May 5, 2023
Dairy Continues Strong Move Lower
- Despite some mid week optimism, second month Class III and IV contracts finished lower this week.
- A three week trend of higher prices in the Class IV second month contract was broken with the move lower, down 14c on the week
- The close lower for the week on the second month Class III contract marks the third straight week lower, down $1.35 for the June contract during that time.
- None of the spot products finished in the green this week, cheese and butter were big movers, losing 6c and 4c per pound, respectively.
Cheese buyers returned mid week and brought optimism that the spot cheese price had bottomed out and support might be found in milk prices. That optimism faded quickly as the markets turned lower again on Thursday and Friday. Class III futures were under extreme selling pressure Friday as all but one contract between June of ’23 and March of ’24 were double digit losses. Class IV contracts, similar to recent weeks, have fared better (a relative term) than their Class III counterpart but still found lower prices overall in Q3 and Q4 of ’23. Class IV faring better, but still lower overall, is that powder and butter prices have stayed above lows from years back while cheese and whey setting or nearing lows are what have driven Class III sharply lower. Next week, the dairy markets will receive fundamental news in the form of the next GDT auction Tuesday and also a milk production and cattle on feed report on Friday.
Do Bears Eat Corn?
- Friday’s WASDE fed the bears in the corn markets, with only nearby contracts finding slight gains.
- Some experts see this recent report as bearish and point to possible future bearishness as carryouts grow, demand shifts south, and the possibility of El Niño weather bringing favorable growing conditions throughout the Midwest.
- Optimistic numbers in today’s report came in larger expected feed and export demand for new crop corn; however, these numbers were met with skepticism considering the low cattle numbers take years to refill feed lots and South American demand continues to eat away at domestic export opportunities.
- Corn planting is nearly half way complete, up 23% on the week to 49%, 7 points ahead of the five year average.
- Corn emergence is just one point ahead of the five year average at 12%.
Mixed Week For Soybean Complex
- Despite beans and oil coming under heavy selling pressure, soybean meal was mixed, with some up and down contracts throughout the next calendar year.
- Crush numbers will be updated Monday, likely showing continued strong crush numbers domestically.
- CONAB raised its Brazilian soybean crop estimate to a record 154.8 MMT, this increase nearly makes up for the 1.5 MMT cut to the Argy crop by the Rosario Grain Exchange.
- Soybean planting is nearly one-third complete, moving briskly with a 16 point jump this week and 14 points ahead of the 5 year average.
- Soybean emergence is five points ahead of the five year average at 9%.
- China increased soybean imports from March to April but compare this April to last year and the you see a 9.8% decrease, well shy of trader expectations.
Friday’s Market Quotes
Author
Michael Minster