This Week In Dairy 11-04-2022

November 4, 2022


Continued Strength in Dairy Markets

Class III milk futures were the big winners of the week with December contracts gaining $1.51 per CWT to settle after Friday’s trade at $20.35.  December Class IV contracts were both volatile and higher on the week, gaining 13 cents to settle at $21.47, but also managed a low of $20 during Wednesday’s trade. Spot butter took a massive hit this week, falling 53 cents from Monday to Wednesday, recovering during Thursday and Friday to shed just over 36 cents per pound on the week. This massive selloff has the spot butter price under $3 per pound for the first time since late August. Other major spot markets were mixed this week with whey gaining nearly 4 cents per pound, powder down 3 cents, and cheese up a nickel. The dead cat bounce may still be true here but follow-through buying on yesterday’s gains may indicate further gains next week. The Dairy Products report from the USDA on Friday detailed September’s production numbers. Cheese was 0.4% above 2021 levels but 1% below August 2022; butter production down against 2021 levels and August of 2022, 1/4% and 1.3%, respectively; total whey production up 5% from September 2021; and nonfat dry milk powder down a substantial 11.3% from September 2021.

  • The Global Dairy Trade event on Tuesday continued on trend with a 3.9% decline, third negative auction event in a row, and well off all-time highs from March of this year
  • September dairy exports, reported 11/3, were up 8% YoY but down 4% from August, total exports for September came in at 234,375 metric tons
  • As the Fed continues to fight recession with interest rate hikes, the dollar index reached a high above 113 but settling closer to the 110 mark on today’s close
  • Cattle prices continue to be extremely strong; December live cattle closing out the week above $151, with feedlots never able to max out capacity throughout the year due to high feed prices and substantial drought throughout the US


Corn Continues Sideways Trend

  • Resistance on the corn trade right now is at the $7.00 barrier, as the market has tested this level since mid-September
  • Weekly export sales were poor and only increased by only 14.7 mb vs the 35 mb needed weekly to meet the USDA’s projection
  • Total commitments of 406.3 mb are down 53% from a year ago and account for only 18.8% of the USDA’s current export projection
  • Export news:  China has approved over 100 facilities in Brazil for exporting corn as Mexico’s GMO corn ban remains a “high priority” starting in 2024
  • The UN is pressuring Russia to extend the grain deal that allows for Ukrainian grain exports from the Black Sea
  • Corn-for-ethanol use totaled 383.1 million bu. in September, down 47.6 million bu. (11.1%) from August and 24.0 million bu. (5.9%) from year-ago

Soybean Meal Rebounds Friday, But Down For The Week

  • December bean meal futures finished the week down $5 per ton to close at $420.40, Monday’s trade saw this contract briefly break above $440
  • Crude oil has broken above 90 dollars a barrel and is also offering strength to the bean market
  • Board crush spreads are at contract highs and also the highest levels on record which is significantly driving soybeans higher
  • According to World Weather, Inc., a La Niña pattern will remain for a few more weeks, keeping eastern Argentina, Uruguay, and Brazil’s Rio Grande do Sul in a below-normal precipitation pattern
  • Processors crushed 167.6 million bu. of soybeans in September, down 7.5 million bu. (4.3%) from August but 3.5 million bu. (2.1%) above year-ago


Friday’s Market Quotes


Michael Minster

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