Archive for Dairy Markets

Farmgate milk price: No panic on Fonterra NZ cut

AUSTRALIAN Fonterra suppliers should not be worried about a recent price drop in New Zealand, according to the milk processor.

But analysts describe the current global market as a “watching brief”, with one NZ analyst predicting a farmgate price cut this season.

Last week Fonterra requested a temporary trading halt in New Zealand and Australia before announcing it would cut last season’s milk price in New Zealand from $NZ6.75 a kilogram of milk solids to $NZ6.70 (a A4c drop).

It said it would hold its previously announced normalised earnings per share guidance range of NZ25-30c (A23-27c), but indicated it would be at or slightly below this. The full year dividend would be just the NZ10 cents paid in April. It said this move ensured a strong balance sheet.

New Zealand dairy farmers get paid for the previous seasons’ production until October. This price revision means an anticipated payment would be less.

ASB senior rural economist Nathan Penny said it was nothing for Australian Fonterra suppliers to worry about.

“It is a Fonterra balance sheet problem, it is not a market price issue,” he said. “Fonterra has its competitive position to consider in Australia, independent of the Fonterra balance sheet effectively.

“NZ farmers are taking the hit on the balance sheet, (Australian suppliers) are not shareholders in Fonterra and the market-based price hasn’t done anything.”

A Fonterra spokeswoman said there would not be “any flow-on effects for the Australia business and we will not adjust our price down as a result of the New Zealand price revision”.

She said Fonterra’s Australian opening price of $5.85/kgMS was a “responsible price based on our product mix”.

Mr Penny predicted the Fonterra New Zealand price of $NZ7/kgMS would be revised later this month. He said a 9 per cent drop on the Global Dairy Trade since May came as Chinese demand decreased due to a weaker Yuan.

ASB has predicted a $NZ6.50/kgMS ($A5.88/kgMS) for this season, which is under review.

Rabobank Australian dairy analyst Michael Harvey said there was no expectation that the Australian farmgate milk price would be revised as Australian processors were not as “aggressive” with pricing as their Kiwi counterparts.

 

Source: The Weekly Times

Milk Futures Down Cash Dairy Mixed in Chicago Thursday

At the Chicago Mercantile Exchange, milk futures were down again and cash dairy prices were mixed Thursday. August declined a penny to $14.99 per cwt. September through December ranged from 7 to 13 cents lower. The last four months of 2018 now carries an average of $15.97 per cwt. 2019 Class III prices were even to slightly negative. Class IV milk had September 2018 down 4 cents while March 2019 lost 6 cents and April 2, respectively. 

CME spot product markets saw butter drop 2 cents to $2.33 per pound. Cheddar barrels traded 10 loads but closed unchanged at $1.675 per pound. Blocks fell a half cent to $1.655. The barrel to block spread is now inverted with barrels leading the way by 2 cents. Grade A nonfat dry milk added a penny and settled at 83 cents per pound following 4 trades and 7 uncovered bids. Dry whey finished unchanged at 44.5 cents.

Dairy product prices on the international markets are up in Western Europe and mixed in Oceania. The USDA’s bi-weekly price report shows whole milk powder is up more than 3% in Oceania, but steady in Europe at $1.41 and $1.48 respectively. Skim milk powder is up in the EU to $.82 a pound, while Oceania is at $.92 after falling six-tenths of a percent.

Grain markets caught some excitement Wednesday when China announced that they were sending a delegation to Washington later this month. Soybeans rose 28 cents to $8.97 per bushel. Soybean meal was up $5.50 per ton to $335 per ton. Corn followed suit as it traded 3 ¾ cents higher while the wheat complex was 10-13 cents stronger. Hogs also had a nice day as they closed limit up.

Cash Steady, Futures Down at CME Wednesday

At the Chicago Mercantile Exchange Wednesday, milk futures were down and cash dairy prices were mostly steady to up. August lost 2 cents and closed at $15. September through December was down 7 to 15 cents per cwt. January through July 2019 prices fell 1 to 7 cents per cwt. Class IV milk had weakness as well. As September through December 2018 prices were down 2 to 9 cents. No changes were seen in 2019 for Class IV. 

CME spot product markets on Wednesday closed with little change outside of the butter market. Grade AA Butter was down $.0375 at $2.35 per pound.  No sales were recorded. Dry whey was unchanged at  $.4450 cents per pound. No sales were recorded. Barrels were up $.0050 at $1.6750 per pound.  Six carloads sold from $1.67 to $1.6750. Forty-pound blocks were up $.0050 at $1.66 per pound.  One carload sold at that price.

 

Milk Markets Mixed Tuesday in Chicago

At the Chicago Mercantile Exchange, Class III milk futures closed mixed Tuesday, where prices in nearby contracts held a premium over those in deferred. The September contract alone rose 11 cents while the balance of the year was largely unchanged. The average from now through December stands at $15.94, up 2 cents from Monday. Class IV markets remained unchanged.

Barrel cheddar has now taken its turn leading the cheese complex higher in the CME spot session. Barrels rose 2 and ¼ cents eclipsing their may high of $1.65 and ¼ cents to finish at $1.67, the highest price witnessed since November 2017. Block cheddar took the day off falling 1/2 cents finishing at $1.65 and ½ cents after just three loads traded hands. Butter closed up $0.02 at $2.3875.  Seven trades were made ranging from $2.37 to $2.3925. Nonfat dry milk closed down a penny at $0.82. Dry whey closed up $0.0025 at $0.4450.

CWT Assists with 2.4 Million Pounds of Cheese and Whole Milk Powder Export Sales

Cooperatives Working Together (CWT) member cooperatives accepted six offers of export assistance from CWT that helped them capture contracts to sell 341,717 pounds (155 metric tons) of Cheddar cheese, and 2.097 million pounds (951 metric tons) of whole milk powder. The product has been contracted for delivery in Asia, Central and South America for the period from August through December 2018.

