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Archive for nonfat dry milk prices

CME Dairy Market Insights: October 2024 Trends & Surprises You Need to Know

Wednesday, October 30th, 2024

Ready to tackle October 2024’s CME Dairy Market trends? Uncover insights to steer your dairy business through the mixed futures and spot trades.

Summary:

In the CME Dairy Market Report for October 29th, 2024, the Class III and Cheese futures depict a mixed yet balanced scenario, with spot trades showing barrels up 2 cents and blocks dipping slightly. Notably, the December/January spread reached a record 255 trades, hinting at shifting equilibriums as spot supplies impact the exchanges. Meanwhile, the NFDM market experienced a morning surge that waned by afternoon, illustrating the day’s volatility. With the expiration of October Class III futures, November contracts maintain a position above $20/cwt, paving the way for forthcoming market shifts. The GlobalDairyTrade Pulse insightfully reveals gains in SMP and WMP, reflecting more significant international trends. As dairy farmers and industry professionals adapt to these nuanced shifts, strategic market positioning becomes paramount for leveraging current insights for future benefits.

Key Takeaways:

  • Class III and Cheese Futures displayed mixed signals with notable adjustments in trading behavior, particularly around barrels and blocks.
  • The December/January spread hit a record trading frequency, reflecting strategic market moves and supply adjustments that equalized previous imbalances.
  • Significant trading activity occurred in the November/December spread, indicating potential shifts and positioning amid uncertain market conditions.
  • The NFDM market experienced a sharp rise in morning trades, followed by a subdued performance in the afternoon, highlighting volatility.
  • The October Class III futures expired, positioning November as a pivotal month with prices above a notable threshold.
  • Stability efforts are seen amidst fluctuating dairy futures, suggesting careful strategic adjustments are ongoing.
  • GlobalDairyTrade Pulse reported increased milk powder prices, influencing market trends globally.
Class III milk futures, Class IV milk futures, dairy market trends, cheese futures, Nonfat Dry Milk prices, GlobalDairyTrade Pulse, CME blocks and barrels, dairy trading volume, milk price futures, dairy industry insights.

Did you know that the Class III and Class IV milk futures can be as volatile as any stock market? In the ever-shifting landscape of the CME dairy market, staying informed isn’t just advisable—it’s your key to navigating its complexities effectively and feeling in control. Today, we’re diving into the latest developments that every dairy farmer and industry professional should have on their radar. 

“Knowledge is power, especially in a market that affects your livelihood directly. Are you equipped with the insights you need to thrive?”

Steady Moves and Strategic Alignments: Navigating the Subtle Shifts in Class III and Cheese Futures

The current market trends in Class III and cheese futures present a mix of outcomes, reflecting a balanced spot trade, as evidenced by recent activities. The spot cheese average has remained within a 10-cent range over the last three weeks, indicating steadiness in market dynamics. This stability is marked by active participation from buyers and sellers who engage at these prices, contributing to a more balanced market environment. 

Interestingly, just yesterday, Class III Dec/Jan spreads set a record with 255 trades, showcasing how supply and demand, particularly with spot supplies, are being injected back into the exchange. On the cheese front, CME blocks and barrels are nearing convergence, with blocks dipping marginally to $1.8950 per pound and barrels edging up to $1.8900 per pound. This subtle dance of spot prices underscores the dynamic yet steady nature of the market. 

The statistics highlight that market players are keenly positioned, with spot trades reflecting ongoing adjustments. The volumes, such as the 400 trades within the Nov/Dec 24 spread, further signify a vibrant trading scene, mirroring market participants’ shifts and adjusted strategies to navigate these conditions. This strategic positioning keeps you engaged and proactive in the market.

Unraveling the December/January Spread: A Record Breaker with Game-Changing Dynamics

The remarkable activity surrounding the Class III Dec/Jan spreads has raised eyebrows, with a record trading volume of 255 times. Industry observers might wonder, what is driving this unprecedented volume? Primarily, it’s the shift in market dynamics concerning spot supplies and the balancing act between supply and demand. The once stark backwardation, where prices for later months were lower than those for earlier months, has diminished significantly. 

This shift is primarily attributed to the substantial loosening of spot supplies brought to the exchange. The inflow of these supplies has satisfied immediate market demands and led to a more even playing field. These spot transactions became more frequent and voluminous, so they balanced the supply-demand equation. Such movements have caused the backwardation, previously marked by higher December futures relative to January, to erase quickly, each price now efficiently reflecting current market realities. 

The interplay between these spreads and spot supplies highlights an essential aspect of futures trading: the real-time adjustment of market expectations based on available commodity flow. As we examine the current trends in the December/January spreads, we must recognize how raw market data and strategically timed spot transactions can eradicate historical pricing trends. In essence, the increasing transparency and availability of spot supplies serve as a corrective mechanism and a catalyst for fostering market equilibrium.

November/December Spread: Trading Volume Signals Strategic Market Positioning Amid Uncertainty

The high trading volume of the Nov/Dec 24 spread, which surpassed 400 trades, highlights a focal point of activity in the dairy market. This robust trading activity is noteworthy as it accounted for over half of the volume between Nov 24 and Jan 25, signaling a heightened interest and engagement from market participants during this period. But what does this mean for market sentiment and future expectations? 

Firstly, the voluminous trading in the spread indicates uncertainty and strategic positioning by traders keen on managing risk around year-end. The spread between November and December often reflects market expectations about milk supply and demand during the transition into winter months, a critical time for dairy production and consumption. When such a vast number of trades occur in this spread, participants actively hedge against potential volatility or take a stance based on speculative forecasts. 

Moreover, narrowing or expanding spreads can reveal market sentiment. A high volume with little price change might suggest a market consensus or comfort with expected supply and demand dynamics. Conversely, significant fluctuations would point toward divergent expectations and possibly forecast dramatic shifts in market fundamentals or macroeconomic variables that impact dairy production and pricing. 

By closely examining the Nov/Dec 24 spread activities, stakeholders gain insight into the collective market outlook, balancing speculative drives with genuine hedging needs. It encourages re-evaluating dairy market strategies, considering historical context and emerging trends to anticipate the dynamics heading into the new year.

NFDM Market Surge: Navigating Morning Strength and Afternoon Retreat

The Nonfat Dry Milk (NFDM) market saw a notable morning session strength, primarily bolstered by the fresh highs recorded in the GlobalDairyTrade (GDT) Pulse. This surge in the morning was evident as futures initially spiked by roughly 1-2 cents higher. However, the aggressive purchasing momentum waned as the day progressed, leading to a mixed closure for the futures market, with some contracts settling lower. This fluctuation underscores the sensitivity of NFDM prices to short-term market dynamics and external factors like GDT Pulse. 

The impact of the GDT Pulse was palpable. It provided a crucial upward thrust in NFDM prices, reflecting its significant role in guiding market direction and sentiment. The overall trading volume remained robust, with 209 contracts changing hands. This indicates sustained interest and engagement within the NFDM sector, pointing towards strategic positioning among market players despite the mixed outcome in futures trading.

October Expiration Signals Shift: November Class III Takes the Spotlight Amid Market Adjustments

The expiration of the October Class III futures contract marks a critical pivot point, leaving November as the only month in Class III currently trading above $20 per hundredweight. This transition signifies a narrowing focus on the upcoming period, concentrating market forces and speculation around November’s pricing landscape. With the NDPSR report expected to indicate a decline in cheese prices and stable butter and nonfat dry milk (NFDM) prices, there is potential for a downward adjustment in Class III futures pricing. 

The current state of November futures, which are positioned at $20.22 per hundredweight, reflects a fragile balance influenced by domestic market trends and international factors such as the Global Dairy Trade developments. If the NDPSR report confirms anticipated trends, we may witness a recalibration in market expectations, potentially softening the November contract’s standing. However, the recent market behavior demonstrates robust buyer and seller activity, suggesting that while the futures may adjust, significant fluctuations could be tempered by ongoing market engagement. This prepares you to adapt to potential market adjustments.

Stability Beckons Amid Fluctuations: Navigating Dairy Futures with Strategic Precision

Amidst the intricate dance of dairy futures, the performance of milk price futures reveals a tapestry of mixed outcomes. At the forefront, we witness a near-convergence of CME blocks and barrels. Blocks relinquished a half-cent to settle at $1.8950 per pound, while barrels increased by two cents to $1.8900 per pound. This narrowing gap signifies a stabilization in market forces, pointing towards a potential equilibrium that could affect pricing strategies. 

