Block cheese: $1.6100 (unchanged)
Barrel cheese: $1.6175 (unchanged)
Grade A NFDM: 93.75¢ (unchanged)
Butter: $1.8500 (unchanged)
In light of current milk supplies (burdensome and could get another growth spurt as the school year ends), cheese export demand (not dead, but very quiet), global cheese prices (lower than U.S.) and cheese imports (down from Q4 but well ahead of Jan./Feb. of 2014), we have to wonder if it will crack the foundation of milk prices during the second half of 2015. We’re not saying that prices will establish new 2015 lows anytime in the immediate future, but even considering some bullish demand data, we’re looking closely at the recent price action vs. fundamental information and thinking that the equilibrium price level of cheese is at some level lower than $1.61/lb. USDA told us last week that we imported 40.4 million total lbs. of cheese in January and February this year, up 17.4% over the same period last year (American cheese is up 29.8%, or 6.1 million lbs.) TUSDA also announced, however, that year-to-date total cheese and American cheese use is up 1.1% and 3.1%, respectively (up over 20 million lbs. each).
Futures outlook
We look for a mostly mixed opening for Class III, Cheese and Dry Whey.
Although the news has remained overtly bearish for NFDM, futures prices have been edging higher amid only modest setbacks for the better part of 3 weeks. On the flip side, butter put in what at least can be construed as a short-term top early last week. The price action last week seems to make sense given commercial disappearance so far this year.
As you might expect, Class IV price action has been fairly mixed as NFDM and Butter jostle. Activity remains rather light around current price levels. The jury is still out on whether or not the Margin Protection Plan took would-be sell-side liquidity from Class IV.
Futures outlook
We look for a steady/mixed opening for class IV, butter and NFDM this morning..
Grain futures
Corn and soybean markets finished lower Friday amid continued concern over bird flu issues, reports of heavy planting and a stronger U.S. dollar. The Corn Belt is expected to be wet this week, and that forecast lasts into next week. Be on the lookout for an “it’s too wet” argument to develop and bring modest price rallies. Temperatures are expected to be warmer than normal for the first half of May. We continue to see the potential for lower prices if all goes well with the crop. But we have made mention that end-users of corn and soybeans ought to accumulate some new crop needs as the market weakens and things look pretty good. Dairy producers ought to examine strategies in 2016 if you scale into new crop grain purchases.
Futures outlook
We look for corn and wheat markets to open 2¢ to 5¢ lower; soybeans to open 3¢ to 5¢ higher.
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Source: Dairy Market
