CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - December 12, 2023
By: Dairy Team - Chicago, Dairy Chicago
Block and barrel cheese separated Monday a block cheese pushed back to $1.60 on a single trade while barrels fell a half-penny on 3 trades. There’s not much to report on fresh loads of spot cheese so far this week. So far it seems to be more of the same: there is some cheese out there and mixed demand for that cheese. We’ve heard some comments about bursts of holiday or pipeline refilling, but even the word “bursts” seems like an overstatement. Meanwhile, there’s little reported problems with getting fresh milk at the moment (although we’re hearing milk is tighter in Idaho) and that may get kicked up a notch as school close down for the Christmas/New Year’s Holidays next week. But while spot is very ho-hum right not, both Class III and Cheese futures closed mostly higher Monday.
Its true that the futures market participants may have given more credence to the 2 cent increase for block cheese than the half-penny decline for barrels. But, for the sake of argument, we’ll suggest a more nuanced view this morning. For all intents and purposes the spot cheese prices is treading water here lately. The mindset of the vast majority of participants seems to be more bearish. Slight downticks in price come with thoughts that range from “the price will stay here indefinitely” to “there is a potential deluge of cheese that could potentially collapse the entire spot market”. A 2 cent bump in the price of block cheese does not carry with it the same sort of conviction. A bounce in cheese these days leaves participants largely offering “someone will sell that bid”. So far they haven’t been wrong.
What’s the point? Yesterday’s futures trade – on light volume for Class III specifically – is telling us that the market is running out of would-be sellers. New sellers need a reason to press the market lower but, outside of sentiment, they’re not really getting that fresh signal this week (flat to lower milk production, firming global cheese prices, anecdotal chatter of increased exports for Q1). With spot cheese some 20 cents below where our stocks/use level would indicate fair value, the market may already be low enough for now. This “low enough for now” realization is slowly sinking in to the rather massive speculative shorts in both of these markets. With year-end right around the corner and a lack of fresh bearish impetus, be on the watch for shorts trying to leave the theater before someone pulls the fire alarm.
While Class III was higher, Class IV was lower Monday. Butter sellers are back. Spot butter dropped 9.5 cents to $2.5750 on 3 offers only – no trades. The weakness coincides with an uptick in discussions of better cream availability. It also helped spur some new selling on the futures market. When the closing bell rang, 273 butter futures had traded Monday and open interest increased by 192 contracts. The January to December pack finished at $251.550 as the market continues to chop a few pennies above and below that key $250.000 level. We don’t know if butter buyers will be back to own some loads in the $250s or not, but for now we expect more spot butter weakness this week.
NFDM futures also have a number they’ve pinned: $130.000. 2024 NFDM futures have flopped both sides of $130.000 since mid-October closing at 129.725 in a mixed/mostly lower trade yesterday. The spot market and current lackluster demand appear to be a drag on things lately. On the flip side, flat-lower milk production, protein demand in general, and budget-setting buy side interest seem to underpin 2024. Perhaps the most telling piece of this week’s NFDM trade so far is the trade volume: just 39 contracts yesterday and open interest rose by just 8 contracts. Feels like the quieter holiday trade came early, but what it really may indicate is a lack of aggressive selling on the derivative contracts. The sideways market marches on….
Grains markets continue to chop mostly sideways so far this week. Corn was slightly higher overnight as Brazil faces hot, dry weather. Brazil corn and soybean planting is close to completion.
- Dairy
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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