Let’s Chat Markets – 14 July 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] Alyssa: Hello and happy Friday to all of you. Thank you so much for tuning into Let’s Chat Markets, your favorite weekly dairy market podcast powered by HighGround Dairy. Today is Friday, July 14th, and you’re hearing from Alyssa Badger, Vice President of HighGround Dairy. Joining me today is Betty Berning, one of our amazing analysts on the team. Betty, CME spot dairy values remain in a tight range but there certainly seemed to be more positive price movement this week. What were some key takeaways that you observed?

[00:41] Betty: Thanks, Alyssa. Well, the big story of the week was Butter which moved much higher this week. It actually broke through the $2.50 per pound barrier. All year long, it’s really been staying below $2.45 per pound so it went right through that and set a weekly high today of $2.55 per pound. In the cheese complex, blocks and barrels bounced around, but no new lows this week, and Cheddar blocks settled as high as $1.53 per pound, the highest price they’ve been at in almost two months. Barrels also moved off their 2023 bottom, finding some momentum this week as the weekly average moved up five cents.  So, butter, blocks, and barrels, all of these weekly averages moved up—that’s the takeaway. Then, powders actually averaged lower weekly prices so nonfat dry milk made a 2023 low of $1.0775 per pound on Monday and stayed there into Tuesday. Whey made yet another all-time low of 22.5 cents per pound in Wednesday’s spot session. I would say that international demand is really what has kept these two commodities weaker this week and that is coming across in the prices.

[01:59] Alyssa: I couldn’t agree more. Thanks, Betty! Other key data out for US markets was the weekly dairy cow slaughter report. Wow, these numbers are pretty high!

[02:10] Betty: Yes, for sure. 2023 continues to trend ahead of 2022 and it’s one of the highest years on record, going back to the data in 1986. But let’s talk about this week! Dairy cow slaughter in the United States saw the largest growth over the prior year since the 21st of January this year, and it was up 14.5%, as 59,300 cows headed to packing plants. On the year, dairy farmers have culled over 1.6 million cows.

Of note this week, Region V (Upper Midwest) recorded the greatest year-over-year increase since December 4th, 2021, as farmers there deal with pretty negative margins and some take advantage of high beef prices while some are exiting the business altogether.

[03:03] Alyssa: That was a pretty massive jump there across all of those key regions. On that note, related to farm costs, the world agricultural supply and demand estimates came out this week as well which was initially met with a grain selloff. However, those relatively bearish numbers are combatting volatile weather throughout the Midwest and there has been a slight weather premium added back into the corn market while soybeans have also consolidated in a sideways trade.

[03:32] Betty: Yeah, the grain markets have certainly been interesting to watch this season. Conditions for corn in particular have improved on the increased rainfall across the corn belt. For the week ending, July 9, corn rated good or excellent was up to 55%, which is much better than just two weeks ago when it was 50% at the end of June and perhaps it is showing signs of life and that things may not be as dire as we were thinking at the end of June.

[04:02] Alyssa: Yeah, thanks for that extra commentary there, Betty. I think that really sums up what happened in the US markets this week. Our customers will get an updated 18-month forecast in their inbox for all CME dairy products as well as global dairy products this afternoon as our team wrapped up our global dairy forecast report. This month’s report was stacked with nearly 100 slides of our team’s analysis and opinion on where dairy prices are heading over the next year and a half. It is a lot of information to absorb so we will be breaking down that report on a live webinar on Monday at noon central standard time. If you’re not a customer, no problem! Just request a free trial on our website today and you’ll gain access right away and gain the ability to attend our webinar as well.

[04:51] Betty: That sounds great, Alyssa. I am looking forward to the webinar on Monday. You watched the international markets—what do I need to know about?

[05:04] Alyssa: Well, generally speaking, the top international fundamentals on our watch list has pretty much been weak global demand that’s outpacing limited supply expectations throughout the second half of the year. We also continue to watch China’s economic developments, the potential for a strong El Nino weather event and tighter on-farm margins in the EU as well as Oceania.

[05:29] There was a Global Dairy Trade Pulse event this week that saw a move lower from the previous GDT auction and traded down to $3,000 per MT. That C2 Regular whole milk powder was the lowest price ever recorded on the Pulse Auction since they began last August. This also marked the lowest C2 Regular whole milk powder price on the GDT platform since November of 2020 as that weak demand continues to challenge these global markets.

[06:00] We also covered our expectations for next week’s global dairy trade event, which can be found on our dashboard. While we do cover in-depth expectations of New Zealand’s upcoming season as well as GDT price forecasts in our monthly forecast report that I mentioned earlier. You should really check out the live webinar we have scheduled for July 26th (view the recording here) with the help of Stu Davison, who is in New Zealand, we will go over our full Oceania dairy forecasts as well as a Chinese demand outlook. We’ll be sure to link access to that webinar in the podcast description so you can get signed up with ease.

[06:40] Otherwise, I think that’s a wrap on dairy markets this week! We wish you all a beautiful weekend wherever you may be and we look forward to coming on next week to chat markets with you. Cheers.

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