This Week In Dairy 05-26-2023

May 26, 2023


The CME and Total Farm Marketing offices will be closed Monday, May 29, 2023, in observance of Memorial Day.

Milk Market Push Lower

  • June Class III milk futures finished the week lower for the fifth week in a row. Pressure stems from a sluggish spot whey and cheese market.
  • Despite bouncing nearly 10c off the lows earlier in the week, the spot cheese market retreated back lower by week’s end. Sellers continue to be aggressive at these multi-year low price levels.
  • The USDA reported this week that US April cheese in storage was down 1%, while butter inventories were up 9.8% from last year.
  • The US spot whey price finished the week up a penny to $0.2750/lb despite hitting a new all-time low earlier in the week.
  • Weekly dairy cow culling for the week ending 5/13 was up 3.1% YoY.

Heavy spot cheese trade remained for the second straight week, as buyers fill up inventories of lower-priced blocks and barrels. The premium of blocks over barrels eroded over the last six weeks, a change of nearly 30 cents as barrels are now at a slight premium of just over a penny per pound. Inventories of cheese being below last year’s level need to be looked at more closely as these levels are the third highest levels over the last eight years. Higher cheese inventories have forced spot prices on milk from $11 to $4 under class, a bearish tone considering this time last year basis on spot milk was closer to class pricing. Milk production remains strong in the Northeast and Europe while components have begun a seasonal push lower in the Midwest. It will be an extremely quiet week for dairy fundamentals during the shortened holiday week on the horizon, with no major reports scheduled for release and markets closed on Monday.



Corn Prices Rebound Sharply

  • The front month corn contract failed to break above $6 per bushel multiple times throughout May. That resistance pushed prices below $5.50 briefly, but this week’s trade of five straight days of gains pushed the contract through resistance to settle at $6.04, the first settlement above $6 since 4/27.
  • Much of the strength in the corn market can be attributed to the current pressure system lingering over the Midwest that is keeping needed moisture away from recently planted fields.
  • The corn crops that are experiencing moderate to intense drought rose by a percentage point to 26%, and at this time last year, 20% of the crop was in drought.
  • Despite the strong move higher in prices, corn exports remain at a 10-year low, down 36% from year-ago levels.
  • Ethanol production was lower for the second straight week and continues to be below year-ago production levels and USDA usage expectations.

Soybean Complex Trying To Work Higher

  • The drier forecast has also buoyed the soybean complex higher to end the week, but bearish meal tones have limited the upward movement.
  • Meal settled below $400 per ton for the first time since last September, despite Argentina’s reported crop coming in 6 mmt lower than USDA estimates at 78% completed harvest.
  • Palm oil is higher for the third straight day of trading as the El Niño pattern expected to materialize will bring higher chances of drought to Indonesia and Malaysia.
  • Soybean exports were at the lower end of industry expectations and are now 14% behind from year-ago levels.


Friday’s Market Quotes


Michael Minster

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