Monday Morning Huddle – 13 February 2023

Monday Morning Huddle – 13 February 2023

Monday Morning Huddle

February 13, 2023

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Just a Short Term Correction or Has a Bottom Been Found?
Class IV products continued driving the bullish sentiment this past week as the CME spot rally that began two weeks ago has held gains or even tacked on a little more. Weekly averages kept climbing for both butter (+2.3%) and nonfat dry milk (+4.5%), and pivoting to dry whey, the weekly average spiked more than 17% versus the prior week! A positive GDT for whole milk powder and butterfat last Tuesday helped set the tone early in the week, while bullish trading chatter out of Europe has helped fuel rallies on dairy commodities across the globe. Meanwhile, the US Class III Milk and Cheese futures markets found support in sympathy to the Class IV products, but the CME spot block (-1%) and barrel (-0.9%) prices posted modest declines from the previous week.

The key question the industry will debate over the next couple of weeks: Is the recent upward momentum just a short term, short covering correction with a resumption of the downtrend to commence soon, or has the bottom in the dairy market really been found?

Without a lot of global fundamental data published this week, it is a perfect time for the HighGround Dairy market intelligence team to dig into the data and publish our Monthly Forecast Report (Wednesday) and Monthly Outlook Webinar (Thurs @ 12PM CST) that will provide our subscribers with the official HighGround market view. Our current hypothesis is that the bear market in dairy is NOT over, and upcoming headlines for US and European fundamentals will help justify that opinion in the coming weeks. We look forward to providing you a more comprehensive argument on that view later this week.

Last Week’s Reports & Analysis
December 2022 Dairy Products Report Analysis
Total cheese production has increased versus prior year for 26 consecutive months, starting back in September 2020. The rate of growth has also begun increasing after just a 0.4% YoY build in Q3 ’22 with both November and December above 2%. This kind of growth is expected to continue into January though may find a temporary reprieve in Feb, as total cheese has improved nearly 11% over the past two years in that month. Total cheese output has now eclipsed the 13 billion mark for five straight years… Full Report

December & Q4 2022 US Dairy Export & Import Volume Analysis
Key dairy commodities closed out the calendar year with vigor as demand for US product remained strong throughout nearly all of 2022. US butterfat was priced below the EU last year and was the most competitive on cheese against the EU and Oceania all year as well…Full Report

Reports This Week

  • GDT Pulse #016 – Tuesday, February 14
  • Dec ’22 US Dairy Product Supply & Utilization Report – Tuesday, February 14
  • Weekly EU Dairy Commodity Prices – Wednesday, February 15
  • Weekly National Dairy Products Sales Report (NDPSR) – Wednesday, February 15
  • HighGround Dairy Monthly Forecast – Wednesday, February 15
  • Fonterra Pre-GDT Offer Volume Estimate – Thursday, February 16
  • HighGround Dairy Outlook Webinar – Thursday, February 16
  • USDA Dairy Market News Weekly Midpoint Prices – Thursday, February 16
  • USDA Weekly Dairy Cow Slaughter – Thursday, February 16

2.10.23 MMH