CWT-assisted member cooperative 2018 export sales total of 46 million pounds of American-type cheeses, 12.305 million pounds of butter (82% milkfat) and 31.744 million pounds of whole milk powder to 29 countries on five continents. These sales are the equivalent of 933.560 million pounds of milk on a milkfat basis.

This activity reflects CWT management beginning the process of implementing the strategic plan approved by the CWT Committee in March. The changes will enhance the effectiveness of the program and facilitate member export opportunities.

Assisting CWT members through the Export Assistance program in the long term helps member cooperatives gain and maintain market share, thus expanding the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively affects all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.

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

 

Futures Lower, Cash Dairy Higher Monday in Chicago

At the Chicago Mercantile Exchange Monday, Class III milk futures closed lower to take back Friday’s gains. August milk fell 2 cents to $15. 02 per cwt. while September through December dropped 11-17 cents. The September through December average now stands at $16.14. per cwt. 

Product markets during the CME’s spot session had a positive outcome. Barrels traded 17 loads and 2 and ¾ cents higher to $1.64 and ¾ cents per lb. The block price grew by ¼ cent despite just one trade to $1.66 per lb. The block to barrel spread now stands at 1 and ¼ cents.

Dairy Prices Up Thursday in Chicago

At the Chicago Mercantile Exchange Thursday cash dairy prices were mostly higher and milk futures were sharply higher. Class III market jumped 18 cents for an average from now through the end of the year to finish at $15.98. All contracts in the fourth quarter added to their $16 plus prices while the September contract alone rose 29 cents to finish just under $16 at $15.99.

Thursday’s trade was all about cheese. Blocks advanced another 4 cents higher without a trade taking place but moving the final price to $1.64 and ½ cents. That is the highest price that’s been witnessed since May 10, and is only 5 and ¾ cents from the highest price paid for block cheddar all year.   Barrels followed suit trading five loads moving 5 and ¼ cents higher and finishing at $1.56 and ¾ cents. Whey was more neutral finishing unchanged at 44 cents. However, that still maintains its highest price since whey entered the spot trade back in March. Butter rose 2 cents to finish at $2.34. Seven loads traded hands there. Grade A nonfat dry milk moved in the opposite direction, falling ½ cents on three loads to finish at 81 and ½ cents.

Whey Prices Break Record Fluid Milk Prices Firm in Chicago Wednesday

At the Chicago Mercantile Exchange Wednesday, Class III milk futures were firm to higher on follow through buying and weather concerns in some areas. Class III markets prices were elevated 14 cents in the average from now through the end of the year to return back to $15.83. The 2019 average picked up 3 cents over Tuesday’s finish to settle at $16.01. Class IV markets remained quiet but also gained some ground in 2019 rising just a penny to $16.04 in its average for the coming calendar year.

Butter prices rose another ½ cents finishing at $2.32 cents per lb. with just a couple of loads trading. Block cheese also traded a pair of loads to rise 2 and 3/4 cents finishing at $1.60 and ½ cents. This is the first time that blocks have traded north of $1.60 since the announcement of tariffs hit in mid-June.  Barrel cheese rose 3 cents on seven loads to finish at $1.51 and ½ cents while whey prices rose ¼ cents to finish at 44 cents per lb. Yet again, another record. Grade A nonfat dry milk fell to its lowest price yet this month, dropping a penny and ¾ cents on four loads to finish at 82 cents per lb.

Markets Slight Higher Tuesday in Chicago

At the Chicago Mercantile Exchange Milk futures and cash dairy prices were slightly higher Tuesday.  By the end of trade Class III milk was largely higher with the average price from now through the end of the year rising to $15.67, up 4 cents over Monday’s close. Class IV markets remained unchanged.

Elsewhere, butter dropped 3.2%. to finish at an 80% butterfat equivalent of $2.13 cents per lb., while cheddar cheese rose 1.3% to finish at $1.67 per lb. The biggest price mover was rennet casing, which rose 8%. 

Global Dairy Trade event number 217 led the conversation in Tuesday mornings trade. The index of products finished unchanged with lackluster performances in nearly every category. Skim milk powder was down three-tenths of a percent to 90 cents per lb., while whole milk powder was up one-tenth of a percent to $1.34 per lb. 

Butter and Class III take a slip and a slide Monday in Chicago

At the Chicago Mercantile Exchange Milk futures were sharply lower and cash dairy prices were mixed on trading Monday. By the sessions close, the average price from now through the end of the year fell 16 cents per cwt. to finish at $15.64. The 2019 average dropped to below $16 for the first time since July 20. That average now stands at $15.99, 3 cents below Friday’s finish. Class IV markets remained unchanged.

Butter slipped a penny and ½ cents without trading, either. It finishes at $2.30 and ½ cents while dry whey remained unchanged. Nothing traded there either, 43 and ½ cents is it’s finish once more.  Dry whey was unchanged at $.4350 cents per pound.  No sales were recorded. Barrels were up $.01 at $1.4850 per pound.  Four carloads sold from $1.4850 to $1.49. Forty-pound blocks were down $.0175 at $1.57 per pound.  No sales were recorded. Nonfat dry milk was up $.0025 at $.83 per pound.  Three carloads sold from $.8250 to $.83.

Class III Price Drops For The Third Straight Day

At the Chicago Mercantile Exchange Class III milk futures closed mostly lower Thursday for the third straight day pressured by negative international prices. The average price from now through the end of the year finishes at $15.82 per cwt, down a nickel from Wednesday, the 2019 average, however, move the penny higher to $16.10. Class IV markets were mostly neutral with the average from now through the end of the year finishing unchanged at $15.28 while the average rose a penny as well to $16.17.

Blocks were up $0.0325 at $1.5725. Barrels closed up $0.0275 at $1.4575. Ten trades were made ranging from $1.44 to $1.46. Nonfat dry milk closed down $0.0075 at $0.8325. One trade was made at $0.83. Butter closed unchanged at $2.32. Dry whey also closed unchanged at $0.4325.

