Archive for Dairy Markets

Coronavirus Continues To Slow Dairy Markets in Chicago

On the Chicago Mercantile milk futures continued mostly lower Tuesday as did cash trade.  Class III milk continued its slide lower outside of Feb that gained 2 cents to 17.03, March fell 9 to 16.53, and April fell 8 to 16..39/cwt. Class IV milk saw double digits move lower though February held unchanged at 16.17. March was down 17 to 15.38, and April fell 24 cents to 15.28/cwt. 

The CME spot Dairy Market saw limited volume for the second day.  Only 3 total loads traded across the 5 products for the week so far. Corona Virus continues to be our main market driver with lack of fresh spot market information.  Dry whey down $0.0175 at $0.3525.  Blocks down $0.0075 at $1.76.  Barrels unchanged at $1.59.  One sale was made at that price. Butter down $0.0075 at $1.73. Nonfat dry milk down $0.0350 at $1.1050.  Two trades were made at $1.1050 and $1.11. 

As Coronavirus Spreads, Milk Futures and Cash Dairy Start Week Mostly Lower

On the Chicago Mercantile Exchange milk futures started the week lower with limited cash news as the spread of coronavirus continued in China but also to other countries as well.  A broad-based commodity sell-off was witnessed as corn fell 4 and a half cents; soybeans were down 16 and a half and the wheat complex softened 10-17 cents. Cattle futures closed limit down in fats and feeders while lean hogs dropped $2.40 per cwt. Crude oil lost $2 and diesel was off 7 and a half cents per gallon. 

Class III and IV markets fell just like all other commodities. Prices declined 3-13 cents per cwt. in March through December in Class III while Class IV markets were walloped another 18-40 cents per cwt.

Dry whey unchanged at $0.37.  Blocks down unchanged at $1.7675.  Barrels unchanged at $1.59.   Butter down $0.0175 at $1.7375. Nonfat dry milk down $0.03 at $1.14. 

CWT Assists with 1.4 Million Pounds of Dairy Product Export Sales

Cooperatives Working Together (CWT) member cooperatives accepted six offers of export assistance from CWT that helped them capture sales contracts for 44,092 pounds (20 metric tons) of Cheddar cheese, 70,548 pounds (32 metric tons) of cream cheese, and 1.323 million pounds (600 metric tons) of whole milk powder. The product is going to customers in Asia, Central and South America, and North Africa. The products will be delivered from February through May 2020.

CWT-assisted member cooperative export sales contracts for 2020 total 2.780 million pounds of American-type cheeses, 407,855 pounds of butter (82% milkfat), 827,836 pounds of cream cheese and 4.630 million pounds of whole milk powder. The product is going to 12 countries in six regions. These sales are the equivalent of 75.1 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and all dairy cooperatives by strengthening and maintaining the value of dairy products that directly impact their milk price. It does this by helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has significantly expanded the total demand for U.S. dairy products and the demand for U.S. farm milk.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.

All dairy farmers and dairy cooperatives should invest in CWT. Membership information is available on the CWT website.

The Cooperatives Working Together (CWT) Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. The money raised by their investment is being used to strengthen and stabilize the dairy farmers’ milk prices and margins. For more information about CWT, visit www.cwt.coop.

Milk Markets Lower in Chicago Thursday

Class III milk futures were lower on follow through selling on the Chicago Mercantile Exchange. Class III milk futures closed 9-22 cents lower. March is now trading at $16.67 per cwt. June and onward in 2020 still holds a price in excess of $17.00 per cwt. Class IV markets took it on the chin even harder. March milk lost 30 cents per cwt. while all other months declined double digits. 

In the cash market, cheese barrels were steady at $1.585 and blocks were down a penny at $1.80. Grade A nonfat dry milk was $.0175 lower at $1.1775, AA butter was down $.02 at $1.755, and extra grade dry whey held at $.37.

The commodity space watched red spread across the various markets on Thursday. Grains saw corn lose 2 and a half cents, soybeans fell 5 cents and the wheat complex softened 5-6 cents per bu. The meat markets followed suit as fat cattle dropped $1 and a half dollars per cwt., feeders softened 75 cents and hogs lost $1 per cwt. 

Milk Futures Close Down in Chicago Wednesday

On the Chicago Mercantile milk futures closed lower Wednesday while cash trade was mostly inactive. February Class III milk down a penny at $16.97.  March down 24 cents at $16.77.  April 31 cents lower at $16.85.  May down 21 cents at $17.03.  June through September contracts seven to 15 cents lower.

Dry whey unchanged at $0.37.  Blocks unchanged at $1.81.  Barrels unchanged at $1.5850.  Butter down $0.02 at $1.7750.  Nonfat dry milk down $0.0050 at $1.1950.  Eight trades were made ranging from $1.1875 to $1.2050.

Global dairy prices and volumes drop again in latest auction

Global dairy prices and volumes dropped for a second time in a row at an auction on Thursday, as prices fell across almost all products.

The Global Dairy Trade (GDT) Price Index dipped 2.9%, with an average selling price of $3,176 per tonne, continuing from a 4.7% drop at the previous sale earlier in Feb, according to GDT Events.

Whole milk powder prices were down 2.6% to their lowest in 12 months and skim milk powder prices also dropped 2.6%.

Milkfats were down, with anhydrous milk fat down 5.5% and butter slipping 3.9%.

“While AMF prices continue their downward trend, butter prices have been relatively stable near or above the US$4000/t mark since mid-2019,” said aid Robert Gibson, analyst at NZX.

A total of 28,181 tonnes was sold at the latest auction, falling 2.8% from the previous one, the auction platform said on its website.

Analysts say the prices could see further downward pressure due to the impact on exports from the spread of the coronavirus in China.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7% of the nation’s gross domestic product.

The dairy prices, however, took a back seat as concerns over the spread of coronavirus in China has weighed on Asian currencies, with the kiwi currency already down 0.7% at $0.6386 on Thursday.

The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant.

U.S.-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction. (Reporting by Praveen Menon Editing by Chizu Nomiyama)

Source: reuters.com

Milk Markets Bounce Back Tuesday in Chicago

On the Chicago Mercantile Exchange milk futures were mostly up, and cash dairy prices were mixed Tuesday.   Class III milk started the day down sharply, but as we moved through trading bounced back to finish mostly in the green. February fell 1 to $16.98, March unchanged at $17.01, and April gained 10 to $17.16. The balance of 2020 was 3-12 higher except Dec which was off 4 cents.  Class IV milk saw nice gains following a large volume of butter trading – Feb was unchanged at $16.28, March gained 18 to $16.20 and April gained 15 to $16.35/cwt. Balance of 2020 trading 10-15 higher. 

Dry whey was unchanged at $.37 cents per pound.  No sales were recorded. Forty-pound blocks were down $.01 at $1.81 per pound. There were five sales recorded from $1.79 to $1.7925. Barrels were unchanged at $1.5850 per pound.  There were no sales recorded. Grade AA Butter was down $.0050 at $1.7950 per pound.  Seven sales were recorded from $1.7950 to $1.8150. Nonfat dry milk was up $.03 at $1.20 per pound.  Two sales were recorded at $1.1950 and $1.20.

Grains saw wheat as the story of the day – gaining 24 cents to $5.66 ¾, while corn and soybeans were mostly mixed. 

Fonterra milk production continues to decline

Australia’s milk production has continued to decline according to the 2020 Global Dairy Update, released by New Zealand dairy company Fonterra.

