April 30, 2021
Dairy Posts A Strong Week Overall
The Class III and IV milk futures markets saw little price action during Friday’s session but still ended the week strong overall. The second-month Class III contract gained 20c this week while the third-month contract added 83c. The second-month Class IV contract finished the week up 14c while the third-month contract added 40c. Feed prices continue to be a very strong supporting factor to this milk rally.
This week was another steady one for the dairy spot trade. Spot whey, powder, and cheese all finished the week green. The only market that ran into more offering was the butter trade, but it only fell 1.75c in total. With global dairy levels holding at higher levels and the expectation for lower milk production throughout the year because of the high feed costs, the US spot market is steady. There will be a Global Dairy Trade auction next week, so we’ll get a look at where global prices are headed. The most recent auction was fairly neutral.
Milk Highlights:
The 2021 Class III average made a new all-time high this week of $18.36
The high feed costs continue to help support higher milk futures. Milk production is expected to taper off if feed costs stay this high
The cold storage report last week showing over 7% growth in cheese inventories year over year looks bearish fundamentally for prices
The spot powder market has continued its breakout over the rangebound trade of $1.15/lb to $1.20/lb, finishing at $1.325/lb this week
Corn Market Volatility Continues
Corn futures were limit higher again on Friday, with the July contract up 40.75c this week. This was the fifth up week in a row for corn. The CME has raised daily price limits from corn – which will now be 40c next week. Expect more volatility ahead as a result. The May futures contract is heading into expiration now and puts the July contract into the focus for the market. The surge in prices today looks to be a combination of individuals trying to get out of May contracts before expiration and the market trying to fill the gap to the topside after rolling to the July contract on the continuous chart. Planting progress is estimated by some to be as high as 50% by the end of the week in the United States.
Soybean Meal Faces Indecisive Week
The soybean meal futures market saw a lot of back and forth trade this week as the market traded $14/ton from the high and $11/ton off the low to finish the week only $1.1/ton higher. While we saw the soybean market push to new highs for the recent move we continue to see the soybean meal be the laggard of the soy complex. The move higher in soybeans does put American soybeans at a premium to South American soybeans from a price perspective. Veggie oils were seeing pressure today as concerns over a surge in Covid cases in India that may reduce palm oil usage. Some are estimating that around 33% of American soybean acreage will be planted by the end of the week.
Today’s Market Quotes
Author
Adam Betancourt