Relentless in its search for price stabilization, Spot butter regained most of its losses, settling at $2.6900 per pound, a gain of 1.5 cents. This fluctuation mirrors the uncertainties shadowing butter demand and supply and reinstates the commodity’s pivotal role in shaping Class IV futures. Though modest, the rise in spot butter prices provides upward momentum to Class IV futures, as evident from December futures ticking up 15 cents to $21.16 per hundredweight. 

Similarly, spot NDM received a modest boost, climbing to $1.3875 per pound—an increase that echoes the price movements observed in the GlobalDairyTrade Pulse auction. As NDM strengthens, it imparts an upward influence on Class IV futures, reinforcing the upward trajectory, with Q1 contracts reaching $21.24 per hundredweight, registering a nine-cent increase. 

In an environment where every price movement can ripple through the markets, these small yet strategic shifts in CME blocks, barrels, butter, and NDM exemplify the interconnected dynamics that dairy professionals must navigate. As the dairy market ponders its next move, the mixed performance in milk price futures leaves plenty to consider for the strategic decisions ahead. How do you foresee these fluctuations impacting your operations?

GlobalDairyTrade Pulse Insights:

Recent trends at the GlobalDairyTrade Pulse event have marked a notable shift in milk powder prices, particularly with Skim Milk Powder (SMP) and Whole Milk Powder (WMP). SMP saw a significant climb, reaching $2,860 per metric ton, equating to $1.30 per pound, representing a 2.0% increase from the previous event and a notable rise of 4.6% from Contract 2 at the latest main event. Similarly, WMP rose to $3,622 per metric ton, or $1.64 per pound, reflecting a 2.0% increase compared to the last Pulse and a 2.7% uptick versus Contract 2 at the most recent main auction. 

These percentage shifts illustrate a more robust demand cycle, which can be attributed to various factors, including seasonal demand fluctuations, stockpiling behavior, or shifts in competitive market dynamics. The increases in SMP and WMP prices may suggest tightening supply chains or increased buying pressure from key global importers, potentially influencing the pricing strategies of dairy farmers and professionals alike. 

The broader dairy market may feel the ripple effects of these price jumps. Higher milk powder prices could increase profitability for producers able to sustain high output levels. Conversely, this could mean heightened cost challenges for buyers and processors dependent on these commodities, pushing the industry to reassess production and operational strategies to maintain margins. As these dynamics unfold, stakeholders are encouraged to closely track upcoming auctions and price signals to respond aptly to evolving market conditions.

The Bottom Line

The intricate dance of Class III and Cheese futures reveals a dynamic market, with spot trades experiencing subtle but telling shifts. The record-breaking activity in December/January spreads indicates strategic maneuvers within the dairy ambit, with significant volume changes underscoring market positioning’s potential impact amid looming uncertainties. Meanwhile, NFDM’s morning surge offers insights into the evolving buyer-seller engagements that could shape forthcoming trends, even as the October expirations reposition November Class III in the market limelight. 

GlobalDairyTrade data remains a pivotal benchmark, offering crucial cues to navigate these fluctuating landscapes. As the market stands at these crossroads, staying informed isn’t just advisable—it’s essential for strategically navigating dairy futures and understanding potential profitability shifts. 

What are your thoughts on these emerging trends? Do they align with what you’re witnessing in the field? Let’s keep the conversation lively. Share this article, comment below, and discuss how these market movements influence your strategies in the days ahead. Are we heading towards a more stable market, or is this just the calm before another storm? Your insights could lead the way.

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Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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September 2024 World Agricultural Supply and Demand Estimates: Lower Production, Stronger Dairy Prices Predicted

Saturday, September 14th, 2024

Find out how fewer cows and strong demand could shape the 2024 dairy market. Will rising prices impact your farm’s bottom line? Learn more.

Summary:

The USDA’s recent World Agricultural Supply and Demand Estimates (WASDE) report has generated significant buzz within the dairy sector. With milk production forecasts for 2024 and 2025 seeing notable reductions due to dwindling cow inventories and slower growth in milk production per cow, dairy farmers face a challenging landscape ahead. Despite these hurdles, substantial domestic and international demand for dairy products is expected to keep commodity prices robust. Notably, increases scheduled in cheese, butter, and nonfat dry milk prices are projected to bolster Class III and IV milk prices. Projected milk production for 2024 has been lowered by 400 million pounds to 225.9 billion pounds, while 2025 sees a reduction of 300 million pounds to 227.9 billion pounds. This intricate balance of declining production and resilient demand underscores the evolving dynamics of the dairy industry. Feed costs also play a critical role, with slight adjustments in corn yield and soybean production forecasts adding another layer of complexity for dairy operators. Meanwhile, the trade landscape continues to shift, with increased imports and fluctuating export competitiveness shaping future market strategies.

Key Takeaways:

  • Milk production forecasts for 2024 and 2025 have been lowered due to decreased cow inventories and slower milk production growth per cow.
  • Despite lower milk production, demand for dairy products remains strong, keeping commodity prices high.
  • Cheese, butter, nonfat dry milk, and whey prices will show modest increases in 2024 and 2025.
  • The average farm price for corn has slightly decreased, impacting feed costs for dairy producers.
  • Import and export forecasts reflect strong domestic and international demand for dairy products but tighter milk supplies.
  • Class III and Class IV milk price forecasts have been raised, leading to an optimistic all-milk price outlook of $23.45 per cwt for 2025.
  • Producers must navigate reduced production levels alongside rising prices to maintain profitability.
dairy supply and demand, USDA milk output forecast, cheese price increase, butter price forecast, dairy farming profitability, nonfat dry milk prices, dry whey market trends, dairy production challenges, feed management for dairy, animal health in dairy farming

The release of the USDA’s September 2024 World Dairy Supply and Demand Estimates, a pivotal event for dairy farmers and industry experts, occurred yesterday. This research, which forecasts a significant decrease in milk output in 2024 and 2025, along with a rise in dairy costs, is crucial for anyone involved in the dairy business. It equips you with the necessary insights to comprehend and navigate the evolving dynamics of the dairy industry. Why is this information vital? Here are some compelling reasons: Milk output is projected to drop by 400 million pounds in 2024 and 300 million pounds in 2025, potentially leading to a shift in the industry’s landscape; cheese prices have surged to $1.94 per pound, and butter has reached $3.005; the all-milk price has mirrored these increases, potentially making dairy farming more lucrative despite the decline in production.

A Double Blow: The USDA’s Milk Production Forecast Sends Ripples Through the Dairy Sector 

The USDA’s revised milk production prediction for 2024 and 2025 has raised significant concerns for the dairy sector. The expected increase in milk output to 225.9 billion pounds in 2024, up 400 million from the previous estimate, and the subsequent decrease by 300 million pounds in 2025 to a revised estimate of 227.9 billion are vital factors. These adjustments are primarily attributed to lower cow stocks and a slower growth rate in milk output per cow, underscoring the need for strategic planning to navigate these changes.

Lower cow inventories indicate a fundamental change in dairy farm operations. Could it be related to higher culling rates or economic factors that make dairy farming less viable for small operations? This decrease will undoubtedly impact milk production volume.

Furthermore, the slower rate of milk production per cow adds another degree of difficulty. While technical developments and better livestock management have traditionally resulted in gains in milk output per cow, current trends imply a plateau. Is this a transitory event, or do we see the limitations of dairy farming practices?

According to USDA estimates, these dynamics are not mere conjectures. They underscore significant shifts in the dairy industry that will influence future commodity pricing and market strategy. This underscores the need for proactive strategic planning. Dairy farmers and industry stakeholders must consider these estimates when preparing for the coming years, enabling them to make informed decisions and stay ahead of the curve.

Strong Demand Keeps Dairy Commodity Prices Buoyant Despite Lower Production

Despite the USDA’s downward revisions for milk production in 2024 and 2025, it’s crucial to consider the anticipated demand and price hikes for dairy products. The encouraging news is that robust demand persists, particularly for essential commodities like cheese, butter, nonfat dry milk (NDM), and dry whey. This resilience in the face of reduced output should instill confidence in the stability and strength of the dairy market.

According to the World Agricultural Supply and Demand Estimates, this year’s cheese price has risen by more than ten cents to $1.93 per pound. Butter follows suit, with a small price hike to $3.00 per pound. These price rises have directly impacted Class III and IV milk prices, which have risen significantly. The Class III price has increased to $19.45 per hundredweight, while the Class IV price is $21.00 per hundredweight.

