Thursday Midday Dairy Market Summary - Barrels Show Further Weakness

Block cheese price remained unchanged at $1.5525 with no loads traded. No buyers or sellers showed up to the market. Barrel cheese price came under pressure declining 1.75 cents closing at $1.4850 with 2 loads traded. There were 3 unfilled bids and 1 uncovered offer remaining at the close. Butter price remained unchanged at $1.74 with no loads traded. Grade A nonfat dry milk price declined 1.50 cents ending at $1.2450 with one load traded. Dry whey price declined penny to 55 cents with one load traded. This moves whey price to the lowest level it has been since Feb. 25. Class III futures are 1-30 cents lower with August holding the most losses. Class IV futures are steady to one cent lower. Butter futures are 0.17 cent to 1.15 cents lower. Dry whey futures are 0.25 cent to 0.72 cent higher.

 

Fluid Milk and Cream - Western U.S. Report 26

Recent reports show California’s surface water is decreasing, and in some areas, bids on     remaining limited water resources are driving the prices higher and higher. Some dairy     operations are selling off cows, reducing herd size to help manage water needs and in     anticipation of drought-induced feed shortages and subsequent higher prices. However, the     drought impact varies from farm to farm. Milk production is steady and following seasonal     trends. Bottling orders are flat to lower. 

Arizona milk production is dropping in the summer heat. Handlers have been pulling at available supplies to fill steady Class I and II orders.

Milk output in New Mexico is decreasing. Bottling orders are flat, and Class II demand is     steady to slightly higher. 

Record-shattering heat seared the Pacific Northwest early in the week. While triple-digit temperatures have moved out of the forecast, warmer than usual weather will likely last a few more weeks. Milk is widely available right now, but some industry contacts expect the heat will shrink yield by a few percentage points. Class I orders are down. Class II and III orders are level. 

Demand for Class I and III milk is steady in the mountain states of Idaho, Utah, and olorado. Milk production in Idaho is particularly strong. Local contacts have sourced spot loads at up to $6.00 under Class III. Other outlets are willing to pay more, but the shortage of tanker drivers is keeping milk closer to its origin and available at a discount. Output is tapering further south in the mountain states. 

Contracted condensed skim is steady. Cream is in adequate supply. Some cream-based manufacturers are modifying production schedules due to the heat, but other butter churns and ice cream plants remain active. Western cream multiples are unchanged from last week.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2500


     Information for the period June 28 -  July 2, 2021, issued weekly

     Secondary Sourced Information:

     PACIFIC NORTHWEST MARKET ORDER
Milk delivered to the Pacific Northwest Order 124 totaled 632.0 million pounds in May 2021.     Class I utilization was 133.3 million pounds and accounted for 21.09 percent of producer     milk. The uniform price was $17.26, up $0.98 from April 2021, and $5.29 above the same     month a year ago.

     ARIZONA MARKET ORDER
Milk delivered to the Arizona Order 131 totaled 356.8 million pounds in May 2021. Class I     utilization was 107.9 million pounds and accounted for about 30.2 percent of producer milk.     The uniform price was $17.25, up $0.82 from April 2021, and $4.87 above the same month a     year ago.

Thursday Morning Dairy Market Update - Uncertain Price Strength

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	10 to 15 Higher
Soybean Futures:	10 to 15 Higher
Soybean Meal Futures:	$3 to $4 Higher
Wheat Futures:	Mixed

MILK:

Milk futures were under pressure for no reason other than the disappointment that barrels could not hold or increase in price Wednesday. Fundamentals of the market have not changed. Milk supply remains plentiful for bottling and manufacturing needs. There is no concern over supply tightness. There are two things that the trade will keep an eye on. The extreme heat and drought that is taking place in the West and Northwest and the rebound of grain prices as result of the Acreage and Quarterly Stocks reports yesterday. Both of these could have some impact on milk production. But for right now, there is plenty of milk available for demand.

CHEESE:

Cheese prices may find further strength as buyers might be stepping up to the plate at current prices in order to increase ownership for later demand. The concern is that there are reports that increasing cheese inventory may limit the interest in purchasing due to sufficient supply. Buyers have been able to purchase what they need without having to chase it.

BUTTER:

The supply and demand balance of butter may keep price near the current level for the foreseeable future. Inventory is 7% above a year ago with churning remaining active. This will leave buyers unconcerned over supply. Exports have been very strong and should remain that way as price remains competitive on world market.