CME Spot Markets See Volatility, With Seasonal Weakness Expected Across Most Products
The CME spot barrel Cheddar price saw weakness throughout last week, falling $0.1300 between Monday’s opening price and Friday’s close. Friday’s settlement of $1.7400 per pound marks the lowest spot barrel closing price since $1.6775 achieved on January 27, 2022. Barrels saw a modest level of activity during the week, trading at least once every day except Tuesday. The largest volume occurred on Friday when product exchanged hands four times, all the settlement price of $1.7400. CME spot block Cheddar saw similar interest throughout the week, trading every day except Friday. The block Cheddar price climbed on Monday and Tuesday to a weekly high of $2.1125 on Wednesday before declining slightly on Thursday and falling $0.1150 by Friday’s close to the lowest CME spot block Cheddar settlement price since November 2, 2022.
Sentiment remains largely bearish in the nonfat dry milk market; the price hit a recent low of $1.34 per pound on Wednesday before recovering a penny into the end of the week. Wednesday’s close was the lowest settlement since September 16, 2021. Demand remains sluggish globally, with ample product available from key exporting regions to meet anticipated upcoming needs.
Volatility persists in the CME spot butter market, with early week weakness met with price strength into the back half of the week as the market remains supported for the time being. Additional volatility is expected in the coming days with price declines expected to materialize by year end. Holiday butter needs have long been fulfilled and production is climbing; attention is focused on the November US Cold Storage report that will be released on Thursday, indicating to the market how much inventory out-movement happened in the month.
Questions Abound About a Post-COVID China
Since China dramatically reversed course and loosened its zero-tolerance approach to COVID recently, Beijing has gone all out to convince the public that it can weather the potential risks of lifting restrictions and still put the world’s second-largest economy back on track. There are a few key concerns into 2023, starting with the fact that their volatile economic recovery could compromise efforts to reduce income inequality under “common prosperity”. The Ministry of Civil Affairs monitors 63 million people on the low end of the income bracket and estimated around 6 million are at risk of returning to poverty. The lack of reliable data on COVID cases also makes it hard to assess how long it will take the economy to bounce back. The global picture is not looking promising, with both the United States and Europe charting a path toward recession, hurting demand for Chinese exports, a usually dependable pillar of the global economy. Lastly, analysts are expecting pent-up demand in the economy to be “relatively weak” next year after three years of lockdowns depleted the finances of many Chinese households.
Last Week’s Reports & Analysis
HG Dairy’s US Dairy Commodity Price Forecast
CME spot block and barrel prices have struggled to find harmony in 2022. 75% of the time (179 of 240 trading sessions this year), the block premium to barrels either exceeded… Full Report
October 2022 US Dairy Supply and Utilization
October total cheese utilization was higher versus prior year for the third consecutive month even as the year over year gain dropped slightly versus the strong growth noted in September. Both domestic and export… Full Report
Reports This Week
- US Milk Production (Nov ’22) – Monday, December 19
- Global Dairy Trade Auction – Tuesday, December 20
- Weekly EU Dairy Commodity Prices – Wednesday, December 21
- National Dairy Products Sales Report (NDPSR) – Wednesday, December 21
- Announcement of Advanced Prices and Pricing Factors – Wednesday, December 21
- New Zealand Dairy Export Data – Wednesday, December 21
- Cold Storage (Nov ’22) – Thursday, December 22
- Livestock Slaughter – Thursday, December 22
- USDA Dairy Market News Midpoint Prices – Thursday, December 22
- USDA Weekly Dairy Cow Slaughter – Thursday, December 22
- USDA Biweekly International Prices – Thursday, December 22
- Cattle on Feed – Friday, December 23