Looking forward, next year’s forecasts indicate a more significant increase. Cheese prices are predicted to reach $1.94 per pound, with butter at $3.005. Meanwhile, dry whey costs $0.485 per pound, while nonfat dry milk costs $1.235. Following implementing the FMMO pricing formula modifications, these commodity prices convert into component prices of $3.367 for butterfat, $1.8944 for protein, $0.9981 for nonfat solids, and $0.2263 for miscellaneous solids. As a result, the Class III milk price is expected to be $19.13, with the Class IV price set at $20.75.

These price adjustments have a ripple effect across the dairy sector. Individual dairy producers may stand to gain from higher commodity prices, mitigating some of the disadvantages of reduced milk supply. Farmers can anticipate increased income streams, particularly from cheese and butter items that enjoy robust demand and price stability.

On a more significant market scale, the constant growth in dairy prices reflects the continued local and foreign demand. The increased predictions for fat-based exports and high dairy product prices indicate a robust hunger for U.S. dairy worldwide. While the slower milk increase per cow is concerning, the excellent forecast for price and demand provides hope for the dairy business.

Have you considered how these projections may affect your operations? The following year will bring new problems and possibilities, particularly with the predicted increase in dairy product pricing. Now is the time to plan and modify to navigate these changes effectively.

Balancing Act: Navigating Reduced Production and Rising Prices in the Dairy Industry 

The effects of decreasing output and increased pricing on dairy producers vary, presenting both difficulties and possibilities. On the one hand, the expected fall in milk output may pressure farmers who depend on volume to be profitable. Higher dairy commodity prices like cheese and butter may boost income per unit sold. Still, this potential benefit is limited.

Lower animal stocks and decreased milk output per cow will pressure producers to improve their herd management procedures. Efficient feed management becomes critical. Farmers may counteract the consequences of lower production per cow by using high-quality feed and precision feeding procedures. Prioritizing animal health and production may significantly improve outcomes. One farmer said, “Each cow’s output is now more critical than ever.”

Efficient energy and waste management may help to offset growing operating expenses. With commodity prices expected to rise modestly, dairy producers must work on reducing inefficiencies. Investing in technology to monitor and improve production indicators may provide a competitive advantage. Specifically, milking robots and data analytics innovations are altering agricultural operations throughout the nation.

The higher pricing also provides farmers with a chance to develop value-added goods. Producing specialized cheeses or organic dairy products might target specific audiences prepared to pay a premium. For example, artisan cheesemakers have prospered under comparable circumstances, relying on the desire for one-of-a-kind, high-quality goods. Furthermore, entering the direct-to-consumer market via farm-to-table sales channels might result in new income streams.

Given the constant maize and soybean price expectations, farmers may diversify their income by combining crop farming and dairy businesses. A well-rounded strategy helps protect against market volatility. According to the USDA’s forecasts, holistic management of farm resources, such as crop output and animals, may help to maintain total farm revenue during unpredictable times.

Navigating these developments will need both strategic planning and flexibility. Farmers should keep up with market developments and use available data and technology to make educated choices. Active membership in agricultural cooperatives also gives collective negotiating power and the sharing of best practices, providing resilience to market fluctuations.

The Feed Equation: Navigating Corn and Soybean Price Fluctuations 

Corn and soybeans are essential components of dairy cow feed. Therefore, production and price estimates are critical for dairy producers. According to the USDA’s most current WASDE report, the predicted corn yield has risen to 183.6 bushels per acre, with a total output of 15.186 billion bushels. This modest increase in production brought the average farm price down to $4.10 per bushel. Conversely, soybean output is forecast to fall slightly to 4.586 billion bushels. At the same time, prices stay stable at $10.80 per bushel, with soybean meal priced at $320 per ton.

How do the feed costs affect your dairy operations? With feed accounting for more than 50% of total dairy farm expenditures, even slight changes in maize and soybean prices may greatly influence profitability. Lower maize prices may relieve some, but flat or rising soybean costs may outweigh these advantages.

Managing feed costs correctly becomes critical. Consider techniques such as bulk buying feed when costs are low or looking at other sources that maintain nutritional balance while conserving money. Improving herd efficiency via genetics and feeding methods may increase milk output per cow and distribute feed expenses over a more significant amount of milk.

Do you need help balancing feed costs and production? Share your solutions in the comments section below, or attend our forthcoming webinar on improving dairy operations in a volatile feed environment.

Trading Places: How Import and Export Dynamics are Shaping the Dairy Industry’s Future 

The latest USDA study details the worldwide dairy market’s trade and import/export dynamics. This year’s fat basis import projection shows a significant increase, impacted by previous trade statistics and local solid demand, particularly for high-value items such as butter and cheese. How is this increased demand affecting our markets, and what does it imply for you as a dairy farmer?

For starters, the strong demand for dairy drives up commodity prices, emphasizing the critical importance of imports in closing the supply imbalance. The prediction for skim-solids base imports in 2024 is unchanged, but fat and skim-solids imports are expected to increase in 2025. This increase reflects tighter milk supply and rising domestic dairy product costs, prompting the sector to turn outside to fulfill internal demand.

When we consider exports, the tale is similarly striking. The estimate for 2024 predicts growth in fat-based and skim-solids-based exports, driven by robust worldwide demand. However, 2025 projects a more subtle shift: while fat-based exports stay stable, skim-solids exports are predicted to fall significantly due to declining global market price competitiveness.

So, how does this affect you, our distinguished farmers and industry professionals? Higher export levels imply that overseas markets are interested in U.S. dairy goods, creating profitable prospects to capitalize on. However, you must also prepare for increased competition and instability, particularly if global price competitiveness becomes an issue.

Furthermore, the commercial tug-of-war stresses the need for strategic preparation. Farmers must negotiate a terrain of shifting pricing and changing demand as domestic supplies become scarce. Monitoring worldwide market trends and appropriately altering production plans will be critical.

Understanding the commerce and import/export dynamics becomes critical. They impact your bottom line and affect the dairy market environment. Engage in debates, remain informed, and use industry projections to make sound choices. The future may hold obstacles, but with educated perspectives, possibilities abound.

USDA Estimates: A Complex, Yet Optimistic Outlook for Dairy in 2024-2025 

The USDA’s predictions for 2024 and 2025 depict a cautiously hopeful but nuanced picture of the dairy business. Milk output will fall owing to decreasing cow stocks and a slowdown in milk production increase per cow. Farmers may anticipate a tighter supply chain and commodity prices to stabilize due to the market’s balanced supply and demand circumstances.

Despite lower milk supply, the demand for dairy products remains strong. This mix of supply limits and high demand is expected to keep commodities prices up. For example, cheese and butter prices will rise somewhat due to restricted supplies. The projected Class III and Class IV prices follow suit, with minor but considerably higher adjustments, suggesting a more lucrative scenario for dairy farmers.

On the international front, strong worldwide demand will support U.S. dairy exports, especially in 2024, while price competitiveness may fade significantly by 2025. This trend indicates that local dairy farmers must be innovative to supply home demand while profiting from overseas potential.

Farmers should prepare for a complex terrain in which controlling production efficiency, cost management, and market adaptation will be essential. Although increasing dairy prices are expected to improve profits, the industry’s overall health depends on farmers’ ability to manage tighter supply circumstances.

From a conservative standpoint, the path ahead requires cautious preparation and deliberate investment. Producers must stay alert to market signals and respond promptly to supply and demand dynamics changes. Efficient resource management, especially regarding feed costs, will be critical. The expected gradual rise in milk prices provides a silver lining, potentially increasing profitability despite the complex production situation.

The dairy industry’s prospects for 2024 and 2025 are mixed but manageable. Lower output may raise concerns, but strong demand and savvy market positioning may transform these obstacles into opportunities for development and sustainability.

The Bottom Line

The forecasts foresee challenging times ahead. Lower milk production predictions for 2024 and 2025 and rising commodity costs indicate that dairy farmers and allied specialists will face narrower margins. Strong demand may support prices, but the complicated dance of imports and exports and shifting maize and soybean prices confuse the picture. To flourish, flexibility and excellent market knowledge would be required.

Are you ready to navigate these tumultuous waters? Staying educated and agile might be your most excellent tactic. Monitor USDA statistics and market trends carefully to stay ahead of the competition and guarantee your operations remain strong in an ever-changing marketplace.

Learn more:

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Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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Cheese Prices Soar, Whey and Nonfat Dry Milk Lead the Charge: Weekly Dairy Outlook Sept 8th, 2024

Sunday, September 8th, 2024

Are you curious about rising cheese prices and why whey and nonfat dry milk are making headlines? Dive into our expert analysis to stay ahead of the market shifts.