CME Prices Up – Class IV Higher Than Class III In July

On Wednesday, USDA announced the federal order prices for July. Milk markets have been feeling the impact of tariffs as evidenced by the steep decline in Class III prices in July. In a rare occurrence, the federal order price for Class IV exceeded the Class III price.  At the Chicago Mercantile Exchange Wednesday milk futures and cash dairy prices all went up. August Class Three milk was up $.10 at $14.86.    September was up $.09 to $15.65. October was up $.15 to $16.33.  November was up $.16 at $16.37. The milk futures from December through next July ranged from zero to ten cents higher.

Dry whey was up $..75 at $.4325 cents per pound.  No sales were recorded. Barrels were up $.0225 at $1.43 per pound.  Fifteen carloads sold from $1.42 to $1.46. Forty-pound blocks were up $.04 at $1.54 per pound.  Two carloads sold at $1.5350 and $1.54. Grade AA Butter was up $.01 at $2.32 per pound.  Twelve carloads sold from $2.30 to $2.32. Nonfat dry milk was up $.0025 at $.84 per pound.  Four carloads sold from $.84 to $.8425.

Milk Futures Fall in Chicago Tuesday

At the Chicago Mercantile Exchange Tuesday, milk futures fell while some cash dairy prices went up. July Class Three milk was unchanged at $14.12.  Class III milk prices were 18 cents lower in August and 6 cents lower in September, respectively. Fourth quarter 2018 ranged from 2 cents lower to 3 cents higher. 2019 saw very little change. Class IV milk results had September through December up 11 to 16 cents. March added 4 cents, April 8 cents, while August through December 2019 dropped 2-14 cents per cwt. 

Dry whey was unchanged at $.4250 cents per pound.  No sales were recorded. Barrels were up $.0025 at $1.4075 per pound.  Seven carloads sold at $1.41. Forty-pound blocks were down $.02 at $1.50 per pound.  One carload sold at that price. Grade AA Butter was up $.0450 at $2.31 per pound.  Ten carloads sold from $2.30 to $2.3175. Nonfat dry milk was up $.0225 at $.8375 per pound.  Seven carloads sold from $.8150 to $.8375.

Milk Prices Fall As Production Rises

USDA’s June Milk Production report was released on Friday, July 20, and again showed an increase in milk production at 1.2% larger than a year ago. The cow herd remained unchanged at 9.404 million head. The dairy industry is producing more with less, as technology and more efficient practices continue to evolve.

Unfortunately for the dairy industry and especially the milk producers, prices are likely to remain range-bound in the short term, which we would define as the next 3 to 6 months. The dairy industry continues to struggle financially. Yet, with production continuing to show higher figures relative to the previous year, it becomes more challenging to argue that demand will increase enough to make up the difference to support higher prices.World demand continues to rise, and that could be the differential. However, with tariff concerns hanging over the market, expect more of the same, and that is range-bound price activity. A lack of processing capacity may act as a price flooring mechanism. From a long-term perspective until demand catches up to supply, rallies will likely be few and far between.

Unfortunately, what the market probably needs is more pain. Pain comes in the form of enough losses in the producers’ pocketbooks to suggest liquidation. Beef prices, while somewhat attractive, are not where they were just a few short years ago, and are not creating an environment where producers are quick to cull the herd. It is human nature to want to increase your production. From a micro-level this may work. From a macro-level, it produces more inventory that the marketplace has to absorb, usually through lower prices.

The good news is that, with prices languishing at current price levels (near $14.00 to $16.00), demand should continue to gradually grow both domestically and worldwide. When there is a strong demand base, it is just a matter of time before prices gravitate higher. Good demand can also lead to a scenario where something may come along to disrupt supply. Consequently, prices can rise quickly. Adverse weather can be an impactful event for dairy producers. However, this summer’s weather has been generally conducive to milk production, and likely not a factor in the near-term forecasts.

 

Source: Pro Ag

CME Markets Mixed Monday

At the Chicago Mercantile Exchange Monday dairy prices were mixed. July Class Three milk was down $.02 at $14.12.   August was down $.08 at $14.94. September was down $.02 to $15.62.  October was up $.07 to $16.20. The milk futures from November through next June ranged from one cent lower to thirteen cents higher. In the end, the average price for the period of August through December finished at$15.80, up 4 cents the average was able to add another penny to its price it now stands at $16.06. Class IV markets saw little activity they finished on change with the balance of the year averaging $14.96 and the 2019 average still holding $16.19 per cwt.

Grade AA Butter was up $.0025 at $2.2650 per pound.  Three carloads sold from $2.2525 to $2.2625. After one day of barrels and blocks selling for the same price, barrels were down $.1150 at $1.4050 per pound.  Five carloads sold from $1.42 to $1.49.  Forty-pound blocks were unchanged at $1.52 per pound.  No sales were recorded. Nonfat dry milk was down $.0025 at $.8150 per pound.  One carload sold at that price. Dry whey was unchanged at $.4250 cents per pound.  No sales were recorded.

Futures Down, Cash Dairy Up in Chicago Thursday

At the Chicago Mercantile Exchange, Thursday milk futures were down and cash dairy prices were up. The final average price for the period of August through December finished at $15.73, down 9 cents from Wednesday’s finish.July Class Three milk was down $.04 at $14.14.   August was down $.07 at $14.85. September was down $.13 to $15.55.  October was down $.07 to $16.14. The 2019 average slipped 2 cents to $16.03. Class IV markets continued their upward stride on the heels of a stronger butter trade. The average price from now through the end of the year is $14.92, up a penny. However, the strongest performance took place in the 2019 calendar with the first half of the year rising 6 cents to $15.61.

The CME spot trade logged yet again another positive performance. Barrels rising ¾ cents to $1.48 and ¾ cents. The price of barrels have now risen 19 and ¾ cents from Monday’s finish. Block cheese remained unchanged to finish once more at $1.51. Two loads did trade on Thursday, however.  Grade AA Butter was up $.0450 at $2.27 per pound.  Ten carloads sold from $1.2450 to $2.27. Nonfat dry milk was up $.0125 to $.8175 per pound.  Two carloads sold at $.8150 and $.82. Dry whey was up $.0025 at $.4125 cents per pound.  No sales were recorded.

