February 24, 2023
Mid-Week Rebound Fails to Hold
Prices during the middle of the week for both Class III and Class IV found some nice gains, but were unable to hold as prices plunged to finish the week. Some of those gains early in the week could have been attributed to a GDT auction event that saw an increased value in cheese, which influenced the domestic spot cheese market higher on Tuesday and Wednesday. The factor likely influencing prices lower starting Thursday was the Milk Production report showing January year-over-year production up 1.3%, while the US dairy herd grew by 9,000 cows. The dairy herd size growing lines up with a report showing US weekly dairy cow culling for week ending Feb 11th was -3.7% YoY. On top of Milk Production and GDT auction was today’s Cold Storage report for January, yet to influence the markets as it was released at 2PM CST, showing cheese stocks in refrigerated warehouses were down slightly from previous month and year ago levels. Butter inventories have made a drastic turn from 5 year lows this past summer to up 21% from last month and up 20% from year ago levels.
- Quarterly Class III prices for the week: Q1 up 1 cent to $18.33, Q2 down 21 cents to $18.08, Q3 down 13 cents to $19.49, and Q4 down 10 cents to $19.75
- Quarterly Class IV prices for the week: Q1 down 1 cent to $19.22, Q2 up 5 cents to $19.28, Q3 up 19 cents to $20.08, and Q4 unchanged at $20.08
- Despite heavy trading, cheese blocks have added to their premium over barrels, currently sitting at $0.34/lb., the spot cheese average price currently sits at $1.71/lb.
- Class IV premiums over Class III have settled near $1 per CWT recently
Corn Breaks Out of Range
- Three consecutive days of selling pressure have pushed corn prices lower and breaking below previous resistance levels, pressure is being applied by lower energy and wheat prices
- The USDA reported an increase of 32.4 mb of corn export sales for 22/23 and an increase of 1.0 mb for 23/24 and were down 20% and 30% from the prior 4-week average
- Last week’s export shipments were 27.1 mb and were below the 48.4 mb needed each week to achieve the USDA’s export estimate
- The Buenos Aires Grain Exchange has lowered their corn crop ratings to just 3% good to excellent which is a an all-time low
- Delays to Brazil’s soybean harvest is delaying planting of second crop corn which is estimated at 40% planted versus 50% last year
- A Bloomberg survey has forecasts 2023 US corn acres to increase to 90.9 million acres, up 2.6% from last year
Soybean Meal Rolls To Lower Values
- After breaking above $500 per ton, touching as high as $508 this week, meal prices failed to follow through and closed the week with the lowest value in the last three weeks at $491.10
- Soybean futures gapped higher to start the week after frost was reported in Argentina over the weekend. Many analysts further reduced crop expectations on the news
- Year-to-date US export commitments are up 3.5% from this time last year with the USDA forecasting a year-over-year decline of 8 percent
- The USDA reported an increase of 20.0 mb of soybean export sales for 22/23 and an increase of 0.4 mb for 23/24 and were up 20% but down 18% from the prior 4-week average
- Last week’s export shipments were 63.9 mb and were above the 17.5 mb needed each week to achieve the USDA’s export estimate
- Brazil’s bean harvest is behind normal pace due to excessive rains
Friday’s Market Quotes
Author
Michael Minster