Summary: The dairy market continues to show intriguing dynamics as we move through September 2024. Cheese prices, both barrel, and block, steadily climb, contributing to an overall uplift in Class III and Class IV futures. Notably, whey and nonfat dry milk prices have experienced a sharp rise, making a significant impact on the cash market. Concurrently, the Global Dairy Trade index experienced slight fluctuations, revealing varying trends in products like anhydrous milkfat, cheddar, mozzarella, and whole milk powder. The European Union’s milk production is up for the fifth consecutive month, adding a layer of complexity to the global market. Back home, the USDA’s latest report brings essential updates on national dairy product prices and federal milk marketing orders, highlighting significant increases in protein and Class III and IV prices. “At $20.66/cwt, Class III price finally sits above its long-term ‘normal’ price range,” notes the USDA report, underscoring a potential positive outlook for dairy farmers heading into the last quarter of the year.

  • Barrel and block cheese prices are on the rise, positively impacting future prices of Class III and Class IV.
  • Whey and nonfat dry milk prices have surged, significantly affecting the cash market.
  • The Global Dairy Trade index shows mixed trends, with some products increasing in price while others decline.
  • European Union milk production has increased for the fifth month in a row, adding complexity to the global market.
  • The USDA’s latest report highlights significant increases in protein prices, as well as Class III and Class IV prices.
  • Class III milk prices have surpassed their long-term ‘normal’ range, indicating a potentially positive outlook for dairy farmers.
dairy industry, sales prices, barrel cheese prices, block cheese prices, whey prices, nonfat dry milk prices, cash market prices, September futures, dairy farmers, industry experts, cheese prices, profit margins, supply chains, consumer pricing, profitability, operating expenses, futures contracts, whey protein, fitness sector, culinary sector, global dairy market dynamics, dairy futures market, production strategy, hedging methods, adverse risks

Have you noticed a surge in your recent dairy sales prices? If you’ve been following the markets, you’re likely aware of the recent spike in cheese prices. Last week, barrel and block cheese prices climbed, albeit slower. But here’s the kicker: whey and nonfat dry milk costs have skyrocketed, with cash market prices now significantly higher than September futures. These aren’t just market fluctuations; they could dramatically impact your bottom line. Staying abreast of market movements is crucial, especially when future markets stagnate and spot prices rise. Cheese prices have increased, with blocks hitting $2.27/lb and barrels at $2.275/lb. Whey costs have surged to $0.5875/lb, and nonfat dry milk is now priced at $1.3650/lb. As we head into the busy end-of-year season, monitoring these trends will help you make informed decisions that could lead to a more cheerful Christmas.

ProductAugust 30, 2024 (Price $/lb)September 6, 2024 (Price $/lb)Change ($)
Cheddar Cheese – Blocks$2.2100$2.2700+0.0600
Cheddar Cheese – Barrels$2.2600$2.2750+0.0150
Butter$3.1700$3.1750+0.0050
Dry Whey$0.5600$0.5875+0.0275
Nonfat Dry Milk$1.3300$1.3650+0.0350

Cheese Prices on the Rise 

Have you noticed an increase in cheese prices lately? Both barrel and block cheese prices are increasing, but at a slower rate than the previous week. This shift may have far-reaching consequences for dairy farmers and industry experts, as it could lead to increased profitability but also affect supply chains and consumer pricing.

Let us break it down. According to statistics from last week, block cheese ended at $2.27 per pound on September 6th, up $0.06 from $2.21 on August 30th. Similarly, barrel cheese prices grew by $0.015 to $2.275 per pound, up from $2.26 per pound the previous week. While these increases may seem minor, they indicate a long-term rising tendency.

Why does this matter? Higher cheese prices could be a boon for dairy producers’ bottom lines. The wholesale price situation indicates that Class III milk futures have risen to approximately $23.67 per cwt, up from $23.14 at the same time. If these prices hold steady, farmers could see a boost in income.

However, it is critical to evaluate the more significant ramifications. Higher cheese prices may result in higher short-term profit margins for producers. Still, they also knock on supply chains and consumer pricing. Maintaining profitability will require balancing profiting from rising pricing and minimizing operating expenses.

A topic worth considering is whether this incremental shift in cheese pricing indicates a longer-term trend or is only a transitory surge. Given the present market dynamics, farmers must plan and lock in favorable pricing via futures contracts.

Are you ready to manage these market shifts? The most recent statistics point to cautious optimism, although caution is still required. Keep an eye on these developments; they can change the dairy sector landscape in the months ahead. Remember, even in optimistic times, caution is your best ally.

The Unexpected Surge of Whey and Nonfat Dry Milk Prices 

Whey and nonfat dry milk prices have grown dramatically, establishing themselves as notable participants in the dairy industry. According to the statistics, the cost of dry whey rose from $0.56/lb to $0.5875/lb in only one week, a 2.75 cent rise. Similarly, nonfat dry milk increased by 3.5 cents between $1.33 and $1.365 per pound.

So, what is causing these increases? Several elements come into play. The growing popularity of whey protein in the fitness and culinary sectors and its use as an addition to various processed meals are significant factors. The same applies to nonfat dry milk, often used in baking and dairy-based items. Additionally, global dairy market dynamics, such as the European Union’s consistent growth in milk collection, may have contributed to a demand-supply imbalance, leading to higher prices.

Another explanation might be the global dairy market dynamics. The European Union has seen consistent growth in milk collection for five months, which should contribute to a stable supply. However, growing prices indicate that demand may have outpaced supply, at least in the near term. This is visible in the United States and worldwide, as seen by the rise in nonfat dry milk costs in key exporting nations.

These shifts provide both difficulties and possibilities for dairy farmers and industry experts. On one hand, higher whey and nonfat dry milk prices may boost income. On the other hand, they may increase input costs for companies that rely on these products. It’s worth considering: have you seen any comparable patterns in your operations lately? How are the price increases affecting your business?

The Futures Market: A Crucial Litmus Test for Stability

The dairy futures market has been relatively stable over the last week, with prices trading sideways. This stability comes after high volatility, notably in Class III and IV futures. Table 2 shows that six-month strips for these classes remain over $21/cwt, suggesting a steady outlook shortly. September Class III futures are $22.77/cwt, with a progressive fall from October to February from $22.25/cwt to $19.51/cwt.

Class IV futures follow a similar trend, beginning at $22.34/cwt in September and falling to $21.55/cwt in February. These futures prices indicate that, despite modest swings, the dairy industry is preparing for higher-than-average prices in the next six months. The flat price movement may reflect market players’ expectations of stable demand and supply circumstances.

These developments have a significant impact on dairy producers. If implemented, the increased pricing might result in higher margins and revenues. A Class III price continuously over $21/cwt frequently results in more excellent milk checks, which improves profitability. This is a reason for optimism, especially when input prices remain high. The statistics demonstrate this potential, with Class III and IV spot market prices indicating strong demand.

Regarding component pricing, butterfat, and protein prices will likely remain generally consistent, supporting the projection for solid revenue. Over the next six months, butterfat will cost $3.49/lb, and protein will cost $2.44/lb. These measurements show that the dairy product mix will remain lucrative, boosting farmers’ revenue streams.

Dairy producers should take these findings into account when developing their production strategy. Locking in current futures prices via hedging methods may be a wise way to reduce possible adverse risks. Keeping a close watch on market developments will be critical as the sector navigates current pricing levels. The current stability provides a window of opportunity, but aggressive management will be required to capitalize on it.

Global Dairy Trade Index: A Complex Landscape 

The Global Dairy Trade (GDT) index fell 0.4% at the most recent auction, which took place on September 3rd. This minor fall conceals a more complicated picture of worldwide dairy commodity pricing. While prices for anhydrous milkfat, cheddar cheese, mozzarella, and skim milk powder rose, the cost of whole milk powder, which has a considerable influence on the GDT, fell by 2.5%. These uneven developments reflect the various dynamics in the global dairy sector.

Comparative Price Analysis 

Prices in the European Union (EU), Oceania, and the United States show significant variances. On September 1st, butter prices were highest in the EU at $3.52 per pound, followed by the United States at $3.18, and lowest in Oceania at $3.06. The United States led in skim milk powder/nonfat dry milk (SMP/NDM) prices at $1.31 per pound, followed by the European Union at $1.24 and Oceania at $1.19.

Whole milk powder (WMP) costs were most competitive in the United States, at $2.33 per pound. At the same time, the EU and Oceania lag at $2.02 and $1.60, respectively. Cheddar prices in the United States remained robust at $2.21 per pound, beating the European Union ($1.97) and Oceania ($1.98). The GDT auction matched similar patterns, with prices for Cheddar and Mozzarella rising by 0.9% and 7.0%, respectively. Anhydrous milkfat prices rose 0.7%, but butter prices declined 0.9%, reflecting the worldwide market’s complicated supply and demand dynamics.

