TFM360 Dairy 04-23-2021

Dairy Markets Finish Choppy Week Higher

The dairy markets finished the week with three up days and two down days, as prices continue to weigh a balance of different factors in the market. We received two important fundamental reports this week with milk production and cold storage. Both of these reports looked to be bearish, as milk production finished just above trendline production growth at 1.8% YoY. Milk production numbers weren’t overly bearish, but the Cold Storage report was one of more concern. Growth of cheese in cold storage came in at the highest levels since 2019 at 7% growth YoY.

Milk futures finished the week at strong levels with May through August of Class III all finishing above $19.00/cwt. Class IV continues to make decent gains as the spread in the market between Class III and Class IV shrinks the further into 2021 you go. This shows that the futures market is optimistic that Class IV can continue to improve towards the latter half of 2021. While spot market prices were mixed this week, the surge in grain prices this week also keeps an artificial level of support in the market. Price action in the whey spot market looks toppy as prices slammed lower from 70 cents to 62 cents. The non-fat powder market’s momentum on the breakout over $1.20/lb continues as the market finished at a new high for 2021 of $1.2525/lb.

Dairy Spot Trade

Cheese In Cold Storage Surges 7% YoY

The cold storage report for the month of March came in at 1.466 billion pounds vs. 1.436 billion pounds in February and 1.374 billion pounds in March of 2020

The largest growth continues to come from american cheese while swiss cheese is mostly unchanged year over year

Butter in cold storage continues to came in largely above last year at 15% growth YoY. We did see a stagnation in monthly growth as the amount of butter in cold storage was virtually unchanged year over year.