This Week In Dairy 09-11-2020

September 11, 2020

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Second month class III milk futures tacked on another 35c this week, as the market has rallied for three weeks in a row. This puts the October 2020 contract back up to $19.24 per hundredweight. Considering most producers hold breakevens in milk around the $16.50 mark, prices are back to being profitable again for dairies. Following the October contract is November at $17.72 and December at $16.74. The class III market is rallying from the fact that the government has announced they will be purchasing additional commodities on the open market for the food for families program. Since the announcement, the spot cheese price has rallied back to this week’s close of $1.88/lb. While cheese is recovering, the class IV market and products are quiet. Nearby class IV futures remain less than $14.00 with butter sub-$1.50 and powder sub-$1.05.


  • The market expects cheese demand to be strong in the near term with more government buying
  • Class IV milk futures remain stuck in the mud at below breakeven prices
  • October class III milk is back over $19 and could make a push towards $20 if cheese demand holds
  • Class IV milk remains at a discount to class III




Corn futures rallied another 10.50c overall this week, pushing the December 2020 contract to a close of $3.6850 per bushel. This is the contract’s highest weekly settlement for that contract since the week of March 9, 2020. The much anticipated USDA Supply and Demand report on Friday brought about a good amount of intraday fireworks for corn, but ultimately the market movement was fairly muted. Dec corn gained just 3.50c on Friday. Within the report, the USDA cut corn yield from its August projection from 181.80 bushels per acre (bpa) to 178.50 bpa. The market had been looking for a cut closer to 177.70 bpa. Corn production came in at 14,900 million bushels versus 15,278 million bushels in the August report. In other news, Brazil is considering lifting import tariffs due to a lack of domestic supplies.


  • USDA put the 2020 corn yield estimatet at 178.50 bushels per acre. This is down from the August estimate of 181.80 bpa.
  • Brazil is considering lifting import tariffs due to a lack of domestic supplies
  • December futures are at their highest prices since March 2020
  • As a result of the yield cut, the USDA lowered expected US corn production this year



Soybean Meal

Soybean meal futures posted a third consecutive week of strong price gains. Since bottoming in early August at $283.10, the front month October contract has gained $36.80 over the course of the past five weeks. This week’s price movement saw a $7.80 gain overall, with $7.20 of that coming from Friday’s session alone. The market reacted well to the fact that the USDA said soybean yield could come in at 51.90 bushels per acre versus the August estimate of 53.30 bpa. The market had been looking for a figure closer to 51.60 bpa, but the fact that they cut yield as much as they did was viewed as bullish. Soybean futures jumped as many as 20.50c on the news today, with front month September pushing back over $10. The market is watching the La Nina weather pattern in Brazil and Argentina, which is causing dryness.


  • USDA put the 2020 soybean yield estimate at 51.90 bushels per acre
  • China has been a very large buyer of U.S. soybeans over the past few weeks
  • La Nina weather pattern in Brazil and Argentina is causing dryness to the area
  • Soybean meal is back over the $300 per ton level



Market Quotes


Evan Disher

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