seasonal trends

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Archive for seasonal trends

CME Dairy Market Report: September 5th, 2024 – Prices on the Rise

Thursday, September 5th, 2024

markets, activity, moving needle, CME cash dairy trading, dry whey, price increase, cheese blocks, steady price, cheese barrels, unchanged price, butter, price increase, nonfat dry milk, modest uptick, upward trend, seasonal trends, supply chain adjustments, market dynamics

Markets have been buzzing with activity, and you’re probably wondering what’s moving on the needle today. On Thursday, September 5, 2024, we saw interesting, steady-to-higher movements in CME cash dairy trading. It’s a sign that underlying shifts might need our attention. Let’s dive right into the numbers.

Dry Whey: Increased slightly by $0.0025 to hit $0.5675. Although no sales were recorded, this minor uptick is worth noting.
Forty-Pound Cheese Blocks: The price held steady at $2.23, with no sales recorded.
Cheese Barrels: Unchanged at $2.25, but we did see one sale at that price.
Butter: Increased by $0.0150, reaching $3.1625. Notably, three sales were recorded at prices ranging from $3.1625 to $3.17.
Nonfat Dry Milk: A modest uptick of $0.0025 brought the price to $1.3575. Two sales were recorded at prices close to this mark, $1.3575 and $1.36.

Class III and Cheese began lower Thursday morning, reflecting the previous day’s follow-through selling. Nearby futures fell 40-50 cents ahead of spot trade. While Wednesday’s spot stability dampened buyer interest, yesterday was different. Futures recovered from their lows, finishing just 10-20 cents down, thanks to an unaltered spot market. Remember that you must fuel a bull market, and spot stability might often be enough, given bullish fundamentals. Given previous USDA report shocks, market investors may also be positioning ahead of today’s July Dairy Product data. Class III futures traded well with over 2,600 contracts, with open interest increasing by 235 contracts. Cheese futures activity decreased, with 304 contracts traded, while open interest increased by 72 contracts.

Spot butter recorded its first advance in six days, up 1.5 cents on three deals. After 500 contracts were traded on Wednesday, barely 100 were transacted yesterday, mainly for September. Butter output is predicted to fall month after month and climb just 1.5% from last year, owing to potential milk diversions to cheese production. This will continue to boost these markets as we approach contract highs.

Spot nonfat increased marginally to a new high, while futures have stabilized over the past two days, decreasing by around 1-2 cents through Q2. Stable to weaker global markets are expected to have slowed the increase, but solid US fundamentals will keep nonfat prices high. As we trade near contract highs, end-users may feel under-hedged for 2025 and must decide whether to wait for a price drop or get coverage.

For the first week of September in the Upper Midwest, spot milk basis levels were consistent with the previous year. Labor Day brought fewer trading volumes. According to farmers and processors, recent warm weather has pressured milk production. School districts are in full gear, resulting in increased Class I demand. Despite the poor trade, several stakeholders reported no milk load proposals to the USDA, which was uncommon for a holiday week. Margin levels are usually favorable, signaling expansion to alleviate the limited milk supply, but there are few substitutes to fuel that increase.

Dairy cow slaughter in the United States remains low. For the week ending August 24th, the slaughter was a little over 50,000 head, down 12.91% from the previous year. Year-to-date slaughter is 14.40% lower than the prior year after 34 weeks. Over the last four weeks, dairy cow slaughter declined 14.04% year on year, the smallest margin in 14 weeks. Total beef slaughter is somewhat lower than a year ago, down 2.81%, as beef cows reclaimed some market share in the cattle market this week.

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

	Final	Change ¢/lb.	Trades	Bids	Offers
Butter	3.1625	1.5	3	3	1
Cheddar Block	2.23	NC	0	1	1
Cheddar Barrel	2.25	NC	1	0	0
NDM Grade A	1.3575	0.25	2	0	3
Dry Whey	0.5675	0.25	0	2	1

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

	Tue	Wed	Thur	Current Avg.	Prior Week Avg.	Weekly Volume
Butter	3.1525	3.1475	3.1625	3.1542	3.182	16
Cheddar Block	2.215	2.23	2.23	2.225	2.128	2
Cheddar Barrel	2.26	2.25	2.25	2.2533	2.2115	3
NDM Grade A	1.3425	1.355	1.3575	1.3517	1.3115	10
Dry Whey	0.57	0.565	0.5675	0.5675	0.5605	2

CME Futures Settlement Prices

	Tue	Wed	Thur
Class III (SEP) $/CWT.	22.54	22.6	22.83
Class IV (SEP) $/CWT.	22.51	22.38	22.7
Cheese (SEP) $/LB.	2.213	2.219	2.227
Blocks (SEP)$/LB.	2.135	2.135	2.217
Dry Whey (SEP) $/LB.	0.5328	0.5285	0.5558
NDM (SEP) $/LB.	1.2775	1.29	1.3275
Butter (SEP) $/LB.	3.165	3.17	3.1853
Corn (SEP) $/BU.	3.8525	3.9125	3.9
Corn (DEC) $/BU.	4.09	4.13	4.1075
Soybeans (SEP) $/BU.	9.96	1.005	9.995
Soybeans (NOV) $/BU.	1.015	1.0275	1.0225
Soybean Meal (SEP) $/TON	320	323.3	320.6
Soybean Meal (DEC) $/TON	321.1	328.6	326.9
Live Cattle (OCT) $/CWT.	179.53	179.18	177.13

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Categories : Dairy Markets

Tags : activity, butter, cheese barrels, cheese blocks, CME cash dairy trading, dry whey, markets, modest uptick, moving needle, nonfat dry milk, price increase, seasonal trends, steady price, supply chain adjustments, unchanged price, upward trend

European Milk Output Surges

Tuesday, August 27th, 2024

Learn how the recent spike in European milk output affects dairy farmers. What can you do to stay ahead in this changing market? Find out more.

