Monday Morning Huddle – 24 April 2023

Monday Morning Huddle – 24 April 2023

Monday Morning Huddle

24 April 2023

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Cheese and Whey Down on the Week on Heavy Volume:
CME spot barrel Cheddar held its 2023 low of $1.5125/lb. on Monday before rallying through the week on 85 loads traded, the most since the week ending June 23, 2018. Notably, seven loads traded at $1.50/lb. during Wednesday’s session, which had an impressive volume of 26, the highest single day total since June 21, 2018. Blocks exchanged hands 29 times through the week, a 22-month high, and set a 2023 low on Thursday of $1.745/lb., before creeping up a half-cent on Friday. There seems to be plenty of buy-side interest at $1.50/lb. on barrels, and $1.75/lb. blocks. Similarly, dry whey volume was heavy again this past week, suggesting traders see value in the mid-to-high $0.30/lb range.

Butter and Nonfat Dry Milk (NDM) Averages Move Higher:
Butter prices remain rangebound, struggling to break through the $2.40/lb., but grew marginally over the prior week’s average, up 7.25 cents from Friday to Friday. NDM markets started the week making a 2023 low before staging a comeback and bouncing 4.25 cents.

Milk Production Shows Herd Growing:
Since December, US dairy producers have added 39,000 cows to the herd, and March’s inventory of 9.435 million cows is the highest since August 2021. While on-farm margins are tight, with producers actively culling cows against a backdrop of historically high beef prices, they are ready to milk heifers and productive cows, at least through the flush. HighGround anticipates that the herd will begin shrinking on a monthly basis by the end of the second quarter.

India Moves Toward Becoming the Most Populous Country:
India is set to surpass China as the most populated country in the world by mid-2023, according to the UN. With a young population, over half are aged 30 and under, the workforce will grow for some time which could help improve GDP. Increased income tends to improve diets and that could provide an opportunity for exporters to grow their market share to the country.

Poland, Slovakia, Hungary, and Bulgaria Ban Ukrainian Grain Imports:
Countries in Eastern Europe have unilaterally banned imports of grain from war-torn Ukraine, as the glut of commodities is driving local prices lower. The EU has stated it does not support these moves and met last week in Brussels to determine solutions to keep Ukrainian grain moving. Ukraine is a major global grain exporter and disruptions in the supply chain there will likely drive prices higher elsewhere, including feed costs for farmers.

American Dairy Products Institute Annual Conference in Chicago This Week:
The entire HighGround Dairy team looks forward to visiting with both US and global market participants in Chicago this week for ADPI’s annual conference.

Last Week’s Reports & Analysis

March 2023 US Milk Production Report Analysis
With heavy livestock slaughter through the first three months of 2023, it has been surprising that the US milking herd continues to grow. March milk cows were up 31,000 head from March 2022 and increased…Full Report

February 2023 EU-27 + UK Dairy Export Volume Analysis 
With milk production still growing in Europe, export data highlights the lengths processors are going to remove excess product from the local market with SMP, butter and infant formula volumes growing significantly in Feb ’23. However, total dairy exports remain slightly lighter than the year prior; -0.68% YoY…Full Report

Reports This Week

  • March ’23 China Dairy Import Volumes – Monday, April 24
  • GDT Pulse  – Tuesday, April 25
  • March ’23 USDA Cold Storage Report  – Tuesday, April 25
  • Weekly EU Dairy Commodity Prices – Wednesday, April 26
  • Weekly National Dairy Products Sales Report (NDPSR) – Wednesday, April 26
  • March ’23 New Zealand Dairy Export Volumes – Wednesday, April 26
  • USDA Dairy Market News Weekly Midpoint Prices – Thursday, April 27
  • USDA Weekly Dairy Cow Slaughter – Thursday, April 27
  • Pre-GDT Fonterra Offer Volume Estimates – Thursday, April 27

4.24.23 MMH