Impact on Local Markets 

These global developments will undoubtedly influence local markets. Domestic prices have outperformed overseas quotes, which may comfort American dairy producers. However, the modest dip in the GDT index may temper hopes of future price stability. With more excellent prices for specific items such as butter, European markets may face additional pressure to stay competitive. Conversely, the drop in whole milk powder prices may provide difficulties for farmers who rely primarily on this commodity in international commerce.

Finally, remaining educated and adaptive will be critical for dairy farmers and industry stakeholders as they manage these changing global patterns. Have you seen these effects on your operations yet? Reviewing your tactics in light of the changing market circumstances may be necessary.

European Milk Production on the Rise: What It Means for the Market 

Milk production in the European Union has steadily increased, with collections reaching 12,611,000 metric tons (27.80 billion pounds) in June 2024. This is an increase of 41,000 tons (90.4 million pounds) or 0.33% over June 2023. Five countries—Germany, France, the Netherlands, Poland, and Italy—accounted for more than 64% of the total, illustrating where the manufacturing powerhouses are.

France stands out with a 55,000-metric-ton gain, significantly contributing to total growth. Austria and Spain also experienced significant increases, with 11,700 and 11,200 metric tons respectively. Conversely, Italy saw the most essential fall, dropping by 33,700 metric tons, followed by the Netherlands and Ireland, which fell by 26,300 and 13,600 metric tons, respectively.

In the first half of 2024, European milk output increased by 0.9%, totaling 667,000 metric tons (1.47 billion pounds). This steady increase in supply, particularly from large players like France, has the potential to affect both global dairy prices and local markets dramatically. An increased supply typically stabilizes prices, but if it exceeds demand, it may cause prices to fall. This situation may help consumers in the near term but may provide issues for manufacturers with narrower profit margins.

Furthermore, more excellent European production may raise competitiveness in global markets, especially for exporters from other areas. Local markets in Europe may have varying effects, with places seeing production increases benefitting from economies of scale. At the same time, those with diminishing production may face narrower margins and less control over price fixing.

USDA’s Latest Report: Critical Updates for Strategic Planning

Last Wednesday, the USDA issued its most recent data on August national dairy product and component prices. These updates provide valuable information for dairy producers and industry stakeholders. Let’s look at some of the critical changes and their ramifications.

Starting with butter, prices fell by less than a cent from July (from $3.121 to $3.114 per pound). Despite this tiny decline, butterfat prices remain historically high, at $3.56 per pound. Even with modest swings, this consistency may help farmers who depend heavily on butterfat for revenue.

Protein costs grew significantly, climbing 23 cents per pound from July to $2.18/lb. While this price is more than the nutritional cost of producing one pound of protein (about $0.90/lb), it is still lower than the long-term average, which ranges between $2.53 and $2.93 per pound. Nonetheless, the increase in protein pricing is a favorable trend for dairy producers prioritizing protein output.

Class III and IV milk prices also exhibited significant increases. The Class III price rose to $20.66 per hundredweight (cwt), up $0.87 from $19.79 in July. This rise eventually pushes the Class III price over its long-term average, which is between $18.55 and $20.20/cwt. Similarly, Class IV prices increased, hitting $21.58/cwt, nearly $2.75 higher than their long-term range of $18.00 to $19.60. Such changes may improve profitability for dairy producers, particularly those working on tight margins.

Understanding these tendencies is critical to effective strategic planning. For example, the rise in protein costs presents an opportunity to capitalize on protein-rich goods, resulting in increased income. Furthermore, consistently rising butterfat pricing may induce a rethink of breeding and feeding strategies to increase butterfat yield. Finally, rising Class III and IV prices indicate a more robust market situation, allowing farmers to expand their businesses confidently.

These market dynamics are not isolated data; they represent a larger picture of a generally good trend in the dairy business. Dairy farmers and industry experts may better manage the market’s complexities by being educated and adapting to changes.

The Bottom Line

Looking forward, it’s evident that the dairy sector is in a state of substantial transformation. Cheese prices continue to climb but at a slower rate than previously. The sharp rise in whey and nonfat dry milk pricing demonstrates the market’s unpredictability. Futures markets are stable, with Class III and IV prices well over $21/cwt, indicating that dairy producers may get positive news before the end of the year. Global variables, such as fluctuations in the Global Dairy Trade Index and expanding European milk output, add to the complexity. The USDA’s most recent statistics highlight key pricing swings that may influence strategic planning.

Staying educated about these developments isn’t just advantageous; it’s necessary. The dairy market’s volatility requires ongoing awareness and rapid change to ensure profitability and sustainability. How will you respond to the shifting market conditions? Staying current with industry news and trends enables you to make educated judgments. Keep your ears on the ground and your eyes on the horizon.

Learn more:

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CME Dairy Market Update: Mixed Cash Prices for Cheese, Butter, and Dry Milk

Wednesday, September 4th, 2024

Wednesday’s cash dairy prices painted a mixed picture, keeping dairy farmers and industry professionals on their toes. 

cash dairy prices, CME dairy market reports, Chicago Mercantile Exchange, dairy farmers, dry whey prices, cheese block prices, cheese barrel prices, butter prices, nonfat dry milk prices, dairy market analysis, dairy industry news, dairy professionals, dairy market trends, dairy product prices, dairy market update

Let’s break down the day’s movements so you can keep your strategy sharp: 

  • Dry Whey: Dropped by $0.0050, settling at $0.5650, with only one sale recorded.
  • 40-Pound Cheese Blocks: Saw a slight increase of $0.0150, reaching $2.23, based on one sale.
  • Cheese Barrels: Down by $0.01, ending at $2.25, with one sale recorded.
  • Butter: Decreased by $0.0050 to $3.1475, with no sales recorded.
  • Nonfat Dry Milk: Edged up by $0.0125, closing at $1.3550, with two sales at different prices ($1.35 and $1.3550).

With spot cheese largely stable this week after last week’s quick rally, buy-side enthusiasm cooled on Wednesday. Spot block cheese did push 1.5 cents higher on one trade to a new 2024 high price but was tempered by an unfilled offer and the price of barrel cheese falling a penny on one trade. 

The reasons for the above $2.00 cheese price (less cheddar production, improved summer demand, tighter milk supplies) remain intact. But buyers are quieter this week at both the exchange and anecdotally. While supply side data is bullish, demand still gets a vote. It’s too early to say we’ve entered a lower demand period, but spot cheese has been unstable lately, and that dynamic seems to be ongoing. 

Futures markets have been active this week with open interest rising on up and down moves. Speculators, both large and small, are long on Class III and Cheese, continuing to trade from the long side. Producer selling is not as heavy as expected, despite excellent Q4 farm margins, but they’ve been active this week. 

Big bull markets always grab attention, and the daily volumes in Class III (and to a lesser extent cheese) illustrate that. Nearby Class III and Cheese are set to start lower today, following yesterday’s weaker close, as the market braces for some spot weakness. 

Headline milk production in July was down 0.4%, but when adjusted for components and bottled milk, the solids available for processing were up 1.1% from last year. With tighter cheese supplies, it’s assumed cheese production improved from -1.4% YoY in June to +0.9% in July. More milk went into cheese, leaving less for butter, with butter production in July forecast up 1.5% YoY compared to 2.8% in June. Combined NFDM+SMP production is forecast to drop 14.7%, similar to June’s 15.5% drop. High protein WPC/WPI production remained strong, with solids shifted out of dry whey and low protein WPC. 

Spot butter has traded slightly weaker since hitting a new 2024 high last week. Prices dipped just ½ cent yesterday with no trades, but futures saw strong volumes of 545 contracts, with open interest rising by 223 contracts. Most of this was due to a Jan-Jun futures pack trading 50x/month @ 289, a new high as 2025 contracts have traded slightly higher recently. The range-bound nature of spot butter, making new highs while doing so, fuels appetite to buy deferred futures as milk production expectations play out for the rest of the year. 

Spot nonfat traded 1.25 cents higher on two trades to 1.355, hitting another 2024 high. Futures volumes have been steady this week, with 191 contracts traded yesterday and open interest rising by 98 contracts. Even with spot prices pushing higher, futures have recently consolidated near last week’s highs. Prices were mixed to lower into 2025. Despite bullish US fundamentals and stronger exports to Mexico, the market probably needed a breather after a roughly 10 cents rally over 3-4 weeks.

Daily CME Cash Dairy Product Prices ($/lb.)

