September 2nd, 2022
Milk Adding Muscle to End Week
After a strong selloff in the Class III market to begin the week that had September and October futures flirt with $19.50, Friday’s bounce saw 21-cent gains in September and 53- cent gains in October. The record high inventories in cheese have not limited that market as the spot block/barrel price saw gains on the week overall to settle at $1.81 per pound. Butter continues its bull run as low inventories have driven spot prices to $3.10 per pound. Although not linear, the spot butter price has risen from 2.94 on 8/19 to today’s level. Consolidation is king as Class III and IV prices have been generally range bound since early July as the markets await a fundamental change that can shift the markets up or down.
- Total cheese output was 1.16 billion pounds, 1.1% above July ’21 and 0.5% above June ’22
- Butter production was 152 million pounds, 3.1% above July ’21 but a substantial 5.3% below June ’22
- Dry whey production totaled 85.7 million pounds, up 5.8% from July ’21
- The US dollar index reached all time highs this week, breaking previous high that was set earlier this year, settling at 109.60 as of this email
- US milk production for July was up 0.23% from July ’21 but US dairy herd butterfat production increased 2.05% from July ’21
Chopping Corn Before Harvest
- The corn markets for the week were choppy, starting the week with four down days only to finish Friday on a positive note
- This weeks high for Dec corn was on the opening Monday at $6.83, fell to a low on Thursdays close $6.58, then finishing today’s trade at $6.6575
- USDA crop ratings for corn continue to fall, good-to-excellent down an additional point this week to 54%, six points behind last years crop
- Current crop conditions are in line with 2011 levels, that year there was a significant selloff into harvest starting in late August
- StoneX farmer survey pegs corn yield above 173 BPA (12 state survey)
Soybean Meal Down Overall For the Week
- Despite today’s trade that saw the meal board up $1.40 October and $2.40 December, meal was lower overall on the week
- This weeks high for Oct meal was on the opening Monday at $433.60, fell to a low on Wednesday’s close at $420.70, then finishing today’s trade at $424.00
- Bean crop ratings unchanged from last week at 57% GTE, that rating is one point above last years crop
- A significant inverse still exists in the bean meal board, front month October bean meal at $424 while March ’23 meal under $405.
- Midwest bean meal basis offers from processors seem to be softening as we close in on harvest
Friday’s Market Quotes
Author
Michael Minster