Class III futures by and large chopped modestly lower from June to September on light volume. Cheese futures traded in similar fashion.
The questions we received yesterday echo last week: How low with spot cheese prices go to reinvigorate demand? Our vantage point is that there ought to be additional weakness to spot cheese in the coming days to reach some sort of equilibrium price based on what we’re hearing about fresh cheese freeing up in the country. To be clear, however, there is still good domestic demand for cheese. But, finding an additional load of cheese is not as difficult as it was a month or two ago.
One key area of support for Class III over the past week has been the sharply higher dry whey futures contracts. We look for some weakness on dry whey from current levels as the market appears overbought for the time being.
Butter futures settled mixed yesterday. While the butter market is firm, the lackluster session yesterday may be a sign that the sharp increases seen of late have over-reached. Exports continue to be supportive and running significantly above the previous year to date. We are hearing that production has been steady and stocks are being rebuilt along seasonal lines, but not enough. We also hear ice cream demand is better. NFDM saw some further weakness.
A GDT auction event is scheduled for today.
May 5 spot session results:
Block cheese: $2.0700 (unchanged)
Barrel cheese: $2.0550 (unchanged)
Grade A NFDM: $1.7775 (unchanged)
Butter: $2.1000 (up 2.5¢)
Today’s expectations:
• Class III & Cheese to open firm
• Dry Whey to open steady
• Class IV, Butter & NFDM to open mixed
Grain futures
Corn gained slightly on Monday as the national corn planting progress fell short of expectations. The planting pace, however, far exceeded last year. Some wet weather is expected in parts of the Corn Belt this weekend with the longer-range forecast suggesting a dry period, allowing field work to continue. Expectations are for close to half the crop planted by next week. Soybean prices declined slightly on Monday, on rumors of South American soy moving into the U.S. may have fueled the move lower. Soybean meal is under pressure this morning, and we expect more of the same behavior heading into the May 9 USDA Crop Report.
Source: DairyHerd