Dairy Markets Mixed in Chicago Wednesday

At the Chicago Mercantile Exchange Wednesday milk futures and cash dairy prices were mixed.  July Class Three milk was down $.02 at $14.18.   August was unchanged at $14.92. September was up $.05 to $15.68.  October was up $.09 to $16.21. The milk futures from November through next June ranged from six cents lower to five cents higher. The average price for now through the end of the year finished 3 cents higher at $14.91

On Wednesday, blocks and barrels came to within 3 cents of each other, a feat that has only been done on six other days this year. Barrels led the charge in the CME spot trade by rising 8 cents after 19 loads traded hands to finish at $1.48. Conversely, blocks fell 2 cents to finish at $1.51 with just 3 loads trading. 

Milk Futures up Sharply, Cash Dairy Prices Mixed

At the Chicago Mercantile Exchange Tuesday, milk futures were up sharply and cash dairy prices were mixed. Class III milk futures traded a penny higher in July, 20-3o cents higher between August and November, and up 12 cents in December. The August through December 2018 average finished at $15.80 per cwt. First half 2019 jumped 5-15 cents and closed with an average price of $15.75 cents per cwt. Class IV milk saw just August trade as it fell 5 cents to $14.55 per cwt. 

Cheddar barrels continued its high-velocity trade as 11 cents were added to its price which closed at $1.40 per lb. Six trades took place along with 6 uncovered bids and 3 offers. Cheddar blocks also traded 6 times as it gained a penny to $1.53 per lb. Butter dropped 6 and ½ cents led by 5 open offers and settled at $2/22 and ½ cents per lb. Grade A nonfat dry milk finished unchanged at 79 and ¾ cents while dry whey lost a penny following two trades and closed at 41 cents per lb.  

Grade AA Butter was down $.0650 at $2.2250 per pound.  No sales were recorded. Barrels were up $.11 at $1.40 per pound.  Six carloads traded from $1.34 to $1.4025. Nonfat dry milk was unchanged at $.7975 per pound.  No sales were recorded. Dry whey was down $.01 at $.41 cents per pound.  No sales were recorded.

Dairy Prices Mostly Up in Chicago Monday

Dairy prices were mostly up on the Chicago Mercantile Exchange Monday. July Class Three milk was unchanged at $14.19.   Class III markets spanning the month of August through December average $15.57, 3 cents over Friday’s finish. The 2019 average for Class III milk advanced 2 cents higher to finish at a final average price for the day of $16.02 per cwt. The milk futures from November through next June ranged from zero to nine cents higher.

The CME spot trade held some positive news. Butter price rose 4 cents on six loads to finish at $2.29. That was the single largest update that butter has seen since mid-May. Cheddar barrels rose 2 cents to move back to $1.29 while blocks remained unchanged, finishing again at $1.52. Grade A nonfat dry milk rose another 1 and ¼ cents, continuing to build on the leap that was made last Friday. Dry whey remained unchanged at 42 cents.

Milk Futures Highers Cash Mixed Wednesday in Chicago

As a result of commercial spread activity, Class III milk futures were firm to higher on Wednesday at the Chicago Mercantile Exchange. July was up $.01 at $14.25 and most active August was $.09 higher at $15.09, while September gained $.17 at $15.62 and October jumped $.27 to $15.94.

In Wednesday’s spot product market, butter, Grade A nonfat dry milk and dry whey all closed unchanged. Cheddar blocks added 1 and ¼ cents to $1.54 even. Cheddar barrels dropped 6 and ½ cents to $1.31 per lb. with 5 loads trading hands. Futures markets on dairy products far outpaced cash sessions as futures traded 1-3 cents higher in cheese and nonfat dry milk was up ½ cents to 1 penny. 

Milk Markets Mixed in Chicago Thursday

Class III milk markets began Thursday’s session on a higher note but eventually dropped 4 cents in July, 10-25 August through November, and 6 cents in December as a result of the pressure from lower global markets.

CME spot product markets had mixed results. Block cheese lost ¾ cents to $1.53 and ½ cents. Barrel cheese traded 8 loads and ½ cent higher to $1/31 and ½ cents per lb. Butter saw 2 trades but fell ¼ cents $2.25 per lb. Grade A nonfat dry milk closed unchanged at 76 and ¾ cents following 4 trades while dry whey added ½ cents on 1 uncovered bid and offer and settled at 42 cents per lb. 

The USDA reports bi-weekly whole and skim milk powder, cheddar cheese and butter are declining in both Western Europe and Oceania regions. Skim milk powder in Oceania is the only market that increased from the previous week, up 2.5 percent.

Dairy Markets Mixed Tuesday in Chicago

At Chicago Mercantile Exchange Tuesday Dairy prices were mixed. July Class Three milk was down $.02 at $14.24.   August was down $.18 to $15.00. September was down $.06 to $15.45.  October was up $.04 to $15.67. The milk futures from November through next June ranged from six cents lower to three cents higher.

Grade AA Butter was up $.0125 to $2.2525 per pound.  Three carloads sold from $2.2450 to $2.25. Barrels were down $.0475 at $1.3750 per pound.  Nineteen carloads of barrels sold from $1.38 to $1.4250.  Forty-pound blocks were down $.0375 to $1.5275 per pound. No sales were recorded.

Dairy Futures Mostly Up In Chicago Monday

The Chicago Mercantile Exchange Monday, Dairy futures were mostly up. July Class Three milk was down $.01 at $14.26.   August was up $.34 to $15.18. September was down $.25 to $15.51.  October was up $.22 to $15.71. The milk futures from November through next June ranged from one to eighteen cents higher.

Grade AA Butter was up $.0150 to $2.24 per pound.  One carload sold at $2.2350. Barrels were unchanged at $1.4225 per pound.  Nine carloads of barrels sold from $1.4225 to $1.4250.     Forty-pound blocks were up $.0050 to $1.5650 per pound. Five carloads sold from $1.5475 to $1.5650. Nonfat dry milk was unchanged at  $.7550 per pound. Three carloads sold at $.7550 and $.7575. Dry whey was down $.0025 at $.4150 cents per pound.  No sales were recorded.

