July 22, 2022
Another Down Week For Milk
Dairy futures were pressured lower this week from a softer spot market in addition to a variety of bearish news items. To start, this week’s Global Dairy Trade auction fell 5% lower as global prices remain under pressure. In the auction, GDT cheese fell 2%, butter fell 2.10%, skim milk powder fell 8.60%, and whole milk powder fell 5.10%. Global prices have been in a steady downfall since the March highs. On Thursday the USDA said that June milk production was up 0.20% on a year-over-year basis despite a 78,000 head reduction in milk cow numbers. Finally, Friday’s Cold Storage report showed that US cheese in inventory for June rose 5% from the same month last year. At week’s end, August 2022 Class III settled at $20.23 while August Class IV settled at $24.47.
- A steady sell-off in the feed markets is keeping dairy prices under pressure. Corn is back down to $5.6425 after trading over $8 back in April and May
- The spot cheese block/barrel average closed 11.75c lower this week down to $1.9150/lb; This is its lowest price since February 2022
- Milk market conditions remain very oversold and could be susceptible to a correction higher at some point
Corn Takes the Next Leg Lower
– September 2022 corn closed lower in four out of five trading sessions this week and was down 40c total to $5.6425
– Pressure on grains has intensified as Ukraine, Russia, Turkey, and the UN Secretary-General will sign a deal today to resume Ukraine’s Black Sea grain exports
– US weather continues to weigh on grain prices
– US corn export commitments are down 13% versus last year
– Brazil’s corn prices are at a discount to the US, so countries have lowered what they are buying from the US
Soybean Meal Prices Start to Slide
– September soybean meal fell $4.90 lower this week to $399.30 per ton
– Over the next two weeks, parts of the US central Midwest are set to see normal rains and milder temperatures
– There remains concern about lower export demand due to the high value of the US dollar
– Managed money is net long an estimated 71,000 soybean contracts and 66,000 soybean meal contracts
– Good buying opportunities could be had in the coming weeks as the seasonal trend calls for grain markets pushing lower into harvest
Friday’s Market Quotes
Author
Evan Disher