top of page

Milk, Dairy and Grain Market Commentary

By Monica Ganley, Quarterra


Milk, Dairy & Grain Markets

Whether or not black cats or broken mirrors were involved, the butter market’s luck has changed dramatically. After repeatedly setting record highs since late September, the market descended in dramatic fashion this week. A quarter cent loss on Monday was followed by another two-cent decline on Tuesday. After taking a breather on Wednesday, another 8.5¢ loss on Thursday and 3.5¢ decline on Friday ultimately pulled the price down to $3.36/lb. at the end of today’s trading session. Cumulatively, the market lost 14.25¢ compared to last week. Lower prices helped to facilitate trading as eight loads moved during the week.



Despite the decline, butter prices remain historically strong as cream is tight and buyers are making their final orders ahead of the holiday season. But while the fundamentals hold, nobody wants to be stuck holding expensive inventories if prices fall further, in some cases leaving buyers and sellers in a standoff. Export demand remains understated while the pull from retail is steady to lighter, depending on the region, according to Dairy Market News.


On the heels of the weak production figures disclosed in last week’s Dairy Products report, nonfat dry milk (NDM) markets found the traction to move higher this week, busting through the $1.20/lb. threshold for the first time since the end of February. Half-cent increases on Monday and Thursday were complemented by a 3¢ gain on Wednesday that ultimately lifted prices to $1.22/lb., up 4¢ compared to last week. A total of 14 loads moved during the week.



After listing sideways for months, the NDM market seems to have found the conviction to move higher, albeit in a measured way. Several market participants indicate that Mexican demand remains robust and, remarkably, could even be strengthening. Logistical bottlenecks at the border threaten to slow the movement of product, but they have not yet been severe enough to affect market sentiment. After months of lackadaisical activity, demand from other global regions is also appearing to perk up. Domestic demand for milk powders is healthy. Meanwhile, condensed skim is relatively available, but Dairy Market News mentions that several dryers are performing regular maintenance which will curtail throughput and could fuel additional market gains.


Within the Class III complex, most of this week’s drama was found with dry whey. The spot dry whey market appreciated every day this week, adding a total to 3.75¢ to the price. At the end of today’s session, the price stood at 33.5¢ per pound, the highest dry whey price seen since early May. Not only were the gains impressive but the market was thrumming with activity as 70 loads traded hands.



Dry whey prices appear to be tracking the entire whey portfolio up as manufacturers of whey protein concentrates and whey protein isolates are also seeing the value of their products increase. Domestic whey demand is healthy while export demand is at least steady. Cheesemaking remains active but as spot milk is now consistently priced at a premium, the whey stream is not excessive. With a limited whey stream and healthy demand for lucrative higher protein products, dry whey production is likely to slip around the edges, keeping support under prices in the coming months.



The cheese markets were relatively subdued again this week as they waited for a signal to push them one way or the other. Cheddar blocks were mostly unchanged except for a quarter cent loss on Thursday as two trades were made which pulled the price down to $1.70/lb. Barrels were somewhat busier, notching gains on Tuesday, Wednesday, and Thursday, lifting the price to $1.645/lb. an increase of 6.75¢ compared to last Friday. This narrowed the block barrel spread to 5.5¢, the slimmest it has been since late July.


For the moment, cheese seems to have struck a balance between supply and demand. Cheesemaking remains active though several plant managers reported to Dairy Market News that their facilities are down for maintenance, potentially slowing production. Domestic demand is steady to higher, with particularly upbeat retail demand reported in the Northeast. While current price levels should be sufficient to generate some additional export activity, most stakeholders report that meaningful new international sales have yet to materialize.



Cooler autumn temperatures have improved cow comfort in many parts of the country and have boosted yields as a result. Milk and cream availability have increased somewhat though processors are still paying a premium to get their hands on spot milk for manufacturing. Bottlers remain active, placing additional pressure on spot milk supplies. Class IV milk futures markets largely dismissed the weakness seen in the spot butter market as prices remained resilient. On Friday, the NOV23 Class IV settled at $20.88/cwt. The Class III markets were mixed as nearby contracts lost a few cents while contracts later in 2024 mostly appreciated. The NOV23 Class III contract settled Friday at $17.41/cwt.


Grain Markets

USDA trimmed yield expectations for the 2023/24 corn and soybean crops in its World Agricultural Supply and Demand Estimates report, released Thursday. The agency dropped corn yields to 173 bu./acre, slightly lower than most analysts’ expectations, in turn reducing production by 70 million bushels. Soybean yields were reduced to 49.6 bu./acre, also modestly lower than the average trade estimate. Both corn and soybean futures moved up on the news though they retreated today. DEC23 corn futures settled Friday at $4.9325/bu. while DEC23 soybean meal futures settled at $390/ton.


コメント


bottom of page