In November 2019, Australian milk production decreased 3.4 per cent, compared to November 2018.

Production for the 12 months to November 2019 was down 6.7 per cent on the previous 12 months.

Source: countrynews.com.au

Mielke Market Weekly

The Agriculture Department left unchanged its 2020 milk production forecast in the latest World Agricultural Supply and Demand Estimates report. The 2020 production and marketings estimate remains at 222.0 and 221.0 billion pounds respectively. If realized, 2020 production would be up 3.7 billion pounds or 1.7% from 2019.

The 2020 fat basis export and import forecasts were also unchanged from the previous month. On a skim-solids basis, the import forecast was unchanged while the export forecast was raised on the strength of international demand for nonfat dry milk and skim milk powder.

Annual product price forecasts for cheese and butter were lowered from the previous month as demand remains relatively weak. The 2020 nonfat dry milk forecast was unchanged while the whey price forecast was raised.

The Class III milk price forecast was reduced on a lower cheese price forecast while the Class IV price was reduced, reflecting a lower butter price forecast. Look for the 2020 Class III to average around $16.95 per hundredweight (cwt.), according to the USDA, down 40 cents from what was projected in January, down a penny from the 2019 average, but compares to $14.61 in 2018.

Thursday’s Class III futures settlements, added to the January announced price, portended a 2020 average of $17.41.

The Class IV projection was put at $16.70, down 20 cents from the January estimate, and compares to the 2019 average of $16.30 and $14.23 in 2018.

This month’s 2019/20 U.S. corn outlook is little changed relative to last month, with offsetting changes to exports and corn used for ethanol. Exports were lowered 50 million bushels, reflecting the slow pace of shipments through January. Offsetting is a 50 million bushel increase in corn used for ethanol. US corn ending stocks were unchanged from last month. The season average corn price received by producers was also unchanged at $3.85 per bushel.

This month’s soybean outlook is for increased exports and lower ending stocks. Soybean exports were projected at 1.825 billion bushels, up 50 million from last month, partly reflecting increased imports for China. With soybean crush unchanged, soybean ending stocks were reduced 50 million bushels to 425 million. The US season-average soybean price for 2019/20 is forecast at $8.75 per bushel, down 25 cents reflecting reported prices to date. The soybean oil price forecast was lowered a half-cent to 33.5 cents per pound and the soybean meal price forecast was unchanged at $305.00 per short ton.

Cotton estimates were unchanged, except for a 1 cent-per pound reduction in the season-average upland farm price, to 62 cents, 8.3 cents lower than in 2018/19.

Checking December commercial dairy product disappearance; total cheese was off 0.3% from December 2018, according to USDA’s latest data, second consecutive month it was below the year ago level, and it was pulled down by lower exports that overcame slightly higher domestic demand, according to HighGround Dairy’s analysis.

Butter disappearance was down 22.7% from November but 11.4% above a year ago, steepest year over year increase since January, says HGD, and marked the strongest December demand since 2014.

Domestic nonfat dry milk disappearance dropped sharply versus prior year levels and marked the lowest December disappearance since 1999. The 59.4% year over year decline was the largest since February 2017.

Dry whey domestic disappearance was up 10.9% from November and 18.7% above a year ago, the eighth consecutive month it bested that of the year before.

The stars came into a little better alignment in the cheese market Valentine’s Week but still have not achieved Nirvana. The Cheddar blocks closed Friday at $1.82 per pound, down 11 cents on the week, lowest since December 26, 2019, but 24 cents above a year ago.

The barrels finished at $1.5850, up 10.75 cents on the week, 15 cents above a year ago, and 23.5 cents below the blocks, better than what it was but a far cry from the normal 3 to 5 cent differential. 6 cars of block traded hands on the week at the CME and 31 of barrel.

Midwest cheesemakers reported varying demand Valentines Week, with most suggesting sales are meeting expectations while others, particularly barrel producers, are concerned about market tones which are not helpful to their bottom line. Spot milk was widely available for cheesemakers who are on the spot market, with reported prices in a tight, discounted range of $2 to $3 under Class III. Cheese inventories are available, but not overly concerning at this time. The block barrel price gap may have narrowed, says Dairy Market News, but “markets are definitely on shaky terrain.”

Western contacts suggest that cheese is readily available and heavy milk flows are resulting in as much milk moving through the vats as possible. Some of this milk is heavily discounted, just to make room in the processing facility. Retail demand has been solid, enough so that stocks of some block cheese brands are highly committed for the next few months. Prices are supported by this demand while prices are weaker for barrel cheese, according to DMN.

Butter fell to $1.80 per pound on Wednesday, lowest CME price since October 24, 2016, and stayed there, 3.25 cents below the previous week’s closing and 45 cents below a year ago. 48 cars found new homes on the week.

Butter makers report that sales are level and or meeting expectations and buying interest is beginning to show signs of springtime revival. Churning is active and cream is easily accessible from local and Western suppliers. Producers are, at least in the near term, not overly concerned about the market dip, says DMN. “In recent years butter has been a dairy commodity stalwart regarding market tones”

Churns are busy in the west with the increased availability of cream. Bulk butter demand is very strong and several customers are looking for coverage to third quarter. Print butter sales are low in some areas but high in others. With the approaching holiday, it is expected that butter requests will increase in three to four weeks. Supplies are currently readily available but some wondering how stocks will look this summer if interests in bulk butter continue to increase.

Dry whey closed Friday at 37 cents per pound, down 2 cents on the week and 1.75 cents above a year ago, with 5 cars finding new homes on the week.

Grade A nonfat dry milk plunged to a Friday close at $1.17 per pound, down 8 cents and the lowest since November 1, 2019, but still 18.25 cents above a year ago. 36 cars were sold on the week, highest weekly total since August 26, 2019.

FC Stone’s Dave Kurzawski wrote in his February 14 Early Morning Update that “China changed how it tests and tallies coronavirus, causing the number of cases to skyrocket from Wednesday to Thursday, and US dairy markets, particularly Class IV markets, felt it.”

“Some traders reacted to the news and pulled the trigger on exiting long positions ahead of next week’s GDT event,” Kurzawski explained. “More than likely they were trying to beat any potential selling rush, if one should develop.” The next GDT auction is Tuesday, leaving only Friday to “square away positions ahead of a very uncertain GDT,” as the markets were closed Monday for Presidents Day.

Speaking in the February 17 Dairy Radio Now broadcast, Kurzawski said there’s a lot of “flux” in the dairy markets right now and the volatility we have seen the past six months or so isn’t going away. The coronavirus holds part of the blame but he suggests we consider what part of the news cycle are we in. “Are we in the beginning, the middle, or the end?” he asked.

He believes we’re in the middle of the cycle but cautions; “There could still be some reverberating impacts for dairy markets.”

Looking at the past 12 months however, he points out that “We’ve made less milk, we’ve made less components within that milk, and we haven’t really changed the dynamic in terms of cow numbers.” “We’re at a higher price level, which is beneficial for producers,” he said, “But within that we’re going to have some big swings on all of these markets.”

I asked for his thoughts on the slam against the dairy industry made at the Oscars by actor Joaquin Phoenix who charged; “We feel entitled to artificially inseminate a cow and when she gives birth, we steal her baby. Even though her cries of anguish are unmistakable. And then we take her milk that’s intended for her calf and we put it in our coffee and our cereal.”

