March 17, 2023
Class III Has Huge Week
The April Class III contract closed out Friday at $19.71, an impressive $1.47 jump since last week’s close. The rest of Q2 saw May garner $1.01 while June sprung 77 cents. The most tangible help came from a 20.3750 cent rally in spot cheese to push to $1.97875/lb, in which both blocks and barrels got in on the fun. For most of 2023, blocks had pushed to an uncomfortable premium over barrels, but that corrected in a massive reversal last week. This week, blocks jumped 21.75 cents with barrels rallying 19.00 cents while the spread stayed at a healthy 3.75 cents. A bit more intangibly, due to a cybersecurity issue, has been the recently-delayed Commitment of Traders report which are now up-to-date through March 7th. Managed Money Traders are still flirting with more than a 4,000 contract net short position, second only to the peak position from 2019. Unfortunately, Class IV futures remained on the sidelines amidst the Class III rebound.
- Quarterly Class III prices for the week: Q1 up 12 cents to $18.42, Q2 up $1.07 to $19.01, Q3 up 33 cents to $19.56, and Q4 up 15 cents to $19.66
- Quarterly Class IV prices for the week: Q1 unchanged at $19.09, Q2 down 5 cents to $18.35, Q3 down 14 cents to $19.23, and Q4 down 6 cents at $19.94
- After recent price action, second month Class III milk now holds a premium to second month Class IV milk
- The spot whey market continues to find buyers, as the price gained 2.50c this week to $0.4675/lb
Corn Finds Support at $6.00
- The corn trade posted its first up week in five weeks and recovered 11.25c on the July contract. Buyers supported the $6.00/bu level
- Private exporters reported sales of 191,000 mt of corn for delivery to China during the 22/23 marketing year on Friday
- There is talk of China lowering their reserve requirements 25 basis points to try to stimulate their economy
- It is still hot and dry in Argentina but there are chances for rain in the next 7-10 days
- US corn exports are still down 39% from a year ago
Soybean Meal Futures Start to Push Lower
- Front month soybean meal fell $19.90 per ton this week, it’s biggest down week since September
- Argentina reduced its soybean crop estimate to 25 mmt
- China may try to buy soybeans domestically to add to their reserves
- Crude oil is lower again today, adding pressure to the market. There are rumors the US could buy crude oil at these levels to add to strategic reserves
- Brazil soybean basis is falling with increased farmer selling and reduced purchases from China so far
- Another down week for meal could start a downward trend, given how overbought the market has been
Friday’s Market Quotes
Author
Evan Disher