This Week In Dairy 09-04-2020

September 4, 2020

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Class III milk futures had a bit of an odd week of trading this week as futures under performed when compared to the spot cheese movement. Spot cheese broke out this week as the market reacts to President Trump announcing the government would do another round of purchasing on the open market. This time, it was announced that an additional $1 billion of product would be purchased for the Food for Families program. Since the release of this news, cheese prices have been soaring. Cheese tacked on 28.375c this week and closed up at $1.9125/lb. Class III milk had a strong start to the week, but fizzled out by midweek. Overall, the Q4 2020 milk average gained just 43c this week. The front month September contract, meanwhile, jumped $1.36.




  • The market expects cheese demand to be strong in the near term with more government buying
  • Premium in the milk market remains just in the nearby months at this time
  • A Global Dairy Trade auction event this week was lower for the fourth event in a row
  • Class IV milk remains at a discount to class III




Corn futures had a pretty choppy week of trade this week, ultimately finishing lower by 1.25c when compared to a week ago. The December contract finished the week right at $3.58 per bushel. The market received some support on Friday after China had experienced typhoon rains of up to 9 inches in some growing areas. Additionally, Chinese corn prices have been holding up near 5-year highs. The markets may be pausing here, awaiting next Friday’s much anticipated USDA Supply and Demand report. The USDA will give an updated yield total which will let the market see how much of an impact that derecho storm in Iowa had on the crop. The short term trend on corn remains up.



  • Chinese corn prices are up near 5-year highs, helping support U.S. corn
  • Iowa crop damage still being assessed from the derecho storm
  • Corn prices chopped sideways this week but did hold onto recent gains
  • China experienced typhoon rains of up to 9 inches recently



Soybean Meal

Soybean meal futures saw continued momentum to the topside this week, as the October contract gained another $8.00 per ton. This follows last week’s price surge of $11.10 per ton. The two strong weekly movements higher now brings the front month contract up to $312.10 after bottoming in August at $283.10. Support in the market comes from talk of cold weather in the United States next week and developing La Nina conditions over in South America. Cold weather in the U.S. could limit bean yields. There have also been some large purchases of U.S. beans by China that is helping to fuel this rally. Palm oil futures prices have been strong lately as well.


  • Soybean meal futures are breaking out into new multi-month highs
  • Cold weather forecasts in the U.S. will be watched closely next week. Could lower bean yield
  • Next Friday’s WASDE report will likely bring fireworks to the markets. Expect volatility
  • Soybean meal is back over the $300 per ton level



Market Quotes




Evan Disher

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