Kurzawski said the comment was “unfortunate,” but he pointed out that the dairy industry is in a public relations battle with the plant-based industry. He adds that “We have a really good, wholesome product and we need to figure out a way to market it in a better way and I think we can do that.” He concluded, reporting that dairy demand domestically last year was up 2.5% versus 1.6% in 2018, “So we have good demand for dairy products,” and he remains optimistic about 2020.

Several in the dairy industry have responded to Phoenix’s attack and while we may be tempted to laugh and dismiss this kind of criticism outright, we must be assured that this is a sign of things to come. It stems from a vegan agenda that seeks to rule the thoughts, words, and deeds of consumers the world over.

Back in the real world, Penn State’s monthly Dairy Outlook had a warning for Pennsylvania dairy producers and, really all US producers. It begins by stating that “The 2020 outlook provided by the futures markets for milk, corn and soybeans points to a positive year for dairy producers. Milk prices are predicted to be the highest in six years and grain prices are expected to remain in their current range, even with some anticipated positive developments in trade agreements. Increases in domestic milk production have been under 1% in 2018 and 2019, helping to support higher prices. Additional good news includes increased skim milk powder sales to China in recent months, and less milk production by leading milk producing nations.”

“However, even with this positive outlook, there remains a level of concern among dairy producers, as the unprecedented pressures of sustained low prices of previous years continues to significantly change our domestic dairy industry. Several facts regarding the industry are challenges to Pennsylvania dairy producers,” the Outlook warned. “The average fat test for domestic herds has now risen to 3.9%. Milk fat and milk protein levels have increased beyond what was once thought possible and they have become the main way to improve premiums. An annual milk fat average of 3.5-3.6% for a Holstein herd is now considered a problem area needing attention,” the Outlook stated. “Many of Pennsylvania’s herds are still in this range.”

“In December 2019, Pennsylvania cows averaged 65 pounds of milk per day. The average for U.S. cows was 73 pounds of milk per day. This lower average continues to push Pennsylvania’s cost of production per cwt. higher compared to other leading dairy states. This is the primary factor challenging Pennsylvania’s dairy industry,” according to Penn State.

Speaking of milk output, Dairy Market News reports that the number of milk cows in the US as of January 1, 2020, totaled 9.33 million head, down slightly from the previous year. Milk cow replacement heifers totaled 4.64 million head, down 1%. The percentage of milk cow replacement heifers per 1,000 milk cows on January 1, 2020 was 49.7, down 1% from 2019. Milk cow replacement heifers expected to calve during the year totaled 29.3 million head, down 2% from the previous year.

Meanwhile, farm milk output is generally steady to higher, across the country, ahead of the upcoming spring flush, according to DMN. “Protein butterfat milk components remain at high levels but are anticipated to steadily decrease until the summer. At this point, raw milk volumes are more than adequate to meet all processing needs. In fact, some milk loads for Class III can be found at discounted prices, under the market, especially in the Central region.”

Looking down under, the February 10 Daily Dairy Report points out that New Zealand’s 2019 calendar-year milk collections fell 0.7% to 21.786 million metric tons (MMT) from 2018’s 21.947 MMT, while milk solids dropped 0.3% below year-earlier levels, according to the Dairy Companies Association of New Zealand.”

“Extreme weather at the start of this year suggests milk collections are also likely to fall slightly below prior-year levels in early 2020,” the DDR says, and “This year’s weather in New Zealand is a tale of two islands, with flooding on the South Island and near-drought conditions on the North Island, including in the major dairy areas on the North Island’s south end.”

I would add that wild fires in Australia have not helped matters there so dairy exports from Oceania maybe somewhat limited in 2020, perhaps enabling the US to step in and make up some of the shortfall.

Cooperatives Working Together member cooperatives accepted seven offers of export assistance this week to help capture sales contracts for 253,532 pounds of Cheddar and Monterey Jack cheese, and 1.323 million pounds of whole milk powder. The product will go to customers in Asia, Central and South America, and the Middle East through June.

Milk Markets Turn Soft in Chicago Thursday

On the Chicago Mercantile milk futures turned lower Thursday while cash markets provided little direction.  Class III milk was lower across the futures. February fell 2 to 17.01, March fell 17 to 17.12. The balance of the first half moved 25-28 cents lower to average at 17.14/cwt. Second half of 2020 slid 15-26 lower to average at 17.67/cwt. Class IV milk also slid lower, losing 7 in Feb to 16.35, March fell 26 to 16.14, and April fell 33 to 16.33/cwt. 

Dry whey down $0.0025 at $0.3925.   Blocks unchanged at $1.8650.  One sale was made at that price. Barrels up $0.0250 at $1.5850.  Five trades were made at $1.57 and $1.5850.  Butter unchanged at $1.80.  Nonfat Dry milk down $0.0275 at $1.1975.  Four trades were made at $1.1950 and $1.1975.

Grain and feed continue to be mixed Corn fell 3 ½ to 3.79 ½, Soybeans gained 3 ¾ cents to 8.96 ½, and Soybean meal gained 20 cents to 291.90/ton.

Global dairy commodity update first quarter 2020

The fundamentals underpinning the global market outlook remain positive but may weaken with improving expansion in milk supply and a slowing in trade in milk powders. However, the outlook for commodity product values is mixed as butterfat values have stabilised, while increased cheese capacity in Europe will keep supplies abundant and may cap values.

Skim milk powder
SMP fundamentals recently improved with lower EU and US output and sustained export demand. Going forward, this is new territory with SMP fundamentals no longer driven mostly by the EU stock turn. Prices should remain relatively firm, despite improving fresh product availability from Europe and the US. SMP demand in Asian markets has slowed but is likely to revert to trend.

Whole milk powder
China and Hong Kong helped the overall numbers look better and added the most trade in the month – up 69.4 per cent YOY or 14,000t. YOY shipments to this key market have now increased in 11 of the last 12 months for which data is available. Demand for milk powders remained resilient with the changes in China’s internal milk use.

Cheese
The disparity in cheese prices should correct. EU commodity cheese values may be influenced by SMP/butter stream returns, but more milk will be diverted to increased plant capacity, which will keep a lid on values. EU exports again rose more than 8,000t YOY in September – the growth in the latest month was driven by stronger shipments to the US and South Korea.

Butter
Butterfat prices have remained steady with improved domestic EU seasonal demand. The EU balance sheet should improve but demand and supply growth will be closely aligned. Overall demand in developing markets remains price sensitive and may continue to pressure NZ prices. NZ exports of fats continued to shrink, but at a much slower rate – both AMF and butter were down YOY in September, 2 per cent and 7 per cent respectively. Meanwhile, the EU expanded butter exports in September by 74 per cent, despite shipping butter at prices still higher than NZ.

Whey
US exports continued to shrink, down 13 per cent in September, while the EU grew shipments by 3.2 per cent. Meanwhile, NZ trade rose 14 per cent YOY in September – this followed consecutive monthly falls and was driven by stronger sales into the North American market. US product remains competitive as prices have weakened since September while EU and Oceania prices remained steady.

Source: foodmag.com.au

US cattle futures rise as part of broad commodity strength

US live cattle futures closed higher on 12 February after a four-moth low as fears over the impact of China’s coronavirus outbreak subside.

According to reporting from Reuters, the benchmark April live cattle futures contract on the CME rose to 0.675 cent at 111.850 per pound after dipping to a low 116.650 in September.

CME March feeder cattle futures rose 0.375 cent to settle at 135.050 cents per pound.

“It’s technically driven, speculative bargain hunting,” Doug Houghton, analyst with Brock Associates, said of the higher close.

