Monday Morning Huddle – 23 January 2023

Monday Morning Huddle – 23 January 2023

CME Spot Cheese Cracks Under Weight of Other Commodities 

After observing dry whey, nonfat dry milk and butter prices crater the week ending January 13 to levels not seen in over a year or more, CME spot cheese followed last week with block Cheddar dropping to lows not seen since last September and barrel Cheddar fell to its lowest price since November 29, 2021. Milder weather in the Upper Midwest has made for optimal milking conditions and USDA is reporting that basis levels for spot milk in the region are trading for $6.00 to $10.00/cwt under Class. European cheese prices have also collapsed in recent weeks, making incremental export opportunities non-existent for US manufacturers and traders. AMPI’s Portage, Wisconsin plant remains shuttered due to the recent fire and barrel Cheddar is still being displaced, helping to keep the block/barrel spread at the CME wide.

This week, the dairy industry is gathering in Orlando for the International Dairy Foods Association Dairy Forum and markets typically react after meetings between buyers and sellers.  We believe the underlying tone of conversations will remain bearish, but that buyers do have the need to fill demand pipelines and with futures on multiple dairy commodities in an technically oversold condition, a short term bounce is likely in the coming week or two, though we still believe the lows may not be in on a number of products.

It’s ‘Now or Never’ to Stop Japan’s Shrinking Population, Says PM

Prime Minister Fumio Kishida on Friday gave Masanobu Ogura, the minister in charge of policies for children, until the end of March to come up with an outline of new measures to support child rearing families in Japan. The Japanese leader is pledging to introduce “an unprecedented level of measures” to encourage a higher birth rate as well as to encourage companies to pay higher wages. The median age in Japan already is 48.4 years, the highest in the world according to United Nations data, and it only is set to rise.

To encourage families to have more children, Kishida promises support from three pillars: higher child allowances; greater child-raising support in terms of after-school facilities and medical help; and labor reform to make it easier for parents to take childcare leave. That’s ahead of the formation of the Children and Families Agency, due to launch in April. Kishida also says he will lay out a plan by June to double the budget for children by the time the government introduces its annual honebuto economic plan (source).

Last Week’s Reports & Analysis

International Price Dashboard (Click Here)
Weekly Futures Settlement Dashboard (Click Here)
Tuesday Morning Huddle (Click Here)
GDT Auction Results Snapshot (Click Here)
US Dairy Commodity Price Forecast (Click Here)
November 2022 US Dairy Supply and Utilization (Click Here)
Comprehensive GDT Auction Analysis (Click Here)
Weekly EU Dairy Commodity Prices (Click Here)
CME February 2023 Class III Milk & CBOT March 2023 Soybean Meal Futures Technical Commentary (Click Here)
November 2022 EU-27 + UK Dairy Export Volume & Milk Production Snapshot (Click Here)
December 2022 China Dairy Import Volume Snapshot (Click Here)
CME February 2023 Class III Milk Futures Technical Commentary (Click Here)
November 2022 EU-27 + UK Dairy Export Volume Analysis (Click Here)

Reports This Week
  • GDT Pulse – Tuesday, January 24
  • Weekly EU Dairy Commodity Prices – Wednesday, January 25
  • US December 2022 Milk Production Report – Wednesday, January 25
  • US December 2022 Cold Storage Report – Wednesday, January 25
  • National Dairy Products Sales Report (NDPSR) – Wednesday, January 25
  • USDA Dairy Market News Midpoint Prices – Thursday, January 26
  • USDA Weekly Dairy Cow Slaughter – Thursday, January 26