:

Butter will continue its choppy pattern as the current market seems to be balanced. Most of the demand for Easter has been met with regular demand to carry on. Manufacturers are looking ahead to spring demand and are trying to build inventory for later in the year. Churning remains active with readily available cream supplies.



Thursday, March 21, 2024

Thursday Closing Dairy Market Summary - Further Selling Pressure Expected

MILK

There had been some optimism that lower milk production in February would get the attention of cheese buyers and they would step up to the plate and purchase more aggressively. That did not materialize as there was more selling interest in the spot market than buying interest. The number of offers remaining may indicate a further downside is possible.

Milk production is improving seasonally as spring flush is here. Production is running lower than last year but remains sufficient for demand. Some manufacturing plants are running near capacity, causing spot milk prices to remain mostly below class. The increase in cow numbers from January is not pushing milk production higher but it does indicate numbers are not as tight as had been anticipated. It is difficult to determine how long milk prices will remain low and what the impact will be on cow numbers as the year progresses.

AVERAGE CLASS III PRICES

3 Month: $16.13
6 Month: $16.90
9 Month: $17.43
12 Month: $17.60

CHEESE

The bearishness of the cheese market today was not just the decreasing cheese prices but the volume of uncovered offers that remained at the close of spot trading. This suggested there may be further selling pressure on Friday if sellers need to move the product.

Block price is down to its lowest level since Dec. 26, 2023. Barrels have not been quite as bearish but have declined significantly from the high a month ago.

BUTTER

Butter continues to chop and is likely to remain in the sideways trading range until we move closer to the summer and hotter weather. There are sufficient cream supplies for churning which keep butter available without concern of a tight supply for the time being. Export interest may be the key to price strength as the year progresses.

OUTSIDE MARKETS SUMMARY

May corn closed up 1.75 cents per bushel at $4.4075, May soybeans closed up 2.50 cents at $12.1200 and May soybean meal closed up $1.80 per ton at $344.30. May Chicago wheat closed up 1.75 cents at $5.4675. June live cattle closed down $0.28 at $184.50.

May crude oil is down $0.20 per barrel at $81.07. The Dow Jones Industrial Average is up 269 points at 39,781 with the NASDAQ up 32 points at 16,402.




Fluid Milk and Cream - Western U.S. Report 12

In California, milk production is strengthening. Contacts say balancing plants are busy with heavier volumes to work through. Processors convey open processing capacity in the Central Valley is tight due to multiple extended unplanned downtimes at some plants going through system changeovers/upgrades. Processors say several manufacturing facilities are at full capacity. Contacts note spot milk load sales at flat pricing. Class I demand is lighter with educational facilities cycling through their spring breaks over the next few weeks. Class II, III, and IV demands are strong to steady. According to the California Department of Water Resources, as of March 19, 2024, the state has received 0.61 inches of precipitation above the historical mean during the 2023-24 water year thus far, and reservoir levels are above the historical average. 

Milk production in Arizona is trending seasonally higher. Handlers note spot load availability is tight. Demands for all Classes are strong to steady. 

In New Mexico, milk production is stronger. Processors convey milk volumes are meeting production schedule needs and surplus milk volumes are tight. With approaching session breaks at educational facilities, Class I demand is lighter. All other Class demands are strong to steady. 

Handlers in the Pacific Northwest convey farm level milk output is strengthening. Manufacturers note plentiful to ample milk volumes available for production needs. Demands are strong to steady for all Class manufacturers. Handlers in the Pacific Northwest convey farm level milk output is strengthening. Manufacturers note plentiful to ample milk volumes available for production needs. Demands are strong to steady for all Class manufacturers. 

Milk production in the mountain states of Idaho, Utah, and Colorado, is noted as steady to stronger. Some industry participants say milk volumes from week-to-week have been good, but overall, milk volumes are tighter than a year ago. Class demands are unchanged.  Cream is indicated to be readily available throughout the region. Cream demand is stronger. 

Cream multiples moved higher on the top end of both ranges. Stakeholders note spot loads of condensed skim milk are more available and demand is stronger.






Thursday Morning Dairy Market Update - Traders Focus on Lower Milk Production

OPENING CALLS:

Class III Milk Futures: 6 to 12 Higher
Class IV Milk Futures: 4 to 6 Higher
Butter Futures: Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 2 to 3 Higher
Soybean Futures: 5 to 7 Higher
Soybean Meal Futures: $2 to $3 Higher
Wheat Futures: 2 to 3 Higher

MILK:

The February Milk Production report was bullish as far as the decline in milk production, but bearish as far as cow numbers are concerned. It was not bearish due to cow numbers in the country being 89,000 head less than February 2023. It was bearish from the standpoint that cow numbers increased by 10,000 head more than in January. Of course, the level of milk production will have more impact on the market if demand improves and bottlers and manufacturers need more milk to meet that demand. Dairy Market News reports that many cheese plants are nearing production capacity with spot milk being offered as much as $6.00 below class. Most of the spot milk in the country is priced at $3.50 below class to near class price. This may keep milk prices from seeing too much strength in the near term.

