Let’s Chat Markets – 2 June 2023

Let’s Chat Markets is a weekly podcast, hosted by HighGround Dairy’s top analysts. Every Friday, they sit down to recap the week in dairy markets and summarize recent reports and relevant news. The podcast can be found here on our dashboard, or wherever you listen to your podcasts. Subscribe so that you never miss an episode!

Subscribe on Spotify | Subscribe on Apple Podcasts | Subscribe on Amazon Music

Register for our second annual Global Dairy Outlook Conference before it’s too late! Find everything you need to know, including the official agenda, a list of our expert speakers, our Chicago Summer Guide and more by clicking the banner below.

Transcript:

[00:10] Eric: A very happy Friday to all in the dairy industry and thank you so much for tuning into Let’s Chat Markets, your favorite weekly dairy market podcast powered by HighGround Dairy.  Today is Friday, June 2nd (we made it to June!) and I’m Eric Meyer, President of HighGround, here to give you some updates on what has been going on this past week.

[00:32] From a report standpoint, this was another quiet week as we rolled the calendar forward to June from May.  Next week is where the action picks up with Monday being US Dairy Products Production and Dry Stocks report, Tuesday is the first June Global Dairy Trade auction and Wednesday gives the industry US Trade Data for April.

[00:53] But this week, the only major news that came out in the dairy industry, other than a deflating CME spot cheese market, was that the USDA provide the dairy industry with an update on their consideration of changes to Federal Milk Marketing Orders.  On Thursday, June 1, USDA published an invitation for proposal submission in response to National Milk Producers Federation’s proposal to make changes to amend the milk pricing system.  This is a process that does take time, and USDA has now provided some guidance as to those timelines.  Additional proposals and amendments to published proposals are now due by Wednesday, June 14th and USDA will host a virtual Pre-Hearing Information Session on Friday, June 16th.  HighGround will have an executive summary of the USDA’s announcement along with links to resources and previously submitted proposals along with letters of support to our subscribers this coming Monday.  Please keep an eye out for this and anyone that has exposure to dairy commodity or milk prices here in the US should be interested in this process and the progression of changes coming, even if it will take a year or more to get here.

[02:10] Let’s give a quick CME spot market recap and then be done for the week.  Dry whey settled the week near multi-year lows after finding a little support.  Friday’s settlement was $0.2575 per pound and the weekly average came in at $0.2650 which was down just over 1% from the prior week.  Buy-side interest down at these historically low levels is high and there are plenty of buyers lined up to take additional loads of whey.  The problem is they have a willing seller happily providing them with product at these low levels, keeping prices down here. 37 loads traded this past week and a total of 218 loads of whey powder traded at the CME during the month of May.  That’s incredibly high!

[02:55] CME spot butter finished the week at $2.4450 per pound, which was a penny and a half above the weekly low set on Tuesday, but prices did find a weekly apex at $2.4650 on Thursday before the rollback.  Weekly volume was a paltry 6 loads and has been very quiet this year after an active 2022, with just 29 loads exchanging hands in May.  Nonfat dry milk prices did find the tiniest bit of support this week, grinding higher just 0.2 cents on the weekly average to $1.1644.  But this other portion that makes up the Class IV market has also been really quiet, with just 6 loads traded this week and 45 loads for the month of May.  Over the past three months, the CME spot market has traded in a 7 1/2 cent range, from $1.1250 to $1.1975 per pound.  But even tighter, since the week ending March 4th, the National Dairy Products Sales Report range for Nonfat Dry Milk has carried a low of $1.1410 per pound to a high of $1.1855 per pound.  Less than a 4 1/2 cent spread over the past three months.  Pretty boring market of late in Nonfat.

[04:11] Last but not least is cheese, which provided the slightest bit of optimism to begin June but rolled right back over to close out the week.  CME spot block cheddar prices set a new multi-year low on Wednesday to finish May at $1.42 per pound, the lowest level since May of 2020, only to see prices pop back above $1.50 on Thursday on two trades.  Rally caps, right?  Well….  No.  Friday happened and the market settled back down more than 7 cents on the day to $1.43 per pound on just a lone trade.  That’s a pretty bearish outcome and the weekly average came in at $1.4456, down 12 cents and nearly 8% below the prior week average.  Barrels have remained fairly stagnant throughout, even with renewed interest on the buy side.  But volatility there has been reduced, with the weekly average remaining above $1.50 per bound, but barely, which was down 0.2% from the prior week.  Such cheap prices for cheese buyers to be able to put away, or begin those buy-one-get-one promotions at the grocery store!

[05:20] Well, that’s all for this week, plenty more to come including now less than three weeks to go until the HighGround Dairy Outlook Conference on June 21-22 in Chicago!  We’ve released more podcast interviews with a couple of our speakers this week and be sure to visit the conference website for more details and to register.  Hope to see you in Chicago later this month.  Have a great weekend.