April 9, 2021
Spot Cheese Ramps Up To Finish the Week
This week the highlight of the spot market was certainly the fact that spot cheese gained 11.75 cents on the week to finish at $1.76125/lb. The breakout earlier in the week over $1.67/lb confirmed the higher breakout potential to the $1.80/lb level and after today’s impressive 6.5 cent up day, prices are already almost to the next level of resistance. The primary driver of the higher block/barrel average continues to be the barrel price as the spread between blocks and barrels has gone from almost 25 cents at the start of the week to only 14 cents. Class III futures have been moving higher for the majority of this week but traded lower on Friday despite the higher cheese prices. The futures market is still pricing in more upside to the spot cheese market at this point. Several nearby class III contracts pushed their way up into the $19+ range by week’s close. Class IV is moving higher as well, with more $17’s popping up on the contract strip. Class IV has been aided by a strong butter and powder spot trade.
The 2021 class III milk average hit new all-time highs this week
The high feed costs are helping to support higher milk futures. The two markets are starting to trade closely on a daily basis
Butter prices finished the week at $1.88/lb as the market looks to be making a move for $2.00/lb
The second month May class III milk contract added 97c this week after jumping 93c last week
Volume in the dairy trade is starting to increase on a daily basis
Corn Adds 17.50c This Week
The corn trade jumped 17.50c to post a $5.7725 per bushel close on the front month May 2021 contract this week. That close is 17.75c off of the week’s high and is 27.50c off of the week’s low. Much of the trade earlier in the week was in preparation for today’s USDA Supply and Demand report. Initial consensus by the market was for a potential bullish report, which aided in the market rallying 19.25c on Thursday alone. Friday’s report came and went with the front month contract initially jumping higher, but closing down 2.50c on Friday. The USDA put U.S. ending corn stocks at 1.352 billion bushels versus market expectations of 1.396 billion bushels. The USDA estimated world corn 2020/21 carryout near 283.85 million metric tons versus market expectations for 284.82 million metric tons. Additionally, the USDA estimated Argentina corn crop at 47.0 mmt and the Brazil crop at 109.00 mmt.
Soybean Meal Struggles
Front month soybean meal dropped $9.00 per ton this week, closing at $401.20. This is the lowest close for the May 2021 contract since the week of March 8th. The contract had three down sessions and two up sessions. In Friday’s USDA Supply and Demand report, the USDA estimated US soybean carryout near 120 million bushels, versus 119 million bushels expected. The USDA estimated world soybean carryout near 86.80 million metric tons versus 83.50 million metric tons expected. Finally, Argentina’s soybean crop is estimated at 47.00 million metric tons versus the 46.6 million expected and Brazil’s soybean crop is estimated at 136 mmt versus 134 expected. These numbers were viewed as slightly bearish and took the soybean market lower on Friday. Front month soybeans fell 12.25c Friday while front month bean meal fell $5.60.