Cash and Dairy Prices Up in Chicago Thursday.

At the Chicago Mercantile Exchange Thursday, milk futures and cash dairy prices were up.

July Class Three milk was up $.09 at $14.30.   August was up $.35 to $15.00. September was up $.28 to $15.39.  October was up $.20 to $15.57. The milk futures from November through next June ranged from four to seventeen cents higher.

Grade AA Butter was up $.0125 to $2.2125 per pound.  Six carloads sold between $2.2050 and $2.2175. Barrels were up $.0625 at $1.4125 per pound.  Ten carloads of barrels sold from $1.36 to $1.41. Forty-pound blocks were up $.0225 to $1.5650 per pound.  No sales were recorded. Nonfat dry milk was down $.0050 to  $.7625 per pound. Eight carloads sold from $.7550 to $.7625. Dry whey was up $.0075 to $.4175 cents per pound.  No sales were recorded.

Milk Futures Make Small Gains, Cash Dairy Down Wednesday at the CME

At the Chicago Mercantile Exchange on Wednesday milk futures made small gains and most cash dairy prices were down.

July Class Three milk was up $.03 at $14.21.   August was up $.05 to $14.65. September was up $.06 to $15.11.  October was up $.04 to $15.37. The milk futures from November through next June ranged from zero to four cents higher.

Grade AA Butter was down $.0250 to $2.20 per pound.  Three carloads sold between $2.19 and $2.20. Barrels were up $.0125 at $1.35 per pound.  Twelve carloads of barrels sold from $1.3375 to $1.35.  Forty-pound blocks were unchanged at $1.5425 per pound.  No sales were recorded. Nonfat dry milk was down $.0150 to  $.7575 per pound. Two carloads sold at $.7575 and $.76. Dry whey was up $.0050 to $.41 cents per pound.  Two carloads sold at that price.

Milk futures mostly lower Tuesday in Chicago

At the Chicago Mercantile Exchange, Class III milk futures closed mostly lower Tuesday as trade uncertainties continue to weigh on the market.

July milk closed up two cents at $14.18. August milk was eight cents higher at $14.60. September milk down a penny at $15.05. October closed down two cents at $15.33. November through next June contracts closed a nickel lower to a penny higher.

Grade AA Butter closed up $0.0250 at $2.2250. Three loads sold ranging from $2.2125 to $2.2250. Blocks were unchanged at $1.5425. Barrels closed up $0.0750 at $1.3375. Eight trades were made ranging from $1.2825 to $1.3370. Nonfat dry milk was unchanged at $0.7725. Dry whey closed $0.0075 higher at $0.4050.

June Dairy Prices – Too Much Milk and Too Much Cheese

June Class and Component prices were announced on July 5.  With one exception, prices saw very little change from the prior month.  The 52% increase in the price of other solids dominates Chart I.  Other changes were minimal with the Class III price increasing by .2%.  Cheese prices were down slightly, which reduced the milk protein price by $.08/lb.  A drop in the cheese price usually causes a drop in the Class III price, however the increase in the price of other solids offset the loss to make the Class III price slightly positive.

Chart I – Dashboard of Dairy Price Changes

Why did cheese prices drop?  Cheese inventories (Chart II below) were again up substantially.  Before any meaningful increase in the Class III price can be attained, cheese inventories must come down.  A lower inventory will force an increase in the price of cheese and an increase in the Class III price.How high was the cheese inventory increase?  It was roughly twice the 2% growth rate of domestic cheese consumption compared to the prior year.  Compared to two years ago the growth in inventories is roughly five times the growth in domestic cheese consumption.  The growth in cheese exports can only absorb a small part of this increase. 

Chart II – Cheese Inventory

What is behind the growth in inventories?  Over production of cheese caused by over production of milk is clearly the culprit.  While there are lots of news headlines about new tariffs on cheese exports, the problem is really right in the U.S.  With the drop in fluid milk consumption the increases in U.S. milk production cannot be sustained.  Parking the excess milk in cheese inventories buys time, but it is not a solution.

Chart III – Cheese Production

In the

June 12 post

to this blog, the huge increase in Nonfat Dry Milk (NDM) exports was covered.  It was impactful in reducing the inventories of NDM (Chart IV below).

Chart IV – NDM/SMP Inventory

While the price of NDM is primarily dictated by international prices, there was a slight upward tick in the price of NDM, which in-turn gave a slight upward tick to the Class IV skim price.  While any increase is helpful, the price of NDM is still in low range of under $1/lb. where it has been for the last three years.  The excess global supply of NDM and Skimmed Milk Powder is keeping these prices low.

Chart V – NDM Wholesale Prices

The big increase in the value of other solids is linked to the increase in dry whey prices.  Because the drying price of dry whey comes close to the total value of dry whey, relatively small changes in the price of dry whey can have a big change on the price of other solids.  The cost to dry whey is $.1991/lb. and the value of dry whey has ranged in 2018 from $.25/lb. to the current price of $.31/lb.  That is why a 13.8% increase in the price of dry whey can calculate to a 52% increase in the value of other solids.

Other Solids Price = (Dry Whey Price − 0.1991) x 1.03

What caused the huge increase in dry whey prices?  Chart VI below shows the huge drop in inventories in 2018.

Chart VI – Dry Whey Inventory

U.S. dairy values remain stuck at moderate prices with a number of shifting parameters like domestic consumption, milk supply, and international events that impact exports and imports.   Posts to this blog will continue to provide accurate and unbiased insights.  As California moves closer to becoming an FMMO, more posts will provide information on what is happening in California and how it may impact the total U.S. dairy industry.

Dairy prices continue to dive in Chicago trading

At the Chicago Board of Trade Monday, milk futures continued to dive and the cash dairy prices were mixed. July Class Three milk was down $.04 at $14.16.   August was down $.17 to $14.52. September was down $.16 to $15.06.  October was down $.08 to $15.35. The milk futures from November through next June ranged from five to ten cents lower.