Cattle futures followed as world equity markets scaled fresh highs after China reported the lowest number of new coronavirus cases in two weeks, boosting hopes among traders that the epidemic will be contained.

Cash cattle traded in the southern Plains on Wednesday mostly at $119 per cwt, the US Department of Agriculture reported, steady with Tuesday’s light trade but down $2 per cwt from last week.

But some traders said cattle futures were supported by the fact that cash values held at Tuesday’s price, instead of falling further.

“That kind of gave us a line on how hard it (cash trade) was going to fall off. The markets tended to relax a little because the worst-case scenario was avoided,” said Matthew Wiegand, commodity broker for FuturesOne.

However, sagging wholesale beef prices hung over the market, limiting rallies. The choice boxed beef cutout value fell $1.52 to $206.31 per cwt on Wednesday afternoon, while select cuts rose 77 cents to $205.30 per cwt.

“The fundamentals are concerning … the choice-select spread is down to $1.01; that is not positive,” Houghton said.

Read more about this story here.

Milk Markets Rebound in Chicago Wednesday

On the Chicago Mercantile Exchange milk futures rebounded midweek while cash trade was mostly lower.  Class III milk moved higher despite little information feeding it in the spot trade. February fell 1 to 17.03 but most of the rest of the futures trade moved higher. March gained 8 to 17.29, April gained 8 to 17.42. The first half of 2020 sits at 17.31/cwt.  Class IV milk didn’t follow suit. February fell 2 to 16.42, March fell 1 to 16.40, and April fell 9 to 16..66/cwt. 

The balance of our products were unchanged. Dry whey unchanged at $0.3950.    Blocks down $0.0150 at $1.8650.  Three sales were made at $1.8875. Barrels unchanged at $1.56.  Five trades were made ranging from $1.56 to $1.5850.  Butter down $0.0150 at $1.80.  Eight trades were made ranging from $1.80 to $1.82. Nonfat Dry milk unchanged at $1.2250.  Five trades were made ranging from $1.2250 to $12325.

Grain and Feed markets saw Chicago wheat gain 5 ½ to 5.47 ½, Corn gained 3 ¼ to 3.83 even, Soybeans gained 7 ¾ cents to 8.92 ½, and Soybean meal gained $0.90 to 291.70/ton. 

Bearish supply drives milk futures lower in Chicago Tuesday

On the Chicago Mercantile Exchange milk futures were lower Tuesday following a slightly bearish supply and demand report while cash trade was mixed. March through July 2020 softened 1 to 8 cents while remaining months in 2020 fared a little better as they closed in the green. The 2nd half of 2020 is offering dairy producers a $17.83 per cwt average at today’s close. Class IV milk markets fell double digits as March to July months traded 13-20 cents lower. 

CME spot dairy product markets saw good volumes trade on Tuesday as well as a couple of big moves. Blocks down $0.06 at $1.88.  One sale was made at that price. Barrels up $0.0750 at $1.56.  Four trades were made at $1.54 and $1.56.  Butter up $0.01 at $1.8150.  Eleven trades were made ranging from $1.8050 to $1.8150. Nonfat Dry milk down $0.0150 at $1.2250.  Twenty-one trades were made ranging from $1.22 to $12275. Dry whey unchanged at $0.3950.  

 

Milk Markets Mixed Monday at CME

On the Chicago Mercantile Exchange milk futures started Monday again trading lower which cash trade showed some improvement. The Grade A Nonfat dry milk price was also reduced a penny and ended at $1.24 per lb., just one load changed hands. Class III futures markets reacted in a bearish tone in the nearby with March losing 18 cents, April down 9 and May 10 softer. June through December remained relatively flat ranging from a couple cents lower to six cents higher. Class IV saw limited action once again falling 1 to 11 cents February through May. 

Dry whey up $0.0050 at $0.3950.  Two sales were made at that price. Blocks up $0.01 at $1.94.  One sale was made at that price. Barrels up $0.0075 at $1.4850.  Two trades were made at $1.48 and $1.4850.  Butter down $0.0275 at $1.8050.  Five trades were made ranging from $1.7950 to $1.81.

Grain prices had corn two cents lower, soybeans up a couple cents and the wheat complex six cents softer in Chicago, even in Kansas City and two cents lower in Minneapolis. Fat cattle lost $1 per cwt, feeder the same and hogs were down 90 cents. Crude oil dropped 70 cents and diesel is approaching the pivotal $1.60 gallon threshold once again. 

Synlait lifts forecast milk payout price

Canterbury-based dairy company Synlait has increased its forecast milk payout prices for suppliers for the 2019/2020 season.

It has lifted the expected base milk price for the season to $7.25 kgMS from $7.00 kgMS after healthy global dairy prices.

“Synlait increased its forecast milk price to $7.25 for the current season on the back of higher than expected commodity prices at the end of 2019, which we believe will hold in the medium term as supply and demand continue to be evenly matched,” said Synlait CEO Leon Clement.

“We are grateful for the ongoing support of Synlait’s farmer suppliers and are pleased to be able to offer an improved forecast milk price for the current season.”

Synlait posted an increased profit of $82.2 million in the year ended July 2019, and achieved record revenue, exceeding $1 billion for the first time.

The 2019 profit was up 12 percent on the previous year and had been driven by ongoing growth in infant nutrition volumes and strong efficiency gains.

Source: newshub.co.nz

Dairy markets Bounce Back Thursday in Chicago

Dairy markets bounced back on Thursday.  February Class III milk futures on the Chicago Mercantile Exchange closed up eight cents Thursday at $16.97.  March 17 higher at $17.23.  April up 12 at $17.29. First half average is at $17.19 per cwt. Second half saw similar strength gaining 2-18 cents.  Class IV milk was unchanged in Feb at $16.58, gained 4 in March at $16.66 and 17 in April to $16.92. July was the biggest mover gaining 23 cents to $17.73. 

Dry whey up $0.0150 at $0.38.  Blocks down $0.0075 at $1.8950.  Barrels up $0.01 at $1.4650.  16 trades were made, ranging from $1.4525 to $1.4725. Butter unchanged at $1.8550.  34 trades made, with a range of $1.8550 to $1.8575. Nonfat dry milk $0.0150 higher at $1.24. 

Grain and feed markets continue to be mixed with no big moves. March corn fell 1 ½ cents to $3.79 ¼, March soybeans gained a penny to $8.81 even, and soybean meal gained $0.80 to $288.20 per ton.

‘It could have been worse’ – Coronavirus concerns see global dairy prices slide

Concerns around the coronavirus outbreak drove Global Dairy Trade auction prices lower yesterday.

Wey whole milk powder (WMP) prices slid 6.2pc, while overall prices fell a more moderate 4.7pc.

According to Nathan Penny analyst with ASB bank in New Zealand, the result could have been worse with futures pricing ahead of the auction pointing to a circa 7pc fall.

“We also note that the 6.2pc is relatively modest by historical auction standards.

“For example, roughly 14pc of auctions have recorded larger than falls than the auction overnight. Other auction prices fared better.

“Three products recorded price gains (cheddar, casein and butter) while the overall index was down a more modest 4.7pc,” he said.

However, other details hinted that the price fall may be short-lived.

“Prices for later-dated contracts were higher than for shorter-dated ones. “Notably, Chinese buyers were still active, with the number of buyers from North Asia bang on the average number for the last three months. “Nonetheless, we remain vigilant. The outbreak situation is very fluid and, with that in mind, dairy price implications are subject to change. Over the coming days, we will monitor the dairy futures market for further market developments ahead of the next auction in two weeks’ time,” he explained.

