This Week in Dairy 03-26-2021

March 26, 2021

 

Dairy Prices Rebound to End the Week

Class III and IV milk futures had two steady green sessions on both Thursday and Friday to finish the week on the right foot. After Thursday’s spot dairy session saw powder, butter, and cheese all close higher for the first time since March 2, there was more bidding on Friday. Cheese blocks added 2c to $1.72/lb Friday while barrels added a quarter of a cent to $1.4625/lb. Butter recovered another 3.75c and closed up at $1.7750/lb on 2 loads traded. This is a new high of the month for butter and is its best price since June 2020. US butter continues to find demand as global price levels are much higher.
The bounce in milk futures to end the week recovered most of the earlier week losses for class III. April class III finished 4c higher at the end of the week, while May class III was down 27c. Class IV had a really nice week of trade, aided by spot butter moving into its best price in months. Although volume is still lackluster in the futures market, the bids worked higher throughout the week in several contracts. April class IV jumped 43c this week to $15.19. May class IV added 33c this week to $15.46. The class IV milk contracts from July 2021 through December 2021 range between $16.06 and $16.81. They are still discounted pretty heavily to class III, but made up ground this week.

Milk Highlights:

Cold Storage inventories for butter and cheese continue to rise as butter increased 17% YoY and cheese increased 5% YoY

The spot whey market once again finished at all-time highs for the electronic spot trade

The spot butter market finished the week at a multi-month high of $1.775/lb showing decent demand in a time of year we typically don’t see it.

The market continues to wait for updates from the new Ag Secretary Tom Vilsack to see if there will be additional government product purchasing

The second half of 2021 remains near the all-time highs for their respective contracts

 

Corn Prices Consolidate Before Stocks Report

Front-month corn futures saw choppy trade throughout the week before the market finished 5.75 cents lower at $5.525. From a technical perspective, the 50-day moving average on the continuous chart has been a level of support the market has repeatedly tested and traded higher off of. We tested this level 2 times this week and 3 times last week and the market has held above it every time. Next Wednesday the quarterly grain stocks report will be released from the USDA. This is typically one of the more volatile reports of the year and the results could lead to a big move in either direction given the recent consolidation of the market. Analysts are expecting the planting intentions for corn to come in near 93.1 million acres vs. 90.8 million acres last year. Recent updates in the long-term forecasts are showing a warm and dry April. This is a bearish influence for the market as it should aid in a strong planting season.

Soybean Meal Firm at $400/ton

The meal market has finished its third week in a row of testing prices below $400/ton before trading back above this psychological level of support. The market is likely looking forward to the quarterly grain stocks report on Wednesday before taking its next leg in either direction. The market traded as low as $395.4/ton before trading higher to finish the week at $404/ton. Going into the report on Wednesday, analysts are expecting soybean acres to come in at 90.1 million acres vs. 83.1 million acres last year. Dry weather in Argentina has continuously hurt the projections for their soybean production on the year. This week the Buenos Aires Exchange predicted that Argentinian production would come in at 44 mmt vs. the USDA’s current estimate of 47.5 mmt.

 

Market Quotes

Author

Adam Betancourt

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