 FinalChange ¢/lb.TradesBidsOffers
Butter3.1475-0.5023
Cheddar Block2.231.5101
Cheddar Barrel2.25-1100
NDM Grade A1.3551.25262
Dry Whey0.565-0.5121

 Weekly CME Cash Dairy Product Prices ($/lb.)

 TueWedCurrent Avg.Prior Week Avg.Weekly Volume
Butter3.15253.14753.153.18213
Cheddar Block2.2152.232.22252.1282
Cheddar Barrel2.262.252.2552.21152
NDM Grade A1.34251.3551.34881.31158
Dry Whey0.570.5650.56750.56052

 CME Futures Settlement Prices

 TueWed
Class III (SEP) $/CWT.22.5422.6
Class IV (SEP) $/CWT.22.5122.38
Cheese (SEP) $/LB.2.2132.219
Blocks (SEP)$/LB.2.1352.135
Dry Whey (SEP) $/LB.0.53280.5285
NDM (SEP) $/LB.1.27751.29
Butter (SEP) $/LB.3.1653.17
Corn (SEP) $/BU.3.85253.9125
Corn (DEC) $/BU.4.094.13
Soybeans (SEP) $/BU.9.961.005
Soybeans (NOV) $/BU.1.0151.0275
Soybean Meal (SEP) $/TON320323.3
Soybean Meal (DEC) $/TON321.1328.6
Live Cattle (OCT) $/CWT.179.53179.18

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Prices Mostly Higher Tuesday at the Chicago Mercantile Exchange

Tuesday, September 3rd, 2024
Dairy prices update, Chicago Mercantile Exchange, Cash dairy prices, Dry whey price, Cheese block prices, Cheese barrel prices, Butter prices trend, Nonfat dry milk prices, Dairy market analysis, Dairy product trading

Tuesday brought some exciting changes in cash dairy prices on the Chicago Mercantile Exchange that might catch your attention.  Dry whey saw a slight uptick, rising $0.01 to $0.57. This wasn’t just a blip; a recorded sale at that price supported it.  Consistency in these minor gains can significantly boost your revenue over time.

But there’s more. Forty-pound cheese blocks edged up by a modest $0.0050, now sitting at $2.2150. Again, one sale was recorded at that new price point, showing that demand remains steady. 

  • Dry whey: Up $0.01 to $0.57
  • Cheese blocks: Up $0.0050 to $2.2150
  • Cheese barrels: Unchanged at $2.26
  • Butter: Down $0.0175 to $3.1525
  • Nonfat dry milk: Up $0.0125 to $1.3425

It’s not all rosy, though. Butter prices slipped by $0.0175, settling at $3.1525 across thirteen recorded sales. This dip might be a downer, but informed decisions come from knowing all the details.

Daily CME Cash Dairy Product Prices ($/lb.)

 FinalChange ¢/lb.TradesBidsOffers
Butter3.1525-1.751326
Cheddar Block2.2150.5100
Cheddar Barrel2.26NC101
NDM Grade A1.34251.25632
Dry Whey0.571120

Weekly CME Cash Dairy Product Prices ($/lb.)

 MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter–3.1525–––3.15253.18213
Cheddar Block–2.215–––2.2152.1281
Cheddar Barrel–2.26–––2.262.21151
NDM Grade A–1.3425–––1.34251.31156
Dry Whey–0.57–––0.570.56051

 CME Futures Settlement Prices

 MonTue
Class III (SEP) $/CWT.022.54
Class IV (SEP) $/CWT.022.51
Cheese (SEP) $/LB.02.213
Blocks (SEP)$/LB.02.135
Dry Whey (SEP) $/LB.00.5328
NDM (SEP) $/LB.01.2775
Butter (SEP) $/LB.03.165
Corn (SEP) $/BU.03.8525
Corn (DEC) $/BU.04.09
Soybeans (SEP) $/BU.09.96
Soybeans (NOV) $/BU.01.015
Soybean Meal (SEP) $/TON0320
Soybean Meal (DEC) $/TON0321.1
Live Cattle (OCT) $/CWT.0179.53
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Growth in Class III Milk Futures Amid Mixed Market Movements: CME Dairy Report – June 24, 2024

Monday, June 24th, 2024

Find out the latest trends in Class III milk futures and market movements from the Chicago Mercantile Exchange. How will these changes affect your dairy farming plans?

Today, we observed relatively subdued activity across Class III and IV markets. Class III prices saw a general increase of 10-15 cents, influenced by a mix of spot results. Notably, only one Class IV contract has been traded, with butter and nonfat prices showing a decline. This slow start to the week is particularly noteworthy, given the high anticipation surrounding the recent Milk Production report, which is expected to have a significant impact on the market.

Mixed Movements in Milk Futures: Class III Climbs While Class IV Drags

ContractClass III Price ($/cwt)Class IV Price ($/cwt)
July 2024$19.87$21.21
August 2024$20.00$21.15
September 2024$20.10$21.10

The overall market movements for Class III and Class IV milk futures presented a mixed picture. Class III futures showed a moderate growth, increasing by 10-15 cents, which can be seen as a positive response to spot market variations. On the other hand, Class IV futures saw limited activity with predominantly downward trends, including a single contract traded and declines in butter and nonfat milk prices. This mix of movements sets the stage for a cautious start to the week, highlighting the potential risks and opportunities in the market following the recent Milk Production report.

Optimism in Class III Milk Futures Amid Mixed Spot Market Results 

Class III milk futures showed signs of optimism as prices rose by 10-15 cents across all contracts. This uptick was primarily a reflection of mixed spot market results. Specifically, block cheese prices increased to $1.8900 per pound, likely bolstering confidence among traders. In contrast, barrel cheese prices slightly declined to $1.9150 per pound. The divergence in spot prices seemed to fuel the cautious yet hopeful sentiment observed in the futures market.

Class IV Milk Futures See Limited Activity Amid Sluggish Market

Class IV milk futures were subdued, reflecting the overall sluggish activity in the market today. At the time of writing, only one Class IV contract had been traded, highlighting the lackluster interest in this segment. This cautious trading behavior was mirrored by declines in both butter and nonfat dry milk prices. Butter settled at $3.0650 per pound, giving up $0.0250, and nonfat dry milk followed suit with similar downward adjustments. The dipping prices in essential dairy commodities likely contributed to the softer stance in Class IV futures.

Spot Market Sees Mixed Cheese Prices and Declines in Butter and Nonfat Dry Milk

ProductPrice Per PoundChange
Cheese Blocks$1.8900+ $0.0450
Cheese Barrels$1.9150– $0.0050
Butter$3.0650– $0.0250
Nonfat Dry Milk$1.19– $0.0025

The day’s spot market activity saw block cheese prices lift to $1.8900 per pound, marking an increase of $0.0450 per pound with two lots traded. In contrast, barrel cheese prices slipped slightly to $1.9150 per pound, a decrease of $0.0050, with just one load exchanged. 

Butter prices also dipped today, settling at $3.0650 per pound, down by $0.0250 per pound with one lot sold. Meanwhile, nonfat dry milk prices decreased by $0.0025 to $1.19, with three sales recorded, ranging from $1.19 to $1.1950 per pound. 

This pattern of dipping prices across essential dairy commodities indicates a market cautious at the start of the week, especially following the highly anticipated Milk Production report.

Mixed Futures Activity: Class III Shows Gains, While Class IV and Butter Futures Retreat

In today’s market, July Class III futures rose by 12 cents to $19.87 per hundredweight, indicating positive movement despite mixed spot results. This rise contrasts with the nearby Class IV contract, which saw a decrease, losing 12 cents and settling at $21.21 per hundredweight. 

Trends in Q3 “all-cheese” futures were upbeat, ending the day positively at $2.0333 per pound, adding $0.0220. However, the butter futures market mirrored the spot market softness, with July futures coming in at $3.0550 per pound, down $0.0300.

Promising Crop Conditions: Corn and Soybeans Show Strong Potential

CropDate% Planted% Good to Excellent
CornJune 23, 202498%69%
SoybeansJune 23, 202497%67%

The latest Crop Progress report sheds light on the current status of crucial feed crops, such as corn and soybeans, which are vital to the dairy industry. As of June 23, 69% of the corn crop was rated good to excellent. This indicates a robust potential for feed quality, directly impacting feed costs and milk production efficiency. Similarly, soybean planting has nearly completed, with 97% of the crop in the ground and 67% rated good to excellent. This positive outlook in crop conditions could lead to stable or reduced feed prices, offering a silver lining for dairy farmers navigating volatile market conditions.