Penny also said traders had also begun to return our gaze to NZ drought conditions.

In particular, the key Waikato region is very dry in parts, while the Taranaki, Northland, Nelson and parts of Canterbury are also very dry.

“If drought conditions continue to worsen over coming weeks, dairy prices have the potential to swing quickly back the other way,” he said.

Source: independent.ie

Milk Futures Continue Decline in Chicago Wednesday

On the Chicago Mercantile Exchange milk futures continued their decline at midweek following a bearish dairy product report and lower cash trade.  Class III milk saw February fall 14 to $16.89, March fell 24 to $17.06 and April fell 8 to $17.17. Our first half of 2020 sits at $17.06 per cwt. Class IV Milk also moved lower throughout 2020 futures. February fell 20 to $16.58, March fell 3 to $16.62, and April fell 9 to $16.75 per cwt. First half of 2020 for class IV sits at $16.85 per cwt.

Dry whey unchanged at $0.3650. Blocks down $0.0125 at $1.9025. One sale was made at that price. Barrels down $0.0150 at $1.4550. Two trades were made at $1.4725 and $1.4750. Butter down $0.0250 at $1.8550. Six trades were made ranging from $1.8550 to $1.87. Nonfat dry milk up $0.01 at $1.2250. Eight trades were made ranging from $1.22 to $1.2325.

Grain markets were mixed with March corn falling 1 ½ cents to $3.80 ¾, March soybeans gained half a cent to $8.80 even, and March soybean meal fell $1.10 to $287.40 per ton.

GDT index tumbles for first time in 2020

The Global Dairy Trade auction index in New Zealand traded lower for the first time in 2020 as global markets continue to react to coronavirus fears, with Oceana market showing overall softness with the total index down 4.7% to $3,226 per ton. Individually whole milk powder was 6.2% lower than two weeks prior. Skim milk powder followed suit down 4.2% and anhydrous milk fat was 4.5% below two weeks ago levels.  Cheddar and rennet casein were both up 6 percent.

Coronavirus fears continues to effect markets in Chicago Tuesday

On the Chicago Mercantile Exchange milk futures closed mostly lower Tuesday as global market fears continue with coronavirus outbreaks, albeit at a slower decline than previous sessions.  Class III milk saw February gain 11 to $17.03, but the balance of 2020 moved 1-10 cents lower. Our first half average sits at $17.15 per cwt.  Class IV milk slid lower – February fell 1 to $16.78 and March fell 10 to $16.65.

The CME spot trade was similarly mixed. Dry whey unchanged at $0.3650.  Blocks down $0.0050 at $1.9150.  Nine sales were made ranging from $1.9225 to $1.93.  Barrels up $0.0150 at $1.47.  Seven trades were made ranging from $1.47 to $1.48.  Butter down $0.0250 at $1.88.  Five trades were made ranging from $1.86 to $1.89. Nonfat dry milk down $0.0150 at $1.2150.  Three trades were made at $1.2150 and $1.22. 

 

The futures market is predicting milk powder prices to drop in response to the coronavirus outbreak

The deadly virus has thrown financial markets into reverse after a strong 2019.

ASB senior rural economist Nathan Penny says tonight’s Global Dairy Trade auctions will show exactly how milk powder will be affected.

But he says the market’s pointing to a five to 10 percent drop in prices.

He says dairy markets are nervous about the potential price drop – because China has the biggest dairy market in the world.

Source: home.nzcity.co.nz

Coronavirus Fears Spurs Week Trade in Chicago Monday

On the Chicago Mercantile Exchange milk futures closed lower Monday again as coronavirus market fears remain and cash trade remains weak.  Class III milk saw February fall 22 cents to $16.92, March fell 37 cents but holds above $17, at $17.38 per cwt. and April fell 31 cents to $17.26 percwt. First half of 2020 has an average price at $17.16 per cwt. Second half of 2020 sits at $17.50 per cwt. Class IV milk also slid lower, February down 6 to $16.79, and March fell 15 to $16.75 per cwt.

Dry whey unchanged at $0.3650.  Blocks unchanged at $1.92.  Barrels down $0.0450 at $1.4550.  Five sales were made ranging from $1.4550 to $1.46.  Butter up $0.0050 at $1.9050.  Thirty-seven trades were made ranging from $1.89 to $1.9050. Nonfat dry milk down $0.01 at $1.23. 

Grain and feed markets were mixed. March corn moved 2 ½ lower to $3.78 ¾, and March soybeans gained 4 ½ cents to $8.77 even, and March soybean meal fell $1.20 to $289.80 per ton. 

Milk Futures Take Double Digits Jump in Chicago Thursday

On the Chicago Mercantile Exchange Class III milk futures jumped double digits between February and September 2020 ranging from 16-24 higher. Fourth quarter was up as well. The February to June average stands today at $17.74 per cwt and the second half ended at $17.88 per cwt. Class IV milk failed to fare as well. Class IV milk futures lost 7-21 cents February to June and ended with a $17.26 settlement. 

Dry whey down $0.01 at $0.3750.  Blocks unchanged at $1.92. Barrels down $0.09 at $1.50. Butter up $0.0525 at $1.86.  Seven trades were made, ranging from $1.8175 to $1.86. Nonfat dry milk down $0.0050 at $1.2625.  Seven trades made, with a range of $1.26 to $1.2650.

Class III Milk Recovers Losses From Early in Week at CME

On the Chicago Mercantile Exchange milk futures recovered some from losses early in the week, and cash dairy prices were mostly steady Wednesday.   Milk futures jumped double digits between February and September 2020 ranging from 16-24 higher. Fourth quarter was up as well. The February to June average stands today at $17.74 per cwt and the second half ended at $17.88 per cwt. Class IV milk failed to fare as well. Class IV milk futures lost 7-21 cents February to June and ended with a $17.26 settlement. 

Dry whey was up $.01 at $.3850 cents per pound.  One sale was recorded at that price. Forty-pound blocks were unchanged at $1.92 per pound. There were no sales recorded. Barrels were unchanged at $1.59 per pound.  There were no sales recorded. Grade AA Butter was up $.0325 at $1.8075 per pound.  Nine sales were recorded from $1.7825 to $1.8150. Nonfat dry milk was down $.0075 at $1.2675 per pound.  Seven sales were recorded from $1.2675 to $1.2750.

Milk Futures Push Higher as Markets Corrects After Coronavirus Scares

On the Chicago Mercantile Exchange milk futures closed higher Tuesday as traders bought back oversold positions after markets reacted negatively Monday to coronavirus fears.  February through July futures traded 1-10 cents stronger while red showed up on the screen beyond that. Class IV markets softened again Tuesday with February down 21 and March and April softening double digits. The day prior on Monday however watched a massive commodity wide bleed. 

Dry whey up $0.01 at $0.3750.  One sale was made at $0.3650. Blocks down $0.0125 at $1.92.  Barrels down $0.02 at $1.59.  One trade was made at that price. Butter down $0.0450 at $1.7750.  Five trades were made ranging from $1.7750 to and $1.7825. Nonfat dry milk down $0.0050 at $1.2750.  Eight trades were made ranging from $1.2725 to $1.2775.

Both livestock and grains faired a little better on Tuesday as corn traded 6 cents higher in March, beans limited the blow to 2 cents and the wheat complex was 2-5 cents lower. The soybean and wheat markets are searching for any type of buy interest out of China but to this point have come up empty handed. Cattle markets fell a half cent Tuesday, feeders were up 20 and hogs added ¾ of a cent per pound.

