CME Block/Barrel Spread Remains Wide to Conclude 2022 Happy New Year! The holiday-shortened week to conclude 2022 was fairly light on official reports and data and many industry participants were on holidays, so it was a light week. CME spot block cheddar rallied $2.16 per pound during this holiday-shortened week but then fell back on Friday to close at $2.1350. There are still multiple reports that 40# blocks are still tight. HighGround believes as the calendar rolls to January and football season demand subsides, declines are coming. HighGround expects milk production to be strong in key cheese-producing regions for the next few months. Barrels also found support this week but closed at $1.8575 per pound. There may be some rationale for trying to close the block-barrel spread, which remains incredibly wide at $.2775. Dry whey rallied off of the $0.3650 per pound 2-year low to close back above $0.40 on very light volume this week. Futures have done little to justify movement in that market. For CME spot butter prices did not move at all this week and is officially stuck at the $2.38 per pound level. But it was a pretty crazy month for the butter market, seasonally declining from a high of $2.90 per pound on December 6. Finally, nonfat endured a pretty decent battle last Friday to close out the calendar year with 11 trades. But, spot ended at unchanged, which was $1.3350.
First GDT Event of 2023 Remains Bearish Despite China Opening The European Centre for Disease Prevention and Control has pointed out that there continues to be a lack of reliable data on COVID-19 cases, hospital admissions, deaths as well as Intensive Care Unit (ICU) capacity and occupancy in China. High levels of infections and increased pressure on healthcare services in China are expected in the coming weeks due to low population immunity and the relaxation of non-pharmaceutical interventions. China has accused Western media of hyping, smearing and political manipulation and said the situation is under control. This morning’s overall bearish Global Dairy Trade event did reflect stronger demand from the North Asia region as volumes procured were the highest since 16 March 2021 – HighGround will continue to dig into the data and get our comprehensive report later today. While Cheddar and whole milk powder (WMP) leaned neutral, all other commodities were bearish versus expectations.
Last Week’s Reports & Analysis
Pre-GDT Forecast Volume Analysis Any optimism that China is reopening is being clouded by a lack of transparency within the country that has pushed other nations to impose travel restrictions for individuals leaving China China’s National Health Commission (NHC) last week said that it would…Full Report
Weekly EU Dairy Commodity Prices Mild temperatures and high winds are helping to ease pressure on western European power grids entering the New Year bringing optimism to a continent riddled with challenges. Weather forecasts are predicting… Full Report
Reports This Week
Global Dairy Trade Auction – Event 323 – Tuesday, January 3
Weekly EU Dairy Commodity Prices – Wednesday, January 4
US Nov ’22 Dairy Import/Export Data – Thursday, January 5
National Dairy Products Sales Report (NDPSR) – Thursday, January 5
Dec ’22 USDA Announced Class & Component Prices – Thursday, January 5
Nov ’22 US Dairy Products Production & Dry Stocks Report – Friday, January 6
CME Block/Barrel Spread Remains Wide to Conclude 2022
Happy New Year! The holiday-shortened week to conclude 2022 was fairly light on official reports and data and many industry participants were on holidays, so it was a light week. CME spot block cheddar rallied $2.16 per pound during this holiday-shortened week but then fell back on Friday to close at $2.1350. There are still multiple reports that 40# blocks are still tight. HighGround believes as the calendar rolls to January and football season demand subsides, declines are coming. HighGround expects milk production to be strong in key cheese-producing regions for the next few months. Barrels also found support this week but closed at $1.8575 per pound. There may be some rationale for trying to close the block-barrel spread, which remains incredibly wide at $.2775. Dry whey rallied off of the $0.3650 per pound 2-year low to close back above $0.40 on very light volume this week. Futures have done little to justify movement in that market. For CME spot butter prices did not move at all this week and is officially stuck at the $2.38 per pound level. But it was a pretty crazy month for the butter market, seasonally declining from a high of $2.90 per pound on December 6. Finally, nonfat endured a pretty decent battle last Friday to close out the calendar year with 11 trades. But, spot ended at unchanged, which was $1.3350.
First GDT Event of 2023 Remains Bearish Despite China Opening
The European Centre for Disease Prevention and Control has pointed out that there continues to be a lack of reliable data on COVID-19 cases, hospital admissions, deaths as well as Intensive Care Unit (ICU) capacity and occupancy in China. High levels of infections and increased pressure on healthcare services in China are expected in the coming weeks due to low population immunity and the relaxation of non-pharmaceutical interventions. China has accused Western media of hyping, smearing and political manipulation and said the situation is under control. This morning’s overall bearish Global Dairy Trade event did reflect stronger demand from the North Asia region as volumes procured were the highest since 16 March 2021 – HighGround will continue to dig into the data and get our comprehensive report later today. While Cheddar and whole milk powder (WMP) leaned neutral, all other commodities were bearish versus expectations.
Last Week’s Reports & Analysis