This Week In Dairy 09-23-2022

September 23rd, 2022


Markets Dump Milk, Slice Cheese 

Class III milk markets made large moves lower today with October and November futures losing 56 and 57 cents, respectively, while December futures were limit down 75 cents. Due to limit down trading on the December contracts, there will be expanded limits in the dairy markets Monday. For the week, second month October futures lost 59 cents, erasing gains from Monday and Tuesday. A catalyst for the lower Class III prices was the spot cheese trade today where blocks were down 4 cents and barrels down a half cent. Spot cheese was down nominally on the week, but similar to Class III, gains from earlier in the week were lost by the end of trade today. Class IV futures were mixed but mostly down. October contracts gained 3 cents, while November, December, and January were net losers of 3 cents, 33 cents, and 35 cents, respectively. Even with the small gains today, second month Class IV October futures were 36 cents lower on the week. For the week, spot powder was up 2 cents, spot whey down a half cent, and spot butter up 2 cents.

  • The premium for spot barrel cheese compared to blocks is at the second highest levels since 1997, the spread currently sits at 22.5 cents, 6 cents off the largest spread set in November of 2019
  • Spot butter pricing continues to be strong as low inventories coupled with strong export demand has prices still elevated above $3 per pound, these prices are the highest seen going back to 1997
  • December corn futures started the week higher but ended up in the red for the week, down 1.5 cents, settling at $6.7675 per bushel
  • December soybean meal futures were higher on the week with $2.30 per ton gains, settling today at 423.30 but well off the highs of the week above $443 per ton
  • The US dollar was up 330 points this week, likely leading to some of the commodity markets selling pressure


Corn Ends the Week in Red

  • December corn futures nearly touched $7 on Wednesday but finished that day, and the week overall, in the red, historical and seasonal pressure lower may be taking place with combines starting to roll
  • This years US corn crop now rated 52% GTE, down 1% from last year and 7% from last year
  • US corn harvested now at 7%, behind both last years pace by 2% and 5 year average by 1%
  • Ukraine’s Agriculture Minister reported corn harvest is currently underway with an expectation of 25 to 27 MMT of corn to be harvested versus last year’s crop over 42 MMT
  • US crude prices continue to tumble lower, November futures were over $111 per barrel in early June to current levels trading under $80 per barrel today, demand for gasoline has taken a large hit recently and is likely putting pressure on ethanol and other biofuel inventories and pricing

Soybean Meal Trends Lower to End Week

  • December bean meal futures gained nearly $18 per ton combined on Monday and Tuesday’s trade, only to finish the week with three lower days, settling today at $423.30, up only $2.30 per ton on the week overall
  • Argentina’s devaluation of its peso earlier this month helped spur soy exports, China booked near 3 MMT in the past two weeks, near the same total they booked for the entirety of last year from Argentina
  • Reports continue to come out about how China is also working to cut soy use in animal feed in order to strengthen food security goals, they are aiming to find protein alternatives for animal feeds
  • Overall US soybean harvest from the major reporting states at 3%, down 2% compared to both 5 year average and this time last year
  • Soybean crop ratings drop one percent from last week, now 55% GTE, 3 points behind last years crop
  • Stats Canada has 2022/23 canola production at 19.099 million metric tons, up from 13.757 mmt last year


Friday’s Market Quotes


Michael Minster

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