Monday Morning Huddle – 6 March 2023

Monday Morning Huddle – 6 March 2023

Monday Morning Huddle

6 March 2023

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Spot CME Prices Mostly Down:
Other than butter, all spot commodities moved lower at the CME last week. Cheddar barrels set a 2023 price low of $1.53/lb and just five loads traded through Thursday, but 20 were exchanged Friday, with the market UP four and a half cents. Still, the weekly average price continues to move downward, and the spread between blocks and barrels shows no signs of wavering. Whey markets averaged almost a penny less than the prior week’s average. While the average weekly butter price was UP, after trading at $2.45/lb. on Monday and Tuesday, the market was DOWN over 10 cents by Friday.

Dairy Products Report Held Few Surprises:
USDA released the January 2023 Dairy Products Report on Friday afternoon. States in the central part of the US had strong milk production in January, and cheese, butter, and NFDM production in that region climbed year-over-year. Total cheese set a new January record, UP 3.2% from January 2022. Cheddar set an all-time high of 356.1 million pounds, UP 7.1% from the prior January. Mozzarella production was flat, but overall, cheese was bearish versus expectations due to the large volumes. Furthermore, dry whey production was DOWN 7.7%, but stocks INCREASED almost 20%, indicating poor demand.

In the Class IV complex, butter production grew 3.8% annually against a weak January 2022 comparison, totaling 201 million pounds, neutral to expectations. NFDM volumes totaled 177 million pounds, increasing 4% vs. January 2022, which was also an easy comparison. NFDM stocks grew 4%, hinting at the slowing demand in the milk powder complex.

International Data and Crops This Week:
On Tuesday, GDT will take place, and US January 2023 trade data will be released on Wednesday, which will round out the January ’23 US supply and demand story. With cheese production setting records in January, but stocks falling, it will be interesting to see if the demand came from the international or domestic markets. Also, on Wednesday, USDA will release World Agricultural Supply and Demand Estimates (WASDE). MAR and DEC 2023 corn contracts made 6-month lows early last week in response to higher acreage and production estimates from USDA at its Agricultural Outlook Forum in late February.


Last Week’s Reports & Analysis

Pre-GDT Forecast Volume Analysis
Following a summer of weather induced damage for North Island dairy farmers, Fonterra’s recently revised milk price is adding more pain for kiwi farmers this season. The 50c/kgMS slide in the forecast milk price, shifting from NZD$9.00/kgMS down to $8.50/kgMS, is expected to put pressure on this season’s profit margins, with reprots from farm consulants in the Waikato showing that this new mid-point forecast is just above recently…Full Report

Weekly EU Dairy Commodity Prices
The butter market remains volatile with price gains appearing in the weekly published numbers on the European Energy Exchange (EEX), however, futures moved lower this morning suggesting that while demand may have returned, supply remains robust as peak milking season approaches. Sellers are seeing a bit more interest as retailers prepare for higher demand during the Easter holiday. While this has provided some sellers with an optimistic outlook, lasting…Full Report

Reports This Week

  • GDT Auction Event – Tuesday, 7 March
  • Jan 23′ US Trade Data Report – Wednesday, March 8
  • Weekly National Dairy Products Sales Report (NDPSR) – Wednesday, March 8
  • USDA World Agriculture Supply and Demand Estimates – Thursday, March 9
  • USDA Dairy Market News Weekly Midpoint Prices – Thursday, March 9
  • USDA Weekly Dairy Cow Slaughter – Thursday, March 9

3.3.23 MMH