CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - July 22, 2024
By: Dairy Team - Chicago, Dairy Chicago
A silent spot cheese call Friday resulted in weaker futures markets to close out the week. Both Class III and Cheese stepped back from the highs of the week (new contract highs in Oct and Nov) as these contracts need something more than a steady spot market to continue the uptrend. After a 3-4 week sideways consolidation, it appears the bigger technical picture is still bullish, but fundamentals ultimately run markets. And things appeared rather stable – and enough risk premium was put into futures – by the end last week.
Tomorrow we’ll get the much anticipated June Milk Production report (2pm CDT). This will be a quarterly report which is more rigorous and can contain significant revisions. Milk production for May was weaker than we forecasted, driven by California being down 1.5%. We’ve heard anecdotally that California could be revised up toward -1% while Idaho may be revised from -0.6% to -3.5%. That would end up being a net reduction to the May production data.
For June, we are forecasting a rather steady dairy herd (+1,000 head from May), but thanks to easier YoY comparables, the herd will shift from -0.7% YoY in May to -0.5% in June (and like toward flat YoY in August). Milk production per cow was down 0.1% from last year in May and I’m expecting a further slowdown to -0.2% in June. Cheaper feed costs and better margins are a positive for PPC, but bird flu and hotter than normal weather are drags on PPC. With the herd forecast down 0.5% and PPC down 0.2%, headline milk production is forecast down 0.7%.
There may be a change underway in the butter market. Spot butter had a banner trading week with 69 loads trading between 313.750 and 307.500 and finishing on the low of the week. Sellers are more aggressive and though buyers stepped up to own butter above $3.00. Between anecdotal comments about good offers of product in the country the past few weeks, better inventories, and now better sell side interest during the spot call, we expect the risk to the butter market is lower – at least short term. Despite futures being lower Friday, futures remain tethered to their sideways pattern for now. We’re looking for a breakout and will update you when we see it.
As if in some bid to keep Class IV stable, buyers got more aggressive during the spot NFDM call. 7 bids pushed the price of NFDM up 0.75 to $119.750 Friday, which remains well within the sideways trading range of the past 60 days. Firming spot underpinned nearby futures but the entire forward curve seemed well supported following a lackluster GDT auction event.
While its human nature to expect to have a list of very good reasons for a market to begin a new trend before a market moves, often times it’s futures price action that lead the news. The other shoe drops and then you find out why. For now not much has changed, but there does seem to be some new underpinning support for this market at a time when the trade remains rather unimpressed – both the bulls and the bears - by any of the news thus far. As we consider better demand for cheese, schools reopening about a month from now, and hot weather, we’d lean towards limited downside risk for NFDM. But also not much going to the upside yet either. Perhaps tomorrows milk production report will shed some light.
Dairy markets were quiet overnight and we expect a rather quiet and mixed start to this week. In the absence of any news, we must remember its late July and sometimes things get quiet.
- Dairy
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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