This Week In Dairy 01-07-2022

January 7, 2022

 



Two-Sided Day Ends Wild Week For Dairy

Despite ending the week with 92 cents of losses in Thursday and Friday’s trade, the February Class III price was still 71 cents higher on the week with a close at $21.43. The roll from January to February as the second month got the charts over that pesky $20.00 resistance level and opens up the topside for further strength. The block/barrel average also managed to break out of its range to the topside in the last week as well, hitting a 14-month high at $1.96875/lb and finishing the week at $1.93/lb. This week’s Dairy Products report showed cheddar production down 4.4% year-over-year, but total cheese production up 1.6%. Whey production remains below the 5-year average as spot prices sit at all-time highs, hitting $0.7575/lb today.

Class IV action was strong again this week with the February contract closing at $22.13. Spot butter prices have been ripping higher, closing the week out at $2.7425/lb. That was a 29 cent jump on the week and makes for a 65 cent rally within the last three weeks, hitting its highest level since December 2015. Both the supply and demand situations are trending bullish as US butter production was down 10% year-over-year in the month of November and exports managed another huge month. Spot powder was also higher on the week, jumping to $1.71/lb and finding support from a 15% decrease in production in November vs. the same month a year prior. Class IV futures have still hardly even shown signs of a retracements and continue to push near their 2014 all-time highs.


 

Corn Adds 13.50 Cents In Another Steady Week

The corn market remains concerned over weather conditions in South America. As a result, weather premium continues to be pumped into the US market. 40% of the Argentina corn crop is early variety, pollinating right now in 100+ degree temperatures. Over the next 10 days temperatures are expected to reach as high as 115 degrees. Brazil and Argentina’s corn crop may each be down by 5 mmt from the heat. The Buenos Aires Grain Exchange decreased the Argentina corn rating to 40% good to excellent from 58% last week. Relief is expected over the next 11-15 days though as some rain and cooling is expected. Weekly corn export sales were a disappointment for the market this week. The market now turns its attention to the January WASDE report next week Wednesday.


Soybean Meal Soars Over $400/ton

Soybean meal futures added an impressive $25.90 ton this week in the front month contract up to $425 per ton. This puts the March 2022 contract into a new contract high. Like the corn market, participants are keeping a close eye on weather over in South America. The Brazil soybean crop may be down as much as 13 mmt from the USDA estimate, with Argentina down about 5 mmt. Argentina soybean crop conditions have been lowered to 48% good to excellent, which compares to 71% two weeks ago. There remains concerns over how much soybeans China has been buying. They have bought 27% fewer soybeans this year than last year. World veg oils continue to trend higher, adding support.


 

Today’s Market Quotes

Author

Evan Disher

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