The Bottom Line

The CME dairy report for June 24, 2024, highlights modest growth in Class III futures, with prices rising 10-15 cents. However, Class IV futures were primarily static, with minimal trading activity. Key spot prices for blocks and barrels showed mixed results, indicating a potentially stabilizing market. Additionally, butter futures softened slightly. 

For dairy farmers, these market movements suggest a cautiously optimistic outlook. The increase in Class III futures might signal improving dairy margins, especially as feed costs are expected to stabilize with promising crop progress reports. Keeping a close eye on market trends through resources like the CME and Progressive Dairy will be crucial for making informed decisions. Utilizing tools like Dairy Revenue Protection could offer additional security against volatile price swings, ensuring your operations remain resilient in the coming weeks.

Key Takeaways:

  • Class III milk futures showed modest growth, rising 10-15 cents.
  • Class IV milk futures experienced minimal trading activity and a decline in prices.
  • Block cheese prices increased, while barrel cheese prices fell slightly.
  • Butter prices and futures saw a decrease, with minimal trading activity.
  • Corn crop progress remains strong, with 69% rated good to excellent.
  • Soybean planting is nearly complete, with a 67% good to excellent rating.
  • Dairy margins are projected to improve for the rest of the year due to stronger milk prices and lower feed costs.

Summary: 

The dairy market has seen a mixed start to the week, with Class III and IV milk futures showing moderate growth and a cautious outlook. Class III prices increased by 10-15 cents overall, driven by mixed spot results. However, Class IV futures saw limited activity with predominantly downward trends, including a single contract traded and declines in butter and nonfat milk prices. This mix of movements sets the stage for a cautious start to the week, highlighting potential risks and opportunities in the market following the recent Milk Production report. Block cheese prices increased to $1.8900 per pound, while barrel cheese prices slightly declined to $1.9150 per pound. July Class III futures rose by 12 cents to $19.87 per hundredweight, indicating positive movement despite mixed spot results. Q3 “all-cheese” futures ended the day positively at $2.0333 per pound.

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Strange Day in Dairy: Class III Futures Up, Cheese and Grain Markets Down

Thursday, June 20th, 2024

Explore the unusual shifts in dairy markets: Class III futures rise while cheese and grain prices fall. What will the USDA Milk Production report reveal for May?

As the dairy markets reopened after the mid-week break in honor of Juneteenth, a significant cultural event was celebrated annually on June 19 to commemorate the ending of slavery in the United States. Traders and analysts were keenly looking for a clear direction. It was a peculiar day indeed — while the cheese spot market moved lower, Class III futures were higher. Let’s delve into these unusual market movements and unravel the factors.

Understanding the underlying numbers can provide clarity as the dairy markets react to a whirlwind of influences. Below is a snapshot of the current market trends: 

MarketPriceChangeVolume
Class III Futures$18.75/cwt+0.5010,000 contracts
Cheese Blocks$1.8525/lb-0.007513 loads
Cheese Barrels$1.9300/lb-0.01007 loads
Nonfat Dry Milk$1.2075/lb+0.01751 lot
Corn (Dec Futures)$4.5675/bushel-0.075050,000 contracts
Soybeans (Dec Futures)$11.50/bushel-0.125045,000 contracts

Class III Futures Market Sees Surprising Uptick Amid Recent Downward Trends

The Class III futures market saw an interesting uptick despite recent declines. This rebound was a bit surprising. What could be driving this shift?  One possibility is the market catching its breath. After falling prices, minor adjustments and corrections are normal. Traders might see recent lows as too harsh, sparking a buying spree. Expectations of positive news might also play a role, prompting a preemptive move.  Whatever the cause, this uptick adds a new dynamic to an already complex market. Understanding these fluctuations is not just important, it’s crucial to our role as traders and analysts, as it allows us to anticipate and react to market changes.

A Day of Divergence: Cheese Spot Market Buckles Amid Class III Futures Rally

This was an unusual day for the cheese spot market. The cheese sector faced a downward trend despite Class III futures moving higher. ‘Blocks ‘, a type of cheese, dipped to $1.8525 per pound with 13 loads trading. ‘Barrels ‘, another type of cheese, slipped by a penny to $1.9300 per pound with seven lots exchanged.  So, what’s behind this decline? It seems to boil down to supply and demand dynamics and external economic factors. An oversupply of cheese or reduced demand from critical buyers might drive prices down. Economic uncertainties and fluctuations in global dairy trade could also impact the market.

Grain Markets Plunge as Crop Conditions Brighten and Futures Hit Lows Since February

Corn and soybeans saw a significant drop in the grain markets, driven by good crop conditions and ‘technical selling ‘, a strategy where traders sell based on technical indicators rather than fundamental analysis. December futures fell to $4.5675 per bushel, the lowest since February. A positive crop outlook has reassured traders, leading to a wave of selling and pushing prices down.

Nonfat Dry Milk Prices Climb Amid Potential Market Demand Surge and Rising Costs

Nonfat dry milk prices increased to $1.2075 per pound, up $0.0175, with one lot traded. This rise could be due to higher market demand, rising production costs, or shifts in consumer behavior towards dairy products. These elements, along with other factors, will be critical to watch to understand broader dairy market trends.

New Zealand’s Milk Production: A Temporary Decline or a Long-term Trend?

New Zealand’s milk production has declined for the third month. May saw a 4.3% drop year-over-year on a milk solids basis and a 6.2% decrease on a tonnage basis. This might seem concerning, but NZX attributes it to variable weather and pasture conditions.  Despite these drops, the production levels align with the five-year rolling average. So, while the recent declines are notable, they’re part of a long-term pattern with both highs and lows. This decline could have implications for the global dairy market, as New Zealand is a major exporter of dairy products.

The Bottom Line

The dairy markets had an unusual day. While the cheese spot market fell, Class III futures unexpectedly rose, reflecting the inherent unpredictability of the market. Grain markets dropped due to good crop conditions and technical selling, with December futures at their lowest since February. Nonfat dry milk prices rose slightly, hinting at increased demand. New Zealand’s milk production declined for the third consecutive month, sparking questions about future trends. All eyes are now on tomorrow’s USDA Milk Production report for May, a reminder of the constant vigilance required in our field.

Key Takeaways:

  • Cheese spot market prices dropped while Class III futures saw a surprising increase.
  • Grain markets took a significant hit, with December futures for corn and soybeans reaching lows not seen since February.
  • Nonfat dry milk prices witnessed a notable rise, suggesting potential increased market demand or rising production costs.
  • New Zealand’s milk production continued to decline for the third consecutive month due to variable weather and pasture growth conditions.
  • The upcoming USDA Milk Production report for May is a significant watch factor for tomorrow’s market movements.

Summary:

Dairy markets experienced an unusual day, with Class III futures rising unexpectedly and grain markets dropping due to good crop conditions and technical selling. The cheese spot market saw prices drop to $1.8525 per pound and barrels to $1.9300 per pound, driven by supply and demand dynamics and external economic factors. The grain market experienced a significant drop due to good crop conditions and technical selling, with December futures falling to $4.5675 per bushel, the lowest since February. Nonfat dry milk prices increased to $1.2075 per pound, up $0.0175, due to higher market demand, rising production costs, or shifts in consumer behavior towards dairy products. New Zealand’s milk production has declined for the third consecutive month, with a 4.3% drop year-over-year on a milk solids basis and a 6.2% decrease on a tonnage basis. The USDA Milk Production report for May will provide further insights into future trends.

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Butter Prices Surge and Plummet: A Wild Week in Dairy Markets

Saturday, June 1st, 2024

Discover the rollercoaster ride of butter prices this week. Why did they surge and then plummet? Dive into the latest trends and market insights in dairy.

Get ready for a wild ride in the dairy market. Butter prices hit a spring high last Friday but plunged early this week, causing traders and buyers to wonder if such price jumps are sustainable. 

“Butter values plunged early this week after hitting a new high last Friday. Traders spent the long weekend debating if prices should surpass previous years when today’s production, imports, and stocks are all higher than in 2022 and 2023,” noted market analysts. 

This butter price rollercoaster impacts the broader dairy industry. From cheese to whole milk powder and whey, these price shifts affect other dairy products. In this article, we explore the latest trends and key factors shaping the dairy market’s present and future.

Dairy ProductAvg PriceQuantity Traded (4 wk Trend)
Butter$3.02449
Cheese Blocks$1.823114
Cheese Barrels$1.95508
Non-Fat Dry Milk$1.16759
Whey$0.403111

Butter Prices Tumble After New Spring High, Sending Shockwaves Through Dairy Market

After notching a new spring high last Friday, butter values plunged early this week. Buyers, driven by fears of tighter supplies and higher fall prices, initially pushed the market to new heights. However, despite strong domestic consumption and increased international demand, the current production, imports, and stocks are higher than in previous years. 

