October 21, 2022
Deferred Contracts Weaken
While the November Class III contract closed the week 63 cents higher within a volatile $1.48 range, the December contract and all 2023 contracts were lower on the week. The Q1 Class III average has fallen about $1.17 in the last two weeks, while the Q2 average fell around 90 cents in that time. Class IV action was similar with the November contract finishing up 26 cents from last Friday’s close, but most deferred months gave up value. The two fundamental reports released this week, Tuesday’s GDT Auction and yesterday’s Milk Production report, were both seen as bearish. Overall, market action has been mostly rangebound in recent weeks for both the nearby dairy and feed markets, with the exception of spot powder’s break down.
- Cheddar blocks and barrels have moved back near each other in value with barrels at a 3.25 premium after Friday’s trade, down from 27.75 cents in late September
- Through the first 2-3 months of their new respective production seasons, Australia and New Zealand’s’ milk production is 6.6% and 4.4% YoY, respectively
- September Milk Production for the US totaled 18.282 billion lbs, up 1.5% from September 2021 (18.018 billion) and down about 4.0% from August (19.035 billion)
- Milk Cows were listed at 9.411 million head, up from 9.405 million a year ago and down slightly from 9.413 million the month prior
- Production per Cow came in at 1,943 lbs, up from 1,916 lbs in September 2021 and down from 2,022 in August
Corn Action Still Sideways
- December corn futures finished the week at $6.8425, down 5.50 cents from last Friday
- As of Monday’s Crop Progress report, the USDA had planting at 45% completed vs. the 5-year average of 40%
- Record low water levels for the Mississippi River continue to plague grain shipments, leading to reports China is looking to South America to fill needs
- Anec expects Brazil’s corn exports to hit 7.2 million tons in October, a record for the month if realized and a huge increase from 1.9 mt in October 2021
- Ethanol production rebounded this week to an average of 1.016 million barrels per day, up 9.01% from the previous week but down 7.30% YoY
- EU’s corn harvest is only expected to hit around 50 million tons this year, down from more than 70 mt a year ago
Soybean Meal Hanging Near Support
- The December soybean meal contract closed today at $417.90, up $3.50/ton on the week
- Until the front month contract can sustain a move beneath $400.00, the action remains sideways as buyers continue to defend that level
- As of Monday’s Crop Progress report, the USDA had soybean planting at 63% completed vs. the 5-year average of 52%
- The USDA attaché in Brazil expects the country’s soybean crop to hit 148.5 million metric tons, up from 144 mmt previously
- Export sales for the week ending 10/13 were 2.3 million metric tons, near the top end of estimate of 1.7-2.5 mmt; China was a notable buyer
Friday’s Market Quotes
Author
Dustin Jonasson