CME: Latest COF Report In-line with Pre-report Estimates

Before we dive into Friday’s “Cattle on Feed” report, a highlight from last week was the volume of slaughter cows hitting a five year high, writes Steiner Consulting Group, DLR Division, Inc.

Total cow slaughter was 138.6 thousand head the highest weekly number since January 2013. Dairy cows hit another 70+ thousand head week, which is somewhat surprising given the rebound in milk price.

On Friday, the futures market bounced-back some from Thursday’s level. Wednesday’s and especially Thursday’s markets fell in light of very high beef production in December (+7 percent year-over-year), uncertainty regarding world markets, pre-report estimates showing larger placements than many market participants expected.

Coronavirus is spreading through Asia, closing public spaces during the Chinese new year celebrations in an attempt to slow the spread of this epidemic. Lean hog contracts are bearing the brunt of that disease concern. Friday’s lean hog futures in the first three contracts of 2020 were down.

Take-aways from COF: The report was in-line with pre-report estimates (for the most part). Placements were a touch higher, while marketings were a touch lower. Second, is that cattle feeders continued to search the country high and low to find 1000 lb+ animals to put on-feed. Those animals will mostly be fed against a lofty April Live Cattle contract that was $124.3 at Friday’s close.

Feedlots have been placing a larger number of cattle that weigh over 700 pounds since September. Much of that is driven by profitable feeding opportunities that emerged post Tyson beef packing plant fire. Live Cattle futures enabled those cattle to be hedged above breakeven levels.

Placements were above a year ago for all the placement categories. Drought continues to persist across much of Texas and the Four Corners area, which may be boosting some of the lighter weight placement categories. Texas placements in the under 700 pound categories were above a year ago.

Marketings were half a percent off what daily Federally Inspected slaughter would have suggested. Steer and heifer slaughter was 5.8 percent above a year ago in December. Canadian imports of slaughter ready cows, steers and heifers were very large, nearly double the import level in 2018.

USDA AMS no longer breaks out cows from steers and heifers. It is difficult to assess how many of those are cows versus steers and heifers. The total number of imports for weeks in December was 45,251 head, 20,189 head over December 2018.

Another AMS report summarizes national cow and bull negotiated sales on imported animals. This report would indicate that much of the increase is steers and heifers.

A market factor that is challenging is the number of cattle in feedlots that are under 1000 head capacity, which are not surveyed monthly. Those farmer feeder numbers are only counted twice a year. That number will be available in the 1 January cattle inventory report released later this week.

The number of heifers on feed climbed above a year ago for the 16th straight quarter. The ratio of steers to heifers did dip below the previous quarter to 38 percent, in part because steers on feed reached above a year ago for the first time in five quarters.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

Source: The Dairy Site

Milk Futures Fall Sharply in Chicago Monday

On the Chicago Mercantile Exchange milk futures fell sharply and cash dairy prices were down Monday.   January Class III milk was unchanged at $17.04.  February was down $.67 at $17.33. March was down $.57 at $17.68.  April was down $.48 at 17.52. The milk futures from May through next December ranged from seventeen to forty cents lower.

Dry whey was unchanged at $.3650 cents per pound.  No sales were recorded. Forty-pound blocks were down $.0625 at $1.9325 per pound. There were no sales recorded. Barrels were unchanged at $1.61 per pound.  One sale was made at that price. Grade AA Butter was down $.0400 at $1.82 per pound.  Four sales were recorded from $1.8175 to $1.8475. Nonfat dry milk was down $.0075 at $1.28 per pound.  No sales were recorded.

Milk Futures Push Higher Thursday in Chicago

On the Chicago Mercantile Exchange milk futures were mostly higher Thursday ahead of a mostly neutral milk production report but reduced class and component prices for February. The Class III dairy markets found another bid on Thursday as February jumped 21 cents, March was up 25, and April gained 15. May also traded 7 cents stronger and June was up a penny. Second half 2020 ranged from even to 5 cents lower. Class IV markets watched March through may fall 9-15 cents per cwt. 

 

Dry whey up $0.0025 at $0.36.  Twenty-two sales were made at $0.3575 and $0.36. Blocks unchanged at $2.0025.  Two trades were made at that price. Barrels up $0.0050 at $1.63.  Six trades were made at $1.63 and $1.6325.  Butter up $0.0025 at $1.8675.  Three trades were made ranging from $1.86 to $1.8675. Nonfat dry milk down $0.0075 at $1.29.  Ten trades were made ranging from $1.2850 to $1.2950. 

The USDA released its December milk production report on Thursday. Milk production was reported beneath most expectations as production rose just 7/10 of a percent. Many Midwest states were down once again year over year, 3 states that continue to put out milk included Texas, Colorado, and Kansas. The milking herd totaled 9.339 billion in December which was unchanged from November after accounting for a revision in November.  

Class III Milk Continues Higher in Chicago Wednesday

On the Chicago Mercantile Exchange milk futures continued higher for the week while cash markets were mixed as butter stocks provide some pressure.  Class III milk liked what it saw and rallied across the board. January gained 2 to $17.05, February gained 26 to $17.80, and March gained 19 to $17.95. Second half of 2020 gained 4-16 cents and is averaging at $18.00 even for July – December.  Class IV didn’t fare as well, Jan fell 2 to $16.71, Feb fell 17 to $16.95 and March fell 7 to $17.42.

Dry whey down $0.0050 at $0.3575.  Three sales were made at that price. Blocks up $0.0375 at $2.0025.  Two trades were made at $2.0075 and $2.0150. Barrels up $0.0275 at $1.6250.  Six trades were made ranging from $1.62 to $1.6250.  Butter down $0.0150 at $1.8650.  One trade was made at that price.  Nonfat dry milk up $0.0025 at $1.2975.  Nine trades were made ranging from $1.2959 to $1.30.  The USDA says cheese stocks are declining slightly while butter inventories are building over year-ago levels. Cheese stocks totaled more 1.3 billion pounds, down half of percent on the month and two percent on the year.  Natural cheeses are down more than seven percent while American and other types of cheese are up five percent from last year. Butter inventories were up five percent from November and up almost six percent from last year at more than 190 million pounds.

Global dairy prices rise again in second auction of the year

Global dairy prices surged again in the second auction of 2020 on Wednesday, as prices increased across almost all products, with dry weather in the coming months seen as putting further upward pressure.

The GDT Price Index climbed 1.7%, with an average selling price of $3,434 per tonne, following on from a 2.8% surge in the previous auction earlier this month.

Prices gains were broad-based across products, jumping 2.4% for whole milk powder and 0.7% for skim milk powder, while butter prices rose strongly by 5.5%.

The result was likely due to a lift in demand from North Asia and the Middle East, said Robert Gibson, analyst at NZX.

A total of 33,165 tonnes was sold at the latest auction, the auction platform said on its website https://www.globaldairytrade.info.

Analysts said the dairy prices have now largely recovered ground lost at the end of 2019, and said drought risks could lend further support.

 

“Looking over February and March, emerging dry weather could put further upward pressure on prices,” ASB Bank Senior Rural Economist Nathan Penny said in a note.

“However, it’s still early days in the NZ summer and we maintain our 2019/20 production growth forecast at 0%. In other words, we are noting the drought risks at this stage,” he added.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation’s gross domestic product.

The positive dairy prices, however, took a back seat as concerns over the spread of a pneumonia-like virus in China weighed on Asian currencies, with the kiwi currency staying largely flat at $0.6596 on Wednesday morning.