Summary: European milk production surged in June, marking the fifth straight month of growth. Despite strong performances in France, Poland, and Italy, declines in the Netherlands and Ireland balanced these gains. Globally, major dairy exporters saw an overall drop for the 11th consecutive month due to setbacks in Argentina, the U.S., and New Zealand. June’s output hit 12.7 million metric tons or 28 billion pounds, the highest year-on-year growth since May 2023. Germany maintained steady production, while France saw a 2.9% rise. Poland and Italy grew, but the Netherlands and Ireland faltered. High temperatures and an outbreak of blue tongue disease have recently stifled Western European production. These issues and a tight U.S. milk supply have driven dairy product prices up. For businesses, this means adjusting to potentially lower global milk prices, which could reduce feed costs and milk prices. Higher output could open up new collaborations and markets, with increased demand in Asia and the Middle East.

Europe’s milk output rose for the fifth month, hitting 12.7 million metric tons in June.
France, Poland, and Italy saw significant gains, while Germany’s production remained steady.
Declines in the Netherlands and Ireland tempered these gains.
Global dairy exporters faced an 11th consecutive month of overall production drop despite European growth.
High temperatures and blue tongue disease have recently impacted Western Europe’s milk production.
U.S. dairy markets experienced increased prices due to tight milk supply and European solid performance.
Dairy farmers must adjust strategies for future price fluctuations and global supply issues.

milk production, Europe, seasonal trends, European milk collections, year-on-year growth, EU-27 dairy industry, Germany, France, Poland, Italy, Netherlands, Ireland, global milk prices, feed and input costs, collaborations, international markets, high-quality dairy products, Asia, Middle East, Argentina, United States, New Zealand, dairy exporters, weather patterns, disease outbreaks, Atlantic, hot weather, France, Germany, Netherlands, milk output, component levels, blue tongue disease, Western Europe, dairy product inventories, prices, restricted milk supply, American dairy producers, pricing, options, demand, market dynamics

Milk production is surprisingly increasing throughout Europe, breaking traditional seasonal tendencies. But what does this imply for your farm and the more significant dairy industry? Despite a wet spring, the EU saw a substantial rise in milk production in June. Changing weather, disease outbreaks, and evolving market dynamics all impact milk production. The USDA’s Dairy Market News notes that “hot weather in France, Germany, and the Netherlands has stifled milk production and component levels.”
Additionally, blue tongue illness influences the Western European milk supply. Despite a constrained milk supply, the US dairy market is growing, and there is a balance between European growth and setbacks in other key dairy exporters, such as Argentina and the United States. Understanding these trends is critical for any dairy farmer who wants to remain ahead of the curve. Ready to delve further into this developing story? Let’s get started.

June’s Record-Breaking Numbers

In June, European milk collections totaled approximately 12.7 million metric tons or roughly 28 billion pounds. That is a 0.9% gain over the previous year, the most substantial year-on-year growth since May 2023. This spike comes after a slow spring, marking a significant milestone for the EU-27 dairy industry.

Country	June 2023 (Metric Tons)	June 2024 (Metric Tons)	Change (%)
Germany	3,100,000	3,100,000	0.0%
France	2,650,000	2,725,850	2.9%
Poland	1,100,000	1,115,000	1.4%
Italy	950,000	980,000	3.2%
Netherlands	1,670,000	1,655,300	-0.9%
Ireland	1,230,000	1,215,000	-1.2%
Others	2,900,000	2,910,000	0.3%

Country-Specific Insights

Germany, the world’s largest milk producer, kept production consistent with the previous year. Meanwhile, France, the second-largest manufacturer, had a significant 2.9% rise. Poland and Italy also recorded substantial growth, offsetting falls in the Netherlands and Ireland. These country-specific patterns are critical to understanding the overall market dynamics.

Strategic Insights for Adapting to European Milk Output Changes

Have you considered how the increase in European milk production may affect your day-to-day operations? The rise presents possibilities and problems you cannot afford to ignore.

An increase in European output may put downward pressure on global milk prices. While this may imply reduced feed and input costs for your business, it may also lower milk prices. Keeping an eye on market developments will be essential.

The increase in output may open the path for new collaborations and international markets. Look beyond your boundaries; high-quality dairy products are becoming more popular in Asia and the Middle East. So, what will be your strategy? Adapt, innovate, and grasp opportunities while facing difficulties front-on.

While Europe saw growth, other major dairy exporters encountered difficulty. Argentina and the United States had considerable setbacks, while New Zealand saw a modest year-over-year decline. The five top dairy exporters fell 0.1% from last year’s output, marking the 11th straight monthly fall. This global perspective is vital for understanding the larger picture.

Weather and Disease: The Double Whammy

Since June, increasing temperatures have caused a decline in milk production on both sides of the Atlantic. According to the USDA’s Dairy Market News, hot weather in France, Germany, and the Netherlands has reduced milk output and component levels. An epidemic of blue tongue disease has also affected productivity in Western Europe. These causes are reducing dairy product inventories and raising prices.

The Bottom Line

So, what are the takeaways from all of this? The increase in European milk output and worldwide production constraints have resulted in a dynamic and potentially profitable market. Monitor weather patterns and disease outbreaks, which may immediately influence supply and pricing. Be aware and agile to capitalize on market trends. What tactics will you use to navigate these changes? It might be critical to your dairy farm’s survival.

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