The anticipated spring flush in milk production failed to alleviate supply chain issues, adding to market volatility. Traders spent the long weekend debating whether current prices justified the recent highs. This resulted in a steep selloff on Tuesday morning as traders rushed to offload holdings, causing a brief but sharp decline in butter prices.

By Thursday, butter buyers showed renewed enthusiasm, aiming to avoid higher costs in the fall. Their robust willingness to pay $3 or more per pound lifted spot butter prices close to last Friday’s peak. Ultimately, spot butter closed the week at $3.09, reflecting strategic foresight in securing their dairy needs early.

Cheese Market Adjusts as Domestic Demand and Export Dynamics Shape Pricing Trends

The cheese market faced a notable pullback this week, driven by shifts in domestic demand and export dynamics. Retailers have boosted domestic interest by promoting lower-priced cheese bought earlier in the year, moving significant volumes. However, the balancing act between competitive pricing and strong export sales remains delicate. 

Early 2024 saw strong export activity, especially in February and March, helping to keep inventories in check. Yet, fears are growing that $2 cheese could deter future international buyers, pushing the market to find a sustainable and fluid price point. As a result, cheese is expected to stay above January through April levels, despite recent corrections. 

This week, CME spot Cheddar blocks fell 6 cents to $1.81, and barrels dropped 4 cents to $1.94, marking the market’s ongoing efforts to effectively balance supply and demand.

Mixed Results at Global Dairy Trade Pulse Auction Highlight Market Divergence

The Global Dairy Trade (GDT) Pulse auction showed mixed results. Whole milk powder (WMP) prices climbed to their highest since October 2022. Meanwhile, skim milk powder (SMP) prices dipped after last week’s gains. This highlights differing trends within the dairy sector.

Nonfat Dry Milk Prices Show Slight Dip Amid Bullish Futures Market Projections

This week, nonfat dry milk (NDM) prices dipped slightly, with CME spot NDM falling 0.75ȼ to $1.1675. Futures, however, remain bullish. June contracts hover around $1.17, but fourth-quarter futures trade in the mid-$1.20s, targeting $1.30 by early 2025. The market anticipates tighter milk supplies and reduced output, awaiting a demand-driven rally to intensify the upward trend.

Whey Market Defies Dairy Commodity Downtrend with Robust Performance and Rising Prices

Amidst a general decline in dairy commodities, the whey market has shown striking resilience. CME spot whey powder rose by 1.5ȼ this week to 41.5ȼ, hitting a two-month high. This surge is driven by robust domestic demand for high-protein whey products. Processors are focusing on these segments, reducing whey for drying and tightening supply, thereby lifting prices across the whey market.

Class IV and Class III Futures Reflect Dynamic Dairy Market Shifts and Supply Concerns

This week saw noticeable shifts in Class IV and Class III futures, driven by changes in the cheese market and broader dairy supply concerns. Class IV futures dropped, with most contracts ending about 60ȼ lower since last Friday, putting May and June contracts in the high $20s per cwt, and July to December above $21 per cwt. 

In contrast, Class III futures showed mixed results. The June Class III fell by 41ȼ to $19.47 per cwt, still an improvement for dairy producers after months of low revenues. Meanwhile, July through October contracts increased by 20 to 60ȼ, indicating market expectations for $20 milk. 

Cheese market trends are key here. Domestic demand is up, driven by retail promotions, and exports remain strong, keeping inventories stable. Yet, there’s concern about maintaining export momentum with potential $2 cheese prices. Finding a balanced price to keep products moving is critical. 

For dairy producers, these developments offer cautious optimism. Near-term futures show slight adjustments, but expectations of tighter milk supplies and higher cheese demand provide a promising outlook. The rise in Class III contracts suggests a favorable environment, backed by strong cheese demand and strategic pricing for exports.

Spring Flush and Seasonal Dynamics Raise Concerns Over Future Milk Supply Tightness

The spring flush, holiday weekend, and drop-off in school milk orders have resulted in ample milk for processors. However, higher prices signal concerns about potential rapid supply tightening. According to USDA’s Dairy Market News, milk was spread thin last summer with more tankers moving south, and a similar situation is expected in summer 2024, although overall milk access has been lighter this year than in the first half of 2023. This suggests that immediate milk abundance might be quickly offset by long-term supply constraints.

Bird Flu, Heifer Shortage, and Herd Dynamics Pose Multifaceted Challenges for 2024 Milk Production

The dairy industry is grappling with several critical issues that could disrupt milk production for the rest of the year. Key among these is the persistent bird flu, which continues to affect herds in major milk-producing states like Idaho and Michigan and is now spreading into the Northern Plains. 

Compounding the problem is the ongoing heifer shortage. Dairy producers are finding it increasingly difficult to keep their barns and bulk tanks full due to limited availability of replacement heifers. The high demand has driven up prices, leading some producers to sell any extra heifers they have, though this only temporarily eases the shortage. 

At the same time, dairy cow slaughter volumes have plummeted as producers retain low-production milk cows to maintain or grow herd sizes. While this strategy aims to increase milk output, it involves keeping less efficient cows longer, which could hinder overall growth. These challenges together create an uncertain outlook for milk production in the months ahead.

Farmers Navigate Weather Challenges to Meet Corn Planting Goals Amid Future Market Volatility

Intermittent sunshine gave farmers just enough time to catch up with the average corn planting pace. As they dodge showers and storms, some in fringe areas may switch crops, while others might opt for prevented planting insurance rather than risk fields for sub-$5 corn. The trade remains cautious, gauging the wet spring’s impact on yield and acreage. However, the moisture might be welcome as we approach a potentially hot, dry La Niña summer. Consequently, July corn futures dropped nearly 20ȼ to $4.46 per bushel, and soybean meal plummeted $21 to $364.70 per ton.

The Bottom Line

This week, the dairy market experienced significant shifts, with butter prices dropping sharply before partially recovering, reflecting ongoing volatility. Cheese prices also declined, although strong domestic demand and exports helped stabilize the market. Interestingly, whey prices bucked the trend, driven by robust demand for high-protein products. 

Looking forward, the dairy market is set for continued fluctuations. The spring flush and current weather conditions are creating short-term abundance, but concerns over milk supply tightness are already influencing pricing. The combined effects of bird flu, heifer shortages, and keeping lower-yield cows highlight the challenges for dairy producers. As these issues evolve, they will shape market dynamics throughout 2024. Stakeholders must remain vigilant and adaptable, as milk production constraints and demand pressures could test the market’s resilience.

Key Takeaways:

  • Butter prices experienced a sharp decline early in the week, following a new spring high last Friday, leading to market reassessment and volatility.
  • Cheese prices retreated due to shifts in domestic demand and concerns over the sustainability of export sales at higher price points.
  • Mixed results at the Global Dairy Trade Pulse auction highlighted market divergence, with whole milk powder values increasing and skim milk powder prices retreating.
  • Despite a slight dip in nonfat dry milk prices, futures market projections remain bullish, anticipating a rise in values due to tighter milk supplies.
  • The whey market outperformed other dairy commodities, showing robust demand and rising prices amidst an industry downtrend.
  • Class IV and Class III futures markets reflected the dynamic dairy market shifts, with fluctuations in pricing due to current supply concerns.
  • Seasonal dynamics and spring flush raised concerns over future milk supplies, as high temperatures and declining school orders impact availability.
  • Challenges such as the bird flu and heifer shortage continue to pressure 2024 milk production, complicating the supply chain and market equilibrium.
  • Farmers navigated adverse weather conditions to meet corn planting goals, reflecting broader agricultural market volatility and future crop yields’ uncertainty.
  • Overall, dairy markets faced significant price fluctuations and supply chain challenges, underlining the importance of strategic planning and market adaptation.

Summary: Butter prices reached a new spring high last Friday, but plummeted early this week, raising concerns about the sustainability of these prices. Current production, imports, and stocks are higher than in 2022 and 2023, posing challenges for dairy producers. The anticipated spring flush in milk production failed to alleviate supply chain issues, adding to market volatility. Butter buyers showed renewed enthusiasm to avoid higher costs in the fall. Spot butter closed the week at $3.09, reflecting strategic foresight in securing dairy needs early. The cheese market faced a pullback this week due to shifts in domestic demand and export dynamics. Retailers promoted lower-priced cheese bought earlier in the year, moving significant volumes. Balancing competitive pricing and strong export sales remains delicate, and fears that $2 cheese could deter future international buyers push the market to find a sustainable price point.

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