 

Source: Reuters

Global Dairy Trade Drives Markets Higher in Chicago Tuesday

On the Chicago Mercantile Exchange  milk futures continued higher supported by global optimism. Class III futures jumped double digits February through December 2020 and three months even touched $18 per cwt on Tuesday. February through June closed with an average price of $17.66 per cwt while second half prices are offering $17.92 per cwt. Class IV markets fell 6 cents in March but added 1-5 cents in the second half of the year. Class IV February to June is offering $17.72 per cwt and the second half is pricing out at $18.37 per cwt respectively. 

Dry whey down $0.0050 at $0.3625.  Nine sales were made at $0.3625 and $0.3650.  Blocks up $0.0025 at $1.9650.  Three trades were made at $1.9475 and $1.9550.  Barrels up $0.0350 at $1.5975.  Four trades were made at $1.5975 and $1.6025.  Butter unchanged at $1.88. Nonfat dry milk up $0.0050 at $1.2950. 

 

Optimistic Outlook for 2020 Dairy Prices

Last year was the turning point for U.S. dairy prices.

Global milk surpluses combined with burdensome dairy stocks that had weighed on the market and returned to better balance, and dairy prices finally began to climb in early 2019.

Fluid prices rose steadily throughout the year, reaching a Class I mover of $19.33 per cwt for December. The January 2020 Class I mover was $19.01 per cwt, down 32 cents from December but still a sizable increase of $3.89 over January 2019. You have to go back to 2014 to see a January Class I mover this high.

USDA and many industry observers believe 2020 dairy prices will go even higher. Long-awaited international trade deals have finally emerged and could help the dairy industry to recover.

Cow numbers creeping up
While the number of milk cows dropped steadily throughout 2018 and in the first half of 2019, this trend reversed after June when cow numbers started inching upward again.

Increasing cow numbers, combined with nonstop growth in output is leading to growth in milk production. This is particularly evident among the top 24 dairy states that USDA reports in its monthly Milk Production releases.

The November Milk Production report, released Dec. 18, showed the top 24 dairy states up 0.9% from November 2018. New York production was up 2.0% due to an increase in the number of cows and growth in per-cow output. Vermont showed a production increase of 0.5% with fewer cows but growth in output. Ohio was up 0.7% primarily on growth in output. But Pennsylvania saw a milk production decrease of 1.7% due to a sizable drop in milk cows — 24,000 — compared to November 2018.

Some industry observers are questioning if recent growth in production per cow can be sustained. While USDA estimates about 1.7% growth in production per cow, others think that 1.2% to 1.3% may be more realistic. Delayed plantings and a very wet growing season last year led to less-than-optimum feed quality and quantity that may be a factor in per-cow production growth.

Prices go higher, except for butter
The latest USDA dairy forecast has 2020 milk production up 1.74% over 2019

Higher cheese prices are expected; $1.865 per pound vs. $1.760 per pound in 2019.

Dry whey is expected to be a bit lower in 2020, but that could change if China starts buying U.S. whey again to feed its recovering swine population.

Butter prices are expected to go lower in 2020; $2.020 per pound vs. $2.240 per pound in 2019. However, nonfat dry milk is expected to go higher; $1.230 in 2020 vs. $1.040 in 2019.

All dairy product price forecasts were raised except for butter. USDA also raised its Class III and IV price forecasts.

The all-milk price forecast for 2019 was left unchanged at $18.60 per cwt. The 2020 all-milk forecast is raised to $19.40 per cwt, 55 cents higher than the previous forecast.

Prices are expected to be lower in the first quarter of 2020, then strengthen during the second half of the year.

Lots of trade activity
The final months of 2019 provided lots of activity as three important U.S. trade agreements saw movement.

The September U.S.-Japan trade agreement was followed by the U.S.-Mexico-Canada Agreement and then the U.S.-China phase-one trade deal in December.

While most U.S. ag leaders are hailing the three deals as a positive step forward, others have expressed cautious optimism. While the benefit of USMCA to U.S. dairy appears more obvious, the Japan agreement is less so, and the China deal is even less than that. Like all trade agreements, only time will tell of the true benefits to U.S. dairy and agriculture.

The U.S.-Japan trade agreement allows renewed access to the Japanese market, which many believe will lead to an additional $7.2 billion in U.S. ag exports to this growing marketplace. Most dairy industry trade groups praised the completion of phase one of this new agreement and are urging quick action on finalizing phase two to include more dairy.

USDA reports that Japan imported $14.1 billion of U.S. ag products in 2018, of which $5.2 billion was duty-free. The phase one agreement calls for a reduction or complete elimination of duties on an additional $7.2 billion in U.S. ag products.

The new trade deal with Japan should help level the playing field amongst countries that export dairy products to Japan. Prior to this agreement, other nations had preferential treatment with Japan under the terms of the Trans-Pacific Partnership (TPP), which President Donald Trump pulled out of in 2017.

The U.S. Dairy Export Council reports that Japan has tripled its purchases of U.S. cheese in the past 10 years. Japan is the second-largest importer of cheese, behind the UK. In the past, a good deal of Japan’s cheese imports came from New Zealand and Australia. Both countries are facing difficult times with weather-related issues that are affecting ag production.

Hopefully Japan will turn to the U.S. to help supply its growing demand for cheese in 2020.

USMCA was finally passed in the U.S. House of Representatives on Dec. 19. The Senate is expected to approve the trade deal soon.

USMCA replaces and updates the North American Free Trade Agreement and should provide benefits for U.S. dairy exports. Mexico and Canada are two of the most important destinations for U.S. dairy products. The new agreement includes rule changes that should eliminate some key distorting policies in Canada, such as the Class 7 program. In addition, U.S. dairy products will gain an extra 3.6% access to the Canadian dairy market. Canada has become the third-largest export market for U.S. dairy products.

The trade deal also strengthens relations with Mexico, the No. 1 market for U.S. dairy exports. The U.S. Dairy Export Council and National Milk Producers Federation estimate that once implemented, USMCA will improve dairy farm revenues by $548 million in the first six years.

The phase one trade deal between the U.S. and China was announced on Dec. 13, ending the 18-month tariff battle between the two countries. The exact details of the deal have not been released, and there are varying degrees of optimism and pessimism about what the deal will mean for agriculture.

U.S. trade officials announced that China had agreed to increase purchases from the U.S. by $200 billion over the next two years, including $40 billion to $45 billion per year of U.S. ag products.

A few years ago, pre-trade war purchases of U.S. ag goods by China topped out at around $25 billion. If China does indeed end up purchasing $40 billion of ag goods, that will represent an increase of $15 billion per year.

How much this deal will benefit U.S. dairy remains to be seen. The only thing worse than no deal is a bad deal

World outlook
Less-than-ideal dairying conditions have been plaguing major global exporters.

New Zealand milk production has suffered with bad weather issues, and Australia has been battling drought and devastating wildfires. Both countries have seen their dairy industries hit hard.

Should a few major global dairy exporters like these fall short of fulfilling demand, there may be a wider opening for U.S. dairy exports in 2020.

 

Source: American Agriculturist

Chinese Trade Deal Pushes Dairy Markets Higher in Chicago Thursday

On the Chicago Mercantile Exchange milk futures closed higher Wednesday supported by optimism brought with the signing of the China trade deal.  Class III milk responded with gains across the board. January gained 5 to 16.99, February gained 23 to 17.08, and March gained 16 to 17.42. Our first half average is at $17.31/cwt Class IV Milk was unchanged nearby – January at 16.78, February at 17.04, and March at 17.37/cwt. 

