CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - December 13, 2023
By: Dairy Team - Chicago, Dairy Chicago
The price of barrel cheese fell below $1.50 for the first time this month Tuesday (Nov 30 was last date below $1.50) as 6 loads changed hands. Block cheese fell 2 cents, both of which seemed to further emboldened bearish market sentiment. Although futures were lower yesterday, most months failed to take out recent lows established at the end of November. That fact is worth noting since the most bearish part of yesterday’s trade seemed to be negative chatter on phone calls we had. Demand is quiet, schools are closing for holidays pushing more milk onto open market, holiday demand is done, etc. You name it, outside of looking at global milk prices and essentially flat US milk production – there seems little reason to see cheese prices move higher this time of year.
Cheese inventory in November was up 1.3%, and the market was about 18 cents lower than you would expect with inventories up that much. So either inventories for November are bigger than expected or the market was really undervalued in November. To fully justify a $1.60 block price for December, inventory would need to be up about 3.3%. It is possible that inventory isn't up that much and the market is still just running weak relative to the fundamentals for other commercial reasons. Whichever way you cut it: at present it seems that US spot cheese prices are undervalued.
We expect some follow-through selling on Class III and Cheese futures this morning. The short side is well loaded up and for now has every reason to stay that way. Cheese end-users seem a little more interested in securing 2024 prices, but that interest still pales in comparison to the end-user hedging interest we see in NFDM and Butter for next year. Said another way, there appears to be an odd complacency from cheese buyers for next year.
Spot butter saw a second straight session of aggressive selling with prices falling 7.5 cents to $2.50 which is where we saw buyers step in back in mid-November. 1st half futures have come off of last weeks highs are roughly in line with spot which continues to encourage end user hedging, more so in Q1 where open interest in each month during this time of year is well above average, as seen below in the March contract.
Nonfat futures volume recovered yesterday seeing 135 contracts trade which was mostly seen in front months as deferred contracts showed no real aggressor. Spot fell by a ¼ cent yesterday which is a multi-month low reaching it’s lowest price since late September. We had a GDT Pulse event yesterday which was mixed as WMP was up 2% from the prior GDT event while SMP was down -0.4%.
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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