The KDM Dairy Report 4/3/2021


Up we go!  Both class 3 and class 4 had good gains this week mostly do to improving food service demand and hope that after this period of review the government will get back to their purchasing programs.

Spot Market Recap
Milk Production

In cheese demand has picked up noticeably in food service with restrictions easing for both restaurants and institutions.  Although on the western side retail sales have slowed.  The rest of the country has not seen any dip in the retail market and promotions were running strong into the Easter weekend.  Exports demand is strong as well.  Production is picking up and there is plenty of milk for manufacturing.  In the Midwest spot loads are running $4 to $5 under class III prices.  With that the market tone is still running steady to bullish.

In Butter cream is widely available and butter production is running strong.  Butter inventories are running higher but the market tone is stable for now.  Retail orders are up with the Easter weekend and orders had surpassed expectations.  Food service demand is continuing to grow and export interest is steady.  Some question weather exports will remain as the market moves higher.  There are some rumors running around that government contracts will lean more toward butter this year then cheese but nothing is confirmed.

Dry whey had another good week as prices move higher.  There are few if any extra loads for buyers to pick up right now and producers suggest that prices may move even higher in the next couple of weeks.  Cheese producers have picked up their production schedules.  Export demand remains active with China hunting around for extra loads.  

Below is the class 3 September milk chart.

With the price actions this week the markets are running bullish.  Renewed demand from food service and the spring holidays have push class to new highs.  These are good numbers for most farmers and with spring flush getting rolling I do not see production slowing any time soon.  If we can get food service to continue its increase buying and have retail maintain its demand we might be able to hold onto some of these numbers.  I expect if people start to eat out more and they will not need to buy as much at the grocery store.  With that in mind I like selling with a call spread above it this week.  If you can get sold near the highs of this week look to buy $19 call sell $21 call for 50 cents.  Hope all have a safe and enjoyable holiday we will be back in the office Monday feel free to give us a call.