The CME spot product market saw green for every product except Butter. Dry whey up $0.0050 at $0.3650.  Five sales were made ranging from $0.36 to $0.3650.  Blocks up $0.0175 at $1.8875.  Barrels up $0.0175 at $1.4850.  Fifteen trades were made ranging from $1.4675 to %1.4950.  Butter down $0.0325 at $1.9075.  Nonfat dry milk up $0.01 at $1.2825.  Nine trades were made ranging from $1.275 to $1.2825.

Grain and Feed markets moved lower, March corn fell 1 ½ to 3.87 ½, March Soybeans fell 13 ½ cents to 9.28 ¾, and March Soybean meal fell $1.90 to trade just 10 cents over $300/ton. 

Milk Futures Lower in Chicago Tuesday

On the Chicago Mercantile ExchangeJanuary Class III milk futures down seven cents at $16.94 Tuesday. Class III milk futures were mixed but with little change. 2020 months ranged from 4 lower to 5 cents higher. First quarter 2021 also gained 6-26 cents per cwt. Class IV milk saw little change with just 4th quarter 2020 and first quarter 2021 trading. 

Dry whey up $0.0075 at $0.36.  Twelve trades made at $0.36. Blocks unchanged at $1.87.  Barrels down $0.06 at $1.4675.  Six trades were made, ranging from $1.4675 to $1.47. Butter $0.07 higher at $1.94.  Seven trades made, ranging $1.9075 to $1.94. Nonfat dry milk unchanged Tuesday at $1.2725.  Six trades were made, ranging from $1.2675 to $1.2750.\

Grain prices declined a half cent to $4.04 ¼ per lb. Soybeans were even on the day closing out at $9.69 and ½ while bean meal was down $1.50 per ton. The wheat complex was higher in each of the markets. Chicago gained 5 cents, Kansas City added 4, and Minneapolis was up slightly.

Milk Futures Slide in Chicago Monday

The Chicago Mercantile Exchange milk futures were mostly down and cash dairy prices were mixed on Monday.   Class III milk was mixed with first half of 2020 moving lower and July forward saw slight gains. January fell 2 to $17.01, February fell 8 to $16.90, our first half average sits at $17.20 per cwt. Class IV saw small gains in the first half of 3- 6 cents. January held at $16.77, February at $17.04 and March at $17.35 per cwt.

Dry whey was up $.0050 at $.3525 cents per pound.  Ten sales were recorded from $.3425 to $.3525. Forty-pound blocks were unchanged at $1.87 per pound. There were no sales recorded. Monday was also the first day of trading for block cheese futures at the CME.  In light trading, February blocks settled at $1.830. March closed at $1.836. April closed at $1.817.  May closed at $1.818.   Barrels were up $.0050 at $1.5275 per pound.  Two sales were recorded at $1.5225 and $1.5270. Grade AA Butter was down $.0500 at $1.87 per pound.  One sale was recorded at that price. Nonfat dry milk was unchanged at $1.2725 per pound.  There were three sales recorded from $1.2725 to $1.2750.

 

Positive Start to 2020 for Dairy Commodity Prices

It has been a positive start to 2020 for New Zealand dairy farmers, with commodity prices rising at the first global dairy auction for the year.

The final Global Dairy Trade (GDT) auction of 2019 saw an unexpected drop of 5.1 percent after months of gains.

However in the latest GDT auction, the overall price index lifted 2.8 percent, with average prices sitting at US$3371/t.

NZX dairy analyst, Robert Gibson said there were increases for all dairy commodities, with smaller overall supply volumes available compared with the previous event.

“The result was largely in line with NZX Dairy Derivative Market expectations leading into the event, continuing the steady and strong trend in GDT prices we have seen since around 2016,” said Gibson.

Whole milk powder (WMP) prices were up 1.7 percent to an average price of US$3150/t.

Skim milk powder (SMP) prices lifted 5.4 percent to an average price of US$3026/t. 

“Milkfats showed some strength which puts a stop to the weakening trend in prices during the previous three GDT events.”

Anhydrous milk fat (AMF) price index lifted 2.3 percent, with average prices reaching US$4929/t, while butter prices lifted 3.7 percent to an average price of US$4029/t.

Source: Newshub

Mixed Markets in Chicago Wednesday

On the Chicago Mercantile Exchange milk futures were mixed at midweek as traders balance improving global markets with negative cash cheese movement.  Class III milk fell 10 cents in January to $17.00 even, February also moved 10 lower to $17.09 and March fell 7 to $17.34, the balance of 2020 was even to a couple cents higher. Our first half average sits at $17.25 per cwt.  Class IV milk fell 1 in January to $16.79, fell 8 in February to $16.95 and march moved 9 lower to $17.27. June – December was unchanged and our first half average for Class IV milk sits at $17.41 per cwt.

Wednesday saw the CME spot trade move mostly lower, Dry whey down $0.0025 at $0.3225.  Ten sales were made at that price.  Blocks down $0.0375 at $1.8425.  Eight trades were made ranging from $1.8425 to $1.85. Barrels down $0.0625 at $1.58.  Eight trades were made ranging from $1.58 to $1.6025.  Butter down $0.01 at $1.87.  Two trades were made at $1.8525 and $1.8575.  Nonfat dry milk up $0.0050 at $1.26.  Two trades were made at $1.26 and $1.2650. 

Grain markets were mixed ahead of Friday’s January USDA supply and demand report. March corn fell a quarter of a cent to $3.84 ¼, January soybeans gained 3 ¼ to $9.38 ¼, and January soybean meal gained 50 cents to $296.90 per ton.

Global Dairy Trade Nearly 3% Higher

Event 251 of the Global Dairy Trade took place on Tuesday with all offered products closing higher for the session.

Global dairy prices jumped at the first auction of the year on Wednesday as low supply supported a surge across all products.

The GDT Price Index climbed 2.8 percent, with an average selling price of $3,371 per tonne, paring the 5.1% drop at the previous sale last month.

Prices gains were broad-based across products, jumping 1.7% for whole milk powder, the top traded item, and 5.4% for skim milk powder.

“This was underpinned by price increases for all dairy commodities, with smaller overall supply volumes available compared with the previous event, which is typical for this time of year but is likely to have contributed to the uptick in demand,” said Robert Gibson, analyst at NZX.

A total of 33,050 tonnes was sold at the latest auction, down 7.5 percent from the previous one, the auction platform said on its website.

Analysts said that prices would likely be supported in the early months of 2020 by constrained supply in New Zealand, the world’s largest dairy exporter.

Global Trade Drives Class III Milk Futures Higher in Chicago Tuesday

On the Chicago Mercantile Exchange milk futures were higher Tuesday on positive global markets while cash trade was mixed.  Class III milk futures were higher on Tuesday after the positive GDT session. First half 2020 months rose 10-25 cents while the second half traded 60-10 cents higher. Class IV was also stronger as months ended even to 15 cents higher.     

CME spot product markets on Tuesday had dry whey up $0.01 at $0.3250.  Seven sales were made ranging from $0.3150 to $0.3250.  Blocks unchanged at $1.88. Barrels unchanged at $1.6425.  Butter down $0.0150 at $1.88.  Two trades were made at $1.88 and $1.8950.  Nonfat dry milk up $0.0225 at $1.2525.  Ten trades were made ranging from $1.25 to $1.2550. 

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