Let’s Chat Markets – 23 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!

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[00:09] Betty: Happy Friday, everyone, to all of you 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 23rd and I’m Betty Berning, HighGround’s Contributing Dairy Economist. The HighGround team survived a very busy week with our Second Annual Global Outlook Conference! It was wonderful to see many of you in Chicago. Thank you for attending, thank to our sponsor, CME Group, and thank you to all of our amazing speakers! We had a wonderful meeting and we hope all of you can join us when we do this all again next year.

[00:49] On to markets! It was a more subdued week in some ways in spot markets. Block cheese did not make any new lows this week, whew, and moved off its low closing the week $1.4050 per pound on a total of 14 loads traded. Again this week, just three loads of barrels traded and they finished the week at at $1.50 per pound, moving lower throughout the week. Butter moved higher settling at $2.42 per pound today, while nonfat dry milk actually moved down this week, closing today at $1.132 per pound. Whey, on the other hand had heavy volume—31 car lots traded this week, and on the week, spot whey was down a penny, settling at $0.2650 per pound in this holiday-shortened week.

[01:45] May milk production was released by USDA on Wednesday and it was slightly bearish to our expectations. Total milk production was up 0.6% vs HighGround’s forecast of 0.2%. The US herd set at 9.43 million cows, which was flat from April, and up a teeny 0.1% from a year ago, all of this is indicative of slowing growth against very tight producer margins. Milk per cow was stronger than HighGround anticipated, up 10 pounds year-on-year across all states, and that’s really what drove the gain in milk production. Western and Southwestern states continue to lag year-on-year production, while the Midwest and Plains states made more milk, particularly, Wisconsin, Minnesota and Michigan.

[02:31] Drought continues to be a huge story in the feed markets. More of the corn and bean crop are covered in drought again this week. Right now, at 64% of the corn covered in drought and beans at 57% covered in drought. Rain is needed. 55% of the corn crop is in good or excellent condition, and that is a drop on the start of the season of 14%. This 55% is one of the lowest percentages for this point in the season and harkens back to 1992 and 1988.

[03:08] On the international front, there was a Global Dairy Trade event on Tuesday with a flat overall result. It was interesting to note that whole milk powder and butter found a little support while skim milk powder leaned neutral. That being said, Chinese buying presence was a huge concern as it dropped aggressively. Speaking of China, their May import datawas released this week and it actually reflected the opposite on the surface and was quite strong on key commodities. When you dig into the numbers, the HighGround team still isn’t convinced that China is back. New Zealand released their May export data shortly after China and there was a lot of green on the table. New Zealand has just posted two record months of milk production at the tail end of the 2022/23 season, reflected in incredible export volumes across the board. Of course, there will be a lot of pressure on China to remain a key buyer in order to absorb excess inventories. All in-depth analysis on both regions can now be found on our website so don’t forget to check that out.

[04:15] Cold Storage will be out this afternoon and we will record a Skim to give you our quick take ahead of the weekend. Watch your inbox for more extensive analysis.

That is all for the week. Like I said, it was a very busy week for the HighGround team and for many of you as well. I hope you have a lovely weekend and we will talk to you next week!

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