April 14, 2023
Milk Gives Up Midweek Gains
- Following through on yesterday’s losses, Class III and IV futures were again under selling pressure, with many Class III contracts giving up midweek gains.
- CME cash barrels were extremely active with 70 loads traded, the most active week of trading since 6/30/2018.
- CME cash whey followed barrels with heavy selling throughout the week, 47 loads traded during the most active week of trade since 1/11/2020.
- US weekly dairy cow culling for the week ending 4/1 was up 9.5% YoY as cattle and beef supplies continue to be tight and prices great.
The heavy pressure of lowering cheese prices caught up to milk prices during Thursday and Friday’s sessions. The second month contracts failed to maintain upward momentum from Tuesday and Wednesday, finishing the week lower for Class III and slightly higher for Class IV contracts. The overall momentum of the dairy market continues to trend lower as bullish and bearish fundamentals seem to be relatively scarce as we follow the path of least resistance lower. The Class III second month contract for the week settled directly on a trendline that has acted as support throughout 2023. Breaking below that trendline could see prices test the lows from 2020-2021 near $15. The spread between blocks and barrels continues to widen, over a quarter per pound current premium on blocks, where barrels carried premium throughout much of 2022.
Nearby Corn Supported By Reports
- Front month corn contracts settled at its highest level since late February, likely supported by good export data
- Field conditions point towards favorable weather for much of the central US but melting snow could cause flooding in the Upper Midwest and Northern Plains
- Monday will bring another crop progress report from the USDA while Russia threatens to pull out of Black Sea grain deal
- Export sales to China have helped keep old crop corn prices elevated while favorable weather and expanded US acres have put selling pressure on new crop corn
- Mexico has set up a study on the consumption of GMO corn by humans amid the ongoing trade dispute with the US on banning GMO corn into the country for human consumption
Likely Tight Supplies Keep Meal Prices Supported
- Despite some up and down, meal futures continue to move relatively sideways this month, still well off the highs from February, and finding a home near $460/ton
- The Brazilian bean crop continues to grow to a record 153.6 MMMT while the Argentina crop dwindles and reports it could continue to fall
- China’s soy imports for Q1 are being reported at 23.02 MMT, up 13.5% from last year, these numbers come as the president of Brazil is currently in China to discuss trade
- NOPA will release its most recent crush report on Monday, likely a very strong report based on crush margins at plants as soy oil consumption in the industrial market continues to grow
- Domestic prices on beans continue to be a premium in the world market, evidenced by Perdue farms purchasing a cargo of Brazilian beans to be delivered to the US this spring
Friday’s Market Quotes
Author
Michael Minster