This Week In Dairy 10-23-20

October 23, 2020

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Milk futures jumped higher yet again this week after running through some turbulence midweek. The second month November contract gained $1.27 per cwt to $22.19 while the December contract added $1.43 per cwt to $20.16. Cheese demand continues to be a driving factor to this rally. It was announced on Friday afternoon by the USDA that they would extend their purchasing for the Farmers to Families Food Box Program. This round of buying will be up to $500 million. It can be expected that cheese demand will remain strong for the next two months, with this announcement set for buying from November 1st through December 31st. Milk futures finished limit higher (75c) on Friday as a result of the news. Some caution needs to be had moving forward though, as the September milk production report released this week was fairly bearish. US milk production jumped 2.30% in September.

Milk Highlights:
  • All Q4 2020 class III milk contracts finished the week over $20.00 per cwt
  • The 2021 class III milk calendar year average finished the week at an all-time high as the market prices in premium in those further out contract months
  • The 2021 average is just at $16.80 per cwt, so it does have plenty of more upside to go to get closer to the spot markets
  • Spot cheese is trading over the 2014 bull market highs and is about 10c away from hitting an all-time high


Corn futures rallied in all five trading sessions this week. The movement in price took the December 2020 contract up 17.25c to post a $4.1925 per bushel close. In addition to the five consecutive up days, this was also the fourth consecutive week of higher prices for corn. Weather will be watched closely in South America over the weekend as Argentina has received beneficial rain and more is expected in the coming days. Meanwhile here in the U.S., some harvest delays are expected due to rain and snow in the Dakotas and parts of Minnesota and Wisconsin. There was an export sale of corn announced this morning for 100,000 metric tons to unknown destinations. Corn exports are a big driving factor of this rally.

Corn Highlights:
  • December corn finished higher in all five trading sessions this week, tacking on 17.25c in total
  • Technically the market broke over the August 2019 high with the next resistance at $4.60 per bushel
  • The weaker Dollar is helping to keep exports demand high
  • The next Supply and Demand report will be on November 10th

Soybean Meal

Soybean meal futures finished higher for the eighth time out of the past nine weeks. The front month December contract is now up to $386.40 per ton after tacking on $18.90 this week. Export demand and weather concerns in South America are a big driver. There is also talk that due to the drop in the Argentine peso, farmers are hoarding beans. This could be sending additional business back to the United States and is likely a big reason for the strong export demand we’re seeing. With the U.S. bean crop, some harvest delays are expected due to the rain and snow in the Dakotas and parts of Minnesota and Wisconsin in the coming days. Market conditions for meal are overbought, but there is enough bullish news keeping the market higher.

SBM Highlights:

  • December soybean meal finished the week at $386.40 per ton as the market nears the $400/ton level
  • Rain is expected in Brazil over the next 10 days
  • The funds continue to be large net buyers of contracts of both soybeans and soybean meal
  • There is talk that US soybean exports to China could exceed the record 36 mmt from 2016/17

Market Quotes


Evan Disher

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