This Week in Dairy 03-24-2023

March 24, 2023


Cheese Aggression Gives Nearby Class III Milk a Jolt

Nearby Class III milk futures have exploded higher over the last couple of weeks following a sudden demand shift in the spot cheese trade. Over the past two weeks, the US block/barrel average cheese price has added an impressive 25.625c and closed the week back over the $2.00/lb threshold. Cheese buyers have been aggressive. With that kind of a rally, it’s no surprise nearby milk futures are following the move higher in cheese. April 2023 Class III milk jumped 76c this week and is now up $2.56 per cwt from its February 27th low. What’s most interesting, though, is that the second half of the year contracts remain stuck in the mud. There may be some pessimism that this cheese rally won’t last and the market isn’t quite ready to add premium to the future months. For now, the market structure for dairy is pretty flat. April 2023 settled the week at $19.93 while October 2023 traded at $19.63. The cheese bidding has also taken Class III quite a bit higher than Class IV. A weaker butter and powder trade has kept the Class IV market under pressure. April Class IV was down 13c this week.

  • The April 2023 class III milk contract finished the week at its highest level since December 6, 2022
  • US spot powder finished the week at a multi-year low, down at just $1.15/lb
  • Despite the strong cheese bidding, each class III contract June through September finished the week down double digits
  • Feed costs are starting to come down. May soybean meal fell $20.90 this week after losing $19.90 last week


Nearby Corn Futures Try to Recover

  • May corn futures closed the week 8.75 cents higher at $6.43; new crop December futures lost a penny to move to $5.6025
  • China purchased 2.35 million tons of US corn in January and February, up 22% vs. the same period last year
  • That amount was nearly matched last week alone with 2.20 million tons in sales to China, the highest weekly amount since May 2021
  • According to the USDA, Brazil will export more corn than the US this year for the first time in a decade
  • As of March 14, Managed Money traders were net short 54,134 contracts, down from a net long position over 200,000 last month

Soybean Meal Futures Break Hard

  • May soybean meal futures fell $20.90/ton this week, on top of last week’s $19.90/ton drop, to close at $445.10
  • The Buenos Aires Grain Exchange estimates Argentina’s soybean production at 25 million metric tons, down 50% from the initial estimate
  • Conversely, AgroConsult sees Brazil’s soybean crop a record 155 million metric tons, up from 153 mmt last month
  • The lower Argentine crop has the country estimating its soybean imports to be up 139% from last year due to the drought
  • As of March 14, Managed Money traders were net long 133,970 contracts, down from a recent record of 155,063 contracts


Friday’s Market Quotes



Dustin Jonasson

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