Tuesday Closing Dairy Market Update - Canada Reciprocates With Tariffs Including Dairy

GENERAL OVERVIEW:

Class IV futures gained back much of what had been lost on Monday as the market continues with choppy trade. This has been the pattern, and it is expected to continue. Increasing fluid demand due to the reopening of schools is not tightening the supply of milk for manufacturing.

MILK:

There is no shortage of milk. The spot milk supply is tight in some areas, resulting in prices above class, but it is still available for those who need to purchase extra supply from the spot market. Cooler weather is improving cow comfort and thereby increasing milk output. So far, increasing demand has been met without difficulty. Seasonal buying should increase at this time of year as buyers look ahead to fall and holiday demand. So far, increased buying has been met with sufficient supplies. Canada reciprocated with retaliatory tariffs on about $20 billion worth of American goods, including steel, dairy products, appliances, and farm equipment, as a result of the 50% tariffs put on Canadian goods on Monday. The impact this will have on dairy prices is uncertain, but it certainly will have some impact on dairy trade with Canada.

AVERAGE CLASS III PRICES:

3 Month:	$16.59
6 Month:	$16.88
9 Month:	$17.05
12 Month:	$17.20

CHEESE:

The cheese prices are stuck. There is little reason for prices to increase if there is sufficient supply to meet demand. Inventory is in line with a year ago, leaving supply and demand balanced. Cheese production remains steady as milk receipts improve.

BUTTER:

The butter price continues to chop around, with the overall price remaining in a downtrend. Manufacturers continue to offer substantial volumes of butter on the daily spot market. This keeps the upside price potential limited as buyers see little reason to be aggressive except when needing to fill immediate orders. There is no near-term concern over supply.

OUTSIDE MARKETS SUMMARY:

December corn closed up 8.00 cents per bushel at $5.2350, November soybeans closed up 13.50 cents at $12.3775, and December soybean meal closed up $.60 per ton at $329.20. December Chicago wheat closed up 3.75 cents at $7.0325. October live cattle closed down $2.65 at $210.95. October crude oil is down $3.93 per barrel at $81.08. The Dow Jones Industrial Average is up 160 points at 53,577, with the NASDAQ up 171 points at 26,151.

 

Tuesday Midday Dairy Market Summary - Nonfat Dry Milk Regains the Loss

OUTSIDE MARKETS SUMMARY:

CORN:	9 Higher
SOYBEANS:	9 Higher
SOYBEAN MEAL:	$0.70 Lower
LIVE CATTLE:	$1.62 Lower
DOW JONES:	105 Points Higher
NASDAQ:	136 Points Higher
CRUDE OIL:	$2.71 Lower

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.5275 and $1.5750, respectively. There were three loads of blocks changing hands. The dry whey price increased 1.00 cent to close at 71.25 cents with no loads traded. Buyers for dry whey could not entice a seller to match the higher bid. Class III futures are 1 -- 13 cents lower. The butter price increased 3.50 cents to close at $1.4800 with 23 loads traded. This does not indicate a change in trend, but an aggressive buying bounce. There were 18 unfilled bids and 71 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk increased 3.50 cents to close at $1.8100 with one load traded. Class IV futures are 12 -- 27 cents higher. Butter futures are 1.50 cents lower to 3.30 cents higher. Dry whey futures are 0.50 cent lower to 0.50 cent higher. Cheese futures are 0.80 cent lower to 0.20 cent higher. Nonfat dry milk futures are 0.32 to 4.07 cents higher.

Tuesday Morning Dairy Market Update - Market Fundamentals Show Little Change

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	4 to 6 Lower
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	10 to 12 Lower

MILK:

The underlying cash prices are not providing any reason for Class III futures to trend higher. The September, October, and November contracts made new lows as premiums continue to erode. The fact that price strength has not been seen to this point does not bode well for the market moving forward. Cheese and butter prices should see support as buyers prepare for upcoming fall and holiday demand. However, milk production is sufficient for bottling and manufacturing, leaving little reason for buyers to be concerned over supplies. Increasing demand may be met with increasing milk production. Lower milk prices have not been much of a concern due to high calf prices. However, calf prices are declining in the near term, impacting cash flow.

CHEESE:

Cheese prices are not expected to trend higher anytime soon. Supply and demand seem balanced, resulting in the market remaining choppy. Cheese production remains steady even though more milk is moving to bottling for school accounts.

BUTTER:

There is little reason for the butter price to increase. Churns are running on full schedules, providing sufficient supply for retail and food service demand as well as slowly building inventory. Manufacturers continue to offer butter on the daily spot market, limiting the upside price potential.