Grade AA Butter was up $.03 to $2.20 per pound.  Eight carloads sold between $2.19 and $2.2050. Barrels were up $.0175 at $1.2625 per pound.  Six carloads of barrels sold from $1.2450 to $1.2625.      Forty-pound blocks were unchanged at $1.5425 per pound.  No sales were recorded. Nonfat dry milk was unchanged at  $.7725 per pound. No sales were recorded. Dry whey was up $.0075 to $.3975 cents per pound.  Two carloads sold at $.39 and $.3950.

Milk Prices Continue to Fall in Chicago Thursday

At the Chicago Mercantile Exchange Thursday, milk futures and cash dairy prices continued to fall. July Class Three milk was down $.13 at $14.36.   August was down $.15 to $14.86. September was down $.13 to $15.38.  October was down $.13 to $15.57. The milk futures from November through next June ranged from zero to 11-cents lower.

Grade AA Butter was down $.02 to $2.18 per pound.  Three carloads sold with prices from $2.18 to $2.19. Barrels were down $.0825 at $1.28 per pound.  Three carloads sold from $1.28 to $1.32. Forty-pound blocks were down $.0075 to $1.5425 per pound.  One carload sold at $1.5075. Nonfat dry milk was up $.0025 to $.7425 per pound. No sales were recorded. Dry whey was down $.0075 to $.3925 cents per pound.  One carload sold at that price.

‘Jittery’ market piles into record volume of dairy derivatives after steep price drop at GDT auction

Unexpectedly weak prices for whole and skim milk powder at this week’s Global Dairy Trade auction have seen market participants pile into a record volume of dairy derivatives on the NZX, with most of the jump in options to buy or sell the products.

The record volume was 6,415 lots on July 3, according to NZX Dairy Derivatives data. That beat the previous record set in 2015 of 5,994. At the Global Dairy Trade auction overnight last Tuesday, prices fell, led by an unexpectedly big decline in whole milk powder. The auction was held after Fonterra Cooperative Group, one of the biggest market participants, released production figures showing its New Zealand milk collection for May was up 7 percent from a year earlier to 71 million kilograms and it forecast a 1.3 percent increase for the 2018/19 season.

Whole milk powder sank 7.3 percent to US$2,905 a tonne and skim milk powder shed 4.6 percent to US$1,913 a tonne, prompting AgriHQ dairy analyst Amy Castleton to say it looked like the market “had the jitters, especially for whole milk powder”.

“Yesterday the market had a record day. People wanted to jump in and manage their risk,” said Nigel Brunel, director of institutional commodities at OMF. “GDT went down and that made the market more volatile. It was more than I expected but there seems to be a lot of milk out there globally and New Zealand is setting itself up for a good season.”

Some 4,000 contracts were in options, the biggest volume in at least three months, based on NZX data. A similar volume of futures contracts traded a week earlier, also a three-month high. It was the busiest day for options trading since May 2015. The contracts are for one metric tonne for GDT-based contracts and 6,000 kgMS for NZ milk price contracts.

Nick Morris, NZX head of derivatives, said it was “pleasing to see record levels of activity” in dairy derivatives. “Higher volatility at the recent GDT auction is driving large volumes of trade.”

NZX said its data showed the majority of options traded yesterday were at strikes of $2,900 and $3,000. Call options, which give the owner the right to buy the underlying commodities at an agreed price, were traded at $3,000 and puts, an option to sell at a specified rate and time, at $2,900. It added that some options “appear to be trading as structures”. It said participants typically use options as insurance should the price move against them, without having to be committed to such a position.

Traders use contract structures to suit their needs including a collar, where the holder seeks to put a cap and a floor on the price. Within that, there’s a ‘long collar’, where the trader buys a call option and sells a put option, and a ‘short collar’, where they take the opposite position.

NZX’s June metrics show that the notional value of dairy derivatives traded rose 16 percent from June 2017 to $132 million. There were 26,417 futures lots traded, up 10 percent, and 7,332 options lots, up almost 30 percent. The ‘options to futures ratio’ rose 18 percent to about 28 percent.

According to Brunel, the participants in the market are also participants in the dairy sector and are hedging their actual risks and potentially offsetting positions elsewhere, such as being long in the futures market or to offset risks in the actual cash market. OMF’s clients do seek structured positions and Brunel declined to comment on actual trading.

Market participants range from producers and sellers of milk to distributors and buyers of dairy products. Up until this latest week, volatility in the market had actually reduced, Brunel said.

 

Source: Newsroom.pro

Dairy prices tumble 5 per cent at latest auction

Dairy prices have taken their biggest hit of the year.

The ASB says trade tensions between the United States and China are behind the plunge in prices at the latest global dairy auction.

Average prices tumbled by 5 per cent per cent to reach US$3232 (NZ$4778), the most dramatic decrease seen in the index this year.

The price for New Zealand’s key export whole milk powder (WMP) was US$2905, a fall of 7.3 per cent. Futures markets had suggested WMP might fall by 1 per cent. 

ASB rural economist Nathan Penny is still confident about dairy prospects despite speed wobbles caused by trade tensions.ASB rural economist Nathan Penny is still confident about dairy prospects despite speed wobbles caused by trade tensions.

ASB rural analyst Nathan Penny said dairy markets were nervous and last night’s fall in dairy auction prices reflected the nervousness.

READ MORE: 
Dairy prices decline by 1.2 per cent in response to increased supply

“We stick to our positive dairy market view, but note the increasing potential for further dairy market fallout.”

The fall in the price of milk power could be expected to reduce the cost of producing a litre of Anchor Blue milk – on sale for $2.87 at Countdown – by about 2.5c. 

Chinese tariff increases on US exports, scheduled for July 7, include dairy and other agricultural products.

Penny said New Zealand would ironically stand to benefit from increased Chinese tariffs on US dairy products. 

