CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - October 17, 2024
By: Dairy Team - Chicago, Dairy Chicago
A lighter trader week for Class III as we have yet to see volumes eclipse 2,000 contracts which was a theme through the second half of September. 1,528 contracts traded yesterday as open interest was up 92 contracts. Volume this week remains mostly centered around nearby months, particularly November. While 2025 futures have caught a bid and are approaching contract highs from last month, November has consolidated near the 100d moving average tethered to spot activity as it holds a $1.00 premium to the spot equivalent. Next weeks spot prices will show up in the first week of Novembers NDPSR pricing so the market is still expecting a recovery in spot prices.
The unwillingness to break to new lows could also be due to the uncertainty around September’s Milk Production report on Monday. There has been a clear trend toward improving production growth in the U.S. The herd went from being down 0.8% YoY in June to just -0.4% in August. Milk production per cow went from -0.9% in June to +0.4% in August which boosted headline milk production from -1.7% in June to just -0.1% in August. If it wasn’t for bird flu, headline production would have likely been positive for the first time in more than a year during September. But bird flu was detected in California in late August and likely reduced milk production (or at least slowed down the growth) in the largest milk producing state. Our forecast has the size of the dairy herd steady between August and September, leaving cows down 0.4% from last year. Due almost entirely to California, milk production per cow is expected to slow from +0.4% in August to just +0.1% in September which leaves total U.S. headline milk production down 0.3% from last year.
With that said, the dairy product production data for July and August was very strong and would argue that maybe the milk production data for those months was understated. This is a quarterly Milk Production report where the USDA is a little more rigorous than their normal monthly reports and we should expect some revisions. So we could see July and August revised higher which might mean September would come in higher than forecast, but with bird flu in California, it should still slowdown from whatever the growth rate was for August.
The spot butter market continues to clear product between the $2.60-$2.65 level with 127 loads trading over the last 3 sessions. Spot prices moved slightly higher yesterday for the first time in 7 sessions creating a floor…for now. Any buyers who were holding off on Q4 hedges or into Q1 has likely stepped in around the $2.70-2.75 level but the forward curve could see pressure if the spot market continues to clear product at these levels.
Spot NFDM prices continue to be very stable trading in less than a 1 cent range in October. Futures prices felt some pressure yesterday likely due to a weaker than expected GDT auction. Milk production in NZ continues to look good, dairy prices in the Northern Hemisphere have generally been softening and the details around the government stimulus in China have been limited. So there doesn’t seem to be much bullish news in the short term to push GDT powder prices to new highs. Nonetheless, the US is dealing with avian flu in California which accounts for 50% of SMP/NFDM production which could underpin NFDM prices.
- Dairy
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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