January 27, 2023
Milk Chops Around But Lower Overall
Second month futures in Class III came within a few pennies of $19 on Tuesday but reversed course lower throughout the remainder of the week. Monday’s gains of 43 cents on the February contract were wiped away by selling pressure and ended up down overall on the week by 17 cents to settle at $18.07. Class IV second month futures were less volatile during the week, trading in a narrower range and settling at $18.92 at Friday’s close, up 17 cents on the week overall. Quarterly changes to Class III are as follows: Q2 down 8 cents, Q3 down 7 cents, and Q4 down 14 cents. Changes on Class IV quarterly contracts are as follows: Q2 down 2 cents, Q3 down 9 cents, and Q4 down 13 cents. These prices moving south are a similar pattern that plays out in the dairy markets to begin most years.
- Spot market weekly changes below:
- Spot cheese was volatile but finished higher with nearly 5 cent gains to $1.75/lb
- Spot powder was down just over 2 cents to $1.15/lb, levels not seen since March of 2021
- Spot butter was down 5 cents to $2.27/lb, lowest weekly close since 12/20/21
- Spot whey was fractions of a penny higher to $0.3275/lb
Corn Grinds Higher
- Corn futures continued higher this week despite a large sell off on Monday, front month futures rose 6 cents per bushel on the week
- Rangebound trading on this second month contract has continued since late December, sticking above $6.50 and below $6.87
- The Buenos Aries Grain exchange reported that following the recent rains, 12% of their corn crop is now rated good to excellent, a big jump from last week’s 5%, with 37% at pollination
- US ethanol production has steadily increased since the calendar turned to 2023 but inventories are piling up as well with gasoline consumption down
- Yesterday’s export sales were better than expected and have offered support to prices
- Central and northern Brazil are still receiving consistent showers, which is slowing their planting pace for second crop corn as well as the soybean harvest
Soybean Meal Choppy But Higher
- The soybean meal market was up and down all week but managed to move higher by nearly $10 per ton on the week, settling at $473.50
- The weekly close maintains rangebound trading on the front month contract between $460 and $480 over the last month
- Brazilian soybeans are much cheaper than in the US which leaves the possibility that China could cancel some shipments in favor of Brazil
- Soybeans benefitted from Argentina’s rains along with corn, and the Buenos Aries Grain exchange bumped up their good to excellent rating from 3% to 7%
- CHS and ADM have reported huge profits recently, much of those profits can be attributed to extremely good crush margins
Friday’s Market Quotes
Author
Michael Minster