“These tariffs will make NZ dairy products cheap relative to US equivalents. In turn, Chinese are likely to increase their demand for NZ dairy products , boosting NZ dairy prices.”

“For now though, dairy buyers are more nervous about the fallout from the increasing trade tensions and the potential impact this could have on dairy demand.  Already, currencies for key dairy buyers have fallen, with the Chinese yuan down around 3 per cent since the last auction.  Meanwhile, Chinese stockmarkets have also taken a hit with the Shanghai Composite Index down nearly 10 per cent over the same period,” Penny said.

The NZ dollar had also fallen about 3 per cent against the US over the past fortnight, but the spot milk price was still sitting at a “healthy” $7.00 per kilogram of milksolids.

AgriHQ said Fonterra’s latest Global Dairy Update appeared to have given the market the jitters, especially for WMP.

It showed its May production was up 6.6 per cent and that it expected to collect 1.3 per cent more milk in the 2018-19 season. There was 20 per cent more WMP sold than at the last auction but buyers were not willing to pay more for it.

All products except butter milk powder and rennet casein fell. Skim milk powder (SMP) was down 4.6 per cent to US$1913, and butter slipped 4 per cent to US$5390.

Anhydrous milkfat (AMF) was down 1.7 per cent, and cheddar prices also fell 4.3 per cent. But buttermilk powder lifted 6.4 per cent, as did rennet casein (3.6 per cent).

Fonterra said production over the past 12 months had been up in many major dairy countries. The European Union and Australia both recorded 3 per cent rises, and the United States 2 per cent. New Zealand on the other hand had flatlined with a zero per cent growth rate.

Meanwhile this week the Global Dairy Trade marked 10 years of auctions with more than US$22 billion cumulative value of dairy products to buyers from over 80 countries.

GDT director Eric Hansen said the auctions re-wrote the rules of engagement for buying and selling dairy commodities.

“In the era before Global Dairy Trade existed, buyers and sellers were struggling to understand what constituted a current market price in the midst of unprecedented volatility. Dairy farmers had limited access to information about what the milk in their vats was worth in international markets.

“By applying advanced auction methods to create a new sales channel for globally-traded commodity dairy products, Global Dairy Trade’s auctions provided assurance to buyers that they were paying a fair market price. Buyers and sellers were able to better manage price risk.  And farmers had a regular market-based price signal around which they could plan their farming businesses,” Hansen said.

The platform launched at the height of the global financial crisis and dairy prices initially crashed but eventually recovered.

Source: stuff.co.nz

Milk futures and cash dairy prices tumble in Chicago Tuesday

At the Chicago Mercantile Exchange Tuesday, milk futures and cash dairy prices tumbled ahead of the holiday. July Class Three milk was down $.19 at $14.49.   August was down $.32 to $15.01. September was down $.36 to $15.51.  October was down $.27 to $15.70. The milk futures from September through next June ranged from zero to 36-cents lower.

Grade AA Butter was down $.0525 to $2.20 per pound.  Three carloads sold with prices from $2.20 to $2.21. Barrels were down $.0675 at $1.3625 per pound.  Sixteen carloads sold from $1.37 to $1.42. Forty-pound blocks were down $.0325 to $1.55 per pound.  Two carloads sold at $1.55 and $1.5650. Nonfat dry milk was unchanged at $.74 per pound. Two carloads sold at $.74 and $.7450. Dry whey was down $.01 to $.40 cents per pound.  One carload sold at that price.

Consumers key to milk price fairness in Australia

Last week Federal Member for Wide Bay Llew O’Brien and former Deputy Prime Minister Barnaby Joyce made a public declaration against Coles and Woolworths, with O’Brien stating, “Look after our dairy farmers, and if you don’t we’re coming after you.”

The statement was made to put consumer outrage at Woolworths and Coles charging shoppers 15 cents for reusable shopping bags into perspective by comparing it to $1 milk. While it does seem ridiculous to pay 15c for a bit of plastic compared to $1/litre for a natural product such as milk, we need to ask what real meaningful plans are being pulled together by the parties to save our dairy industry.

Queensland Dairyfarmers’ Organisation has been pushing both state and federal governments to take a stand against the duopoly since they first introduced $1/litre pricing in 2011.

While we held out some hope when the ACCC inquiry into the dairy industry was first announced, we have found neither side of the political fence making a concerted effort to affect the situation since the final ACCC report claimed that farmers were in such a weak bargaining position in the supply chain, forcing the supermarkets to increase the price of their private label product would not necessarily see that flow back to farm gate.

So while we are right behind the sentiment in Llew O’Brian’s recent speech, what we need is for both sides of politics to work together on a real and tangible plan to make the domestic milk market function properly and get a real outcome for the dairy industry.

As one QDO member pointed out on Facebook when the story ran, it was a nice to see that consumers want to support our farmers, but they don’t know how. This is a sentiment that we’ve seen in recent secret shopper research that QDO has been conducting.

So, QDO is also looking at ways that bypass the supply chain politics and use the might of the consumer to influence change. We have several campaigns in the pipeline to do this.

We are aware that no one tactic is going to be the silver bullet, but we are hopeful that consumers will tell our politicians and the supermarkets through their purchases that they truly support the local Queensland dairy industry and want to see it survive for future generations.

 

Source: North Queensland Register

Milk futures Down, Cash Dairy Mixed in Chicago Monday

At the Chicago Mercantile Exchange Monday, Milk futures were mostly down and cash dairy prices mixed. July Class Three July milk was up $.08 at $14.68.   August was down $.01 to $15.33. September was down $.08 to $15.87.  October was down $.09 to $15.97. The milk futures from September through next June ranged from zero to eight cents lower.

Grade AA Butter was down $.0150 to $2.225 per pound.  Fourteen carloads sold with prices from $2.2450 to $2.26. Barrels were up $.04 at $1.43 per pound.  Eight carloads sold from $1.39 to $1.43.   Forty-pound blocks were up $.0275 to $1.5825 per pound.  No sales were recorded. Nonfat dry milk was down $.0075 at $.74 per pound. Three carloads sold at $.74 and $.7450. Dry whey was up $.0025 to $.41 cents per pound.  No sales were recorded.