CHEESE:

Cheese buyers may not react to the lower milk production in the report yesterday as the milk has already been absorbed into the market. Reduced milk production has not resulted in any tightness of cheese supply. However, inventory may not be much higher than a year ago. This would indicate there is a balance of supply and demand.

BUTTER:

Price may have limited upside potential in the near term as much of the demand for Easter has been filled. Price is not expected to fall as there seems to be solid support in the market. The current production level has been keeping up with demand and increasing inventory. However, inventory may be below a year ago, which will be seen on the Cold Storage report Monday.




Wednesday, March 20, 2024

Wednesday Closing Dairy Market Update - Cow Numbers Jump from January

MILK

Traders tried to focus on the milk production report today but could not hold Class III futures steady to higher considering the weakness of barrel cheese and dry whey prices declining. The February milk production report was friendly for milk production but bearish for cow numbers.

Milk production in the top 24 states was down by 1.1% after the adjustment for Leap Day. This was neutral to friendly to the market as production continues to run below a year ago.

The big news is the number of cows compared to the previous month. It increased by 8,000 head from January for the top 24 states totaling 8.878 million head, down 61,000 head from January 2023. Milk production in the 50 states decreased by 1.3% when adjusted for leap day. Cow numbers totaled 9.330 million head, down 89,000 head from a year ago, but up 10,000 head from January.

It was anticipated that cow numbers would fall as low milk prices continued. This is somewhat bearish for the market as milk production remains better than expected due to the level of cow numbers.

It would initially seem that there had been a substantial miscalculation of cow numbers in January. However, USDA revised cow numbers 3,000 head lower in to top 24 states and 5,000 head lower in the U.S. from what was initially recorded last month. That makes this even more impressive for February. The April Class I price was announced today at $19.18, an increase of $0.38 from the previous month.

AVERAGE CLASS III PRICES

3 Month: $16.36
6 Month: $17.15
9 Month: $17.67
12 Month: $17.79

CHEESE

It is likely cheese buyers will not buy cheese aggressively after the milk production report. Milk production was lower but cow numbers increased, which would allow for milk production to improve more quickly if milk prices moved higher sometime over the next months. It may take longer for milk production to tighten as cow numbers remain higher than anticipated.

BUTTER

The butter price remains in a range developed over the past month. Now that much of the demand for the Easter season has been filled, the price may continue in this range for a period. Churning is active with cream supply sufficient for demand. Demand is strong enough to support the price but not reduce inventory and tighten supply. The cold storage report on Monday will provide a better picture of inventory.

OUTSIDE MARKETS SUMMARY

May corn closed down 0.50 cent per bushel at $4.39, May soybeans closed up 24 cents at $12.0950 and May soybean meal closed up $8.60 per ton at $342.50. May Chicago wheat closed down 7.50 cents at $5.45. June live cattle closed down $0.23 at $184.78. May crude oil is down $1.20 per barrel at $81.53. The Dow Jones Industrial Average is up 401 points at 39,512 with the NASDAQ up 203 points at 16,369.



February Milk Production in the United States up 2.2 Percent

February Milk Production up 2.4 Percent        

Milk production in the 24 major States during February totaled 17.4 billion pounds, up 2.4 percent from February 2023. However, adjusting production for the additional day due to leap year causes February milk production to be down 1.1 percent on a per day basis. January revised production, at 18.3 billion pounds, was down 1.0 percent from January 2023. The January revision represented a decrease of 6 million pounds or less than 0.1 percent from last month's preliminary production estimate.  Production per cow in the 24 major States averaged 1,955 pounds for February, 58 pounds above February 2023.   The number of milk cows on farms in the 24 major States was 8.88 million head, 61,000 head less than February 2023, but 8,000 head more than January 2024.   

February Milk Production in the United States up 2.2 Percent  

Milk production in the United States during February totaled 18.1 billion pounds, up 2.2 percent from February 2023.  Production per cow in the United States averaged 1,941 pounds for February, 60 pounds above February 2023.  The number of milk cows on farms in the United States was 9.33 million head, 89,000 head less than February 2023, but 10,000 head more than January 2024. 




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 ...