This Week In Dairy 12-04-2020

December 04, 2020

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Spot cheese finished off this week trading lower and retesting the previous lows at $1.49 from last week. This is also the same area that the spot cheese market found support back in August when the market went through a similar collapse in cheese price. This weakness is driving nearby contracts lower, but the contracts further into 2021 continue to impress as the Class III 2020 average was able to make a new high this week. The biggest question mark for the Class III market continues to be will the government continue government purchases into 2021? Class IV markets started to make some interesting moves as both powder and butter finished higher on the week. Butter has been particularly interesting as larger-than-usual volume has been pushing prices higher lately. End-users may be trying to take advantage of recent lower prices to purchase products ahead of time.

Milk Highlights:

  • Spot cheese is resting near $1.49 to end the week, which has posed as a strong level of support previously this year
  • Government product purchasing on the open market is likely leading to extreme volatility in cheese. When the government buys, the price soars. When they slow down purchasing, the market collapses
  • Class IV milk has started to make some interesting price movements as butter and powder price action has become positive in the spot market recently
  • Class III milk continues to see the trend of lower nearby contracts and higher trading deferred contracts as confidence in the remainder of 2021 stays steady


Corn futures closed lower to end the week, posting the fourth negative weekly close in the last 17 weeks. The March contract finished down 6 cents today at $4.205 per bushel, 19 cents off the high from the overnight on Sunday night/Monday morning, and down 13.25 cents from last Friday’s close. Although weather concerns in South America are still on the table, futures came off last week’s holiday on the defensive following a wetter forecast for Brazil and Argentina. Rumors have emerged this week that China is looking to book US corn for the spring, but the market will have to remain patient for confirmation. Overall, a healthy setback amidst a longer-term uptrend might be shaping up, but there is no denying that the bearish weekly reversal leaves the market looking heavy in the short-term.

Corn Highlights:

  • Corn futures traded lower as the market lets off steam after hitting new highs in the overnight trade Sunday of this week
  • The recent improvement in wetter forecasts for South America has improved prospects for a stronger crop
  • Export Sales remain strong through the week and rumor has it that China may be looking to make additional purchases of US corn
  • The weekly reversal does make the market look weak in the short term

Soybean Meal

Soybean meal futures ended the trading week in the red as the January contract closed at $385.50 per ton, down $4.50 per ton on the day $10.80 per ton lower for the week. Like corn futures, this is the fourth weekly negative close in the last 17 weeks. The $400 per ton mark remains the line in the sand for resistance. The big picture fundamental outlook remains mostly positive for the soybean complex, but this week’s reversal and a friendlier forecast for our Southern Hemisphere competitors should have the market on the defensive.

SBM Highlights:

  • Soybean meal futures were rejected at the $400 level and have finished the week lower
  • Market conditions in the soybean complex are leaning overbought and the weekly reversal makes the market look ready to trade lower
  • South American weather improvement takes some support away from the recent move
  • Export sales of U.S. soybeans continue to be strong and are a driving force to higher prices

Market Quotes


Adam Betancourt

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