Milk Futures Up Dairy Prices Mixed at Chicago Thursday

At the Chicago Mercantile Exchange Thursday, milk futures were mostly up and cash dairy prices mixed. Class Three June milk was up $.01 at  $15.24. July was up $.05 at $14.34. August was down $.06 to $15.21.  September was up $.03 to $15.92. The milk futures from October through next May ranged from zero to five cents higher.

Grade AA Butter was down $.0025 to $2.25 per pound.  Five carloads sold with prices from $2.24 to $2.2525. Barrels were up $.08 at $1.3350 per pound.  Thirteen carloads sold from $1.2650 to $1.3350.   Forty-pound blocks were up $.0275 to $1.5125 per pound.  Three carloads sold from $1.49 to $1.5125. Nonfat dry milk was down $.0050 at $.7475 per pound. Two carloads sold at that price. Dry whey was up $.01 to $.4125 cents per pound.  No sales were recorded.

Milk prices Rebound Wednesday in Chicago

At the Chicago Mercantile Exchange Wednesday, milk futures were up sharply, but not enough to make up for huge Monday losses.  Cash dairy prices also made small gains. Class Three June milk was up $.01 at  $15.23. July was up $.23 at $14.29. August was up $.39 to $15.27.  September was up $.32 to $15.89. The milk futures from October through next May ranged from zero to twenty-six cents higher.

Grade AA Butter was up $.0075 to $2.2525 per pound.  Ten carloads sold with prices from $2.2525 to $2.2750. Barrels were up $.05 at $1.2550 per pound.  Twenty-five carloads sold from $1.25 to $1.2975.    Forty-pound blocks were down $.04 to $1.45 per pound.  Two carloads sold at that price. Nonfat dry milk was up $.0050 at $.7525 per pound. Four carloads sold from $.7475 to $.7525.   Dry whey was up $.0125 to $.4025 cents per pound.  One carload sold at $.39.

Milk to move as price race heats-up in Australia

The new appetite to negotiate with different milk companies comes as most processors have confirmed opening prices for the new season, which begins on Sunday.

Some processors have superseded previous opening prices as the race to secure milk heats up. Colac’s Bulla Dairy Foods has gone as far as venturing into Gippsland for the first time to shore up supplies.

But many farmers are not happy with current offerings.

Katamatite dairy farmer Erwin Van Den Berg said processors had been phoning him regularly wanting milk.

He said he had been negotiating with a few and knew many farmers in the same situation. He was also critical of “games played” by processors, such as sign-up bonuses and said he envisaged farmers swapping processors annually.

Mr Van Den Berg, who supplies Parmalat, which unveiled an opening price of $5.90/kg of milk solids last week, said the price determined where he sent milk. He said he needed “mid sixes-plus (/kg of MS)”.

Former Murray Goulburn supplier Barry Bruce, of Kongorong in South Australia, said he was furious with the $5.75/kg of MS opening price from new owner Saputo last week.

United Dairyfarmers of Victoria president Adam Jenkins said he did not necessarily believe there would be an exodus of farmers to different processors, but that many were looking at their options.

Australian Consolidated Milk lifted its opening by 1.7 per cent to $6/kg on Monday. This comes after Bulla Dairy Foods lifted its opening by 20c/kg earlier this month. Bulla general manager Rohan Davies said its recruitment had gone well with some “opportunity left in southwest Victoria”.

Source: The Weekly Times

Milk Futures Mostly Higher in Chicago Monday

Thanks in part to record exports most Class III milk futures contracts at the Chicago Mercantile Exchange Monday finished with gains,  June milk closed up a penny at $15.22. July was down four cents, settling at $14.06. August milk finished two cents higher at $14.88. The September contract closed three cents higher at $15.57. The October through January contracts were up $0.02 to down $0.03 Tuesday.

Grade AA butter was down a cent at $2.2450. Five loads sold, ranging from $2.24 to $2.2475. Blocks were a penny higher at $1.46. Barrels steady at $1.2050. Six loads sold, ranging from $1.2050 to $1.2075. Nonfat dry milk closed one cent higher at $0.7475. Six loads sold, ranging from $0.7375 to $0.7475. Dry weigh was down one cent at $0.39.

Dairy prices sharply down at CME Monday

At the Chicago Mercantile Exchange Monday, dairy prices were down and milk futures were sharply down.  Class Three June milk was down $.04 at  $15.21. July was down $.56 at $14.10. August was down $.50 to $14.86.  September was down $.39 to $15.54. The milk futures from October through next May ranged from three to twenty-seven cents lower.

Grade AA Butter was down $.0350 to $2.2550 per pound.  No sales were recorded. Barrels were down $.08 at $1.2050 per pound.  Twenty-three carloads sold from $1.2850 to $1.3125.    Forty-pound blocks were down $.04 to $1.45 per pound.  Two carloads sold at that price. Nonfat dry milk was down $.0250 at $.7375 per pound. Six carloads sold from $.7375 to $.7475. Dry whey was up $.0025 to $.40 cents per pound.  No sales were recorded.

Dairy prices continued to fall Thursday in Chicago

At the Chicago Mercantile Exchange Thursday, dairy prices continued to fall. Class Three June milk was down $.06 at  $15.26. July was down $.14 at $14.86. August was down $.07 to $15.49.  September was down $.02 to $16.07. The milk futures from October through next May ranged from ten cents lower to one cent higher.

Grade AA Butter was up $.0025 at $2.29 per pound.  No sales were recorded. Barrels were up $.0175 at $1.31 per pound.  Thirty-four carloads sold from $1.2825 to $1.3275. There were also 22 carloads sold Wednesday.  Forty-pound blocks were down $.01 to $1.4950 per pound.  Three carloads sold from $1.4950 to $1.5050.  Nonfat dry milk was up $.0025 at $.77 per pound. Eight carloads sold from $.76 to $.77. Dry whey was unchanged at $.39 cents per pound.  No sales were recorded.

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