Thursday Midday Dairy Market Summary - Spot Prices Increase

Block cheese price increased a penny to $1.76 with no loads traded. Barrel cheese price increased 5 cents closing at $1.86 with 5 loads traded. Dry whey increased a penny to 61 cents with one load traded. This pushed Class III futures substantially higher with contracts ranging from 11 cents to 56 cents higher and November showing the greatest gain. Front-month October shows a decline of 6 cents due to the market adjusting the prices on the weekly AMS report. Butter increased 4.50 cents closing at $1.8450 with one load traded. Grade A nonfat dry milk price increased 0.75 cent closing at $1.5275. Class IV futures are 12 cents to 34 cents higher. Butter futures are 1.00 cent to 4.37 cents higher. Dry whey futures are 0.72 cent to 1.70 cents higher. Some of the buying on the spot market may be the reaction to the September Milk Production report as well as good buying interest with demand increasing for the holidays. USDA will release the September Livestock Slaughter report Thursday afternoon.

Fluid Milk and Cream - Western U.S. Report 42

California milk production is flat but following typical seasonal patterns. Contacts say     that supplies are meeting current dairy manufacturing needs. Bottling sales are unchanged.     Class II and III orders are steady to higher. Forecasted heavy rain over the next week is     expected to bring some much-needed moisture to the state. However, sources indicate the     precipitation won’t be enough to end the drought, and residents in some areas have been     cautioned to prepare to evacuate in the event of severe flash flooding. 

Farm level milk output in Arizona is flat to higher. Bottling demand is perking up as schools resume instruction following scheduled fall breaks. Class III sales are steady as cheesemakers work through available milk supplies. 

Milk production is up in New Mexico, and stakeholders expect output will continue to increase over the next few weeks. Balancing plants are  active; holdover numbers are higher but coming down to more manageable quantities. Class I demand is lower while Class II orders are steady to stronger. 

Pacific Northwest milk production is following seasonal trends, but Washington’s output falls short of handler forecasts by several percentage points. Some contacts are not anticipating a full rebound after this summer’s heat. Class I sales are steady, but some bottling operations are running under capacity, on abbreviated schedules, due to labor issues. Class III demand is high, and some cheese plants are staffed to operate at maximum capacity. 

Milk production throughout the mountain states of Idaho, Utah, and Colorado is stable. Bottling is steady. Class II and III demand is level to higher. 

Some contracted customers have temporarily reduced condensed skim order volumes due to planned downtime for plant maintenance. Cream availability is  reportedly sufficient for current production demands. Internal cream supplies are meeting the needs of some end users. Ahead of the holiday season, production is steady to increasing for butter and cream cheese. Western cream multiples are steady.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.3500


     Information for the period October 18 - 22, 2021, issued weekly

     Secondary Sourced Information:

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 1.904 billion pounds in September 2021.     Class I utilization was 396.5 million pounds and accounted for about 20.8 percent of     producer milk. The Statistical Uniform Price for milk delivered to plants in Los Angeles     County, CA was $16.91, up $0.32 from August 2021, and $2.44 above the same month a year ago.


     MONTHLY MILK PRODUCTION
The NASS Milk Production report noted September 2021 milk production in the 24 major states     was 17.3 billion pounds, 0.4 percent higher than a year ago. Milk cows in the 24 selected     states totaled 8.93 million head, 48,000 head more than a year ago. The following table     shows western states included in the report and the monthly milk production changes compared     to a year ago:

     September 2021 Milk Production, (USDA-NASS)

                       (Million Pounds)    % Change From
                                           1 Year Ago

      Arizona               362        -    1.9
      California            3285       +    0.2
      Colorado              429             0.0   
      Idaho                 1335       -    0.2
      New Mexico            579        -    12.5
      Oregon                211        -    0.9
      Utah                  185        +    2.8
      Washington            515        -    7.9

Thursday Morning Dairy Market Update - Class III Futures Move Higher

OPENING CALLS:

Class III Milk Futures:	5 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Lower
Soybean Futures:	7 to 9 Lower
Soybean Meal Futures:	$2 to $4 Lower
Wheat Futures:	3 to 5 Lower

MILK:

The bullish implications of the September Milk Production report may push milk futures higher. Milk production only being 0.2% above the previous year with production per cow and cow numbers declining, provides a friendlier price outlook. Obviously, higher prices will need to be supported with higher cash markets. The contraction of milk production due to significantly higher culling may point to the potential of a tighter milk supply. A continuation of this trend may have some processing plants and co-ops rethink their milk production quotas that are in place or planned to be implemented. Feed prices are high as well as other expenses squeezing profit margins. USDA will release the September Livestock Slaughter report that will show a significant increase of dairy cattle slaughter.

CHEESE:

It will be interesting to see whether cheese buyers might be more aggressive during spot trading Thursday as they see milk production slowing. This may not have much impact on underlying cash as there is sufficient supply available to the market. USDA will release the monthly Cold Storage report Friday, which should show a decrease of inventory but supply continuing to remain higher than a year ago.

BUTTER:

The market is uncertain as to the level of demand through the rest of the year. Retail orders are increasing as buyers want to provide sufficient lead time to receive supply due to transportation issue that are evident. Export demand remains robust, but price has not been able to break out and trend higher.