5/15/2021
Another roller coaster of a week with a good move higher in the NDPSR, which put class 3 pricing at 1911. That and a good push higher on cash on Wednesday push futures to new highs. That faded by the end of the week but most futures still hold on to a gain from where we closed last Friday.
Spot Market Recap
Milk Production
Cheese Northeast milk volumes are available for class 3. Cheese markers area running active production schedules. Inventory levels are stable with availability for customer spot demand. Food service demand is still increasing and retail demand is holding steady. In general cheese markets remain stable. Cheese Midwest is seeing active cheese production with some plants dropping down to 6 days a week to give there employees some time off. Milk is available for additional cheese production. Inventory levels are stable with more cheese becoming available for spot buyers. Cheese West has demand for retail has held steady, while demand for food service is mixed. Export demand is good but current shortage of truck drivers have slowed shipments. Barrels are a little more available this week for spot buyers though inventories are limited. The market tone is firm.
In butter, cream supplies for making butter are adequate with a little tightness in the western region. Inventories are stable with retail orders lower this week. Food service demand is strong and the market tone for butter strengthens.
Dry Whey prices for the first time this year have shifted lower and some producers say they plan to make loads available for spot buyers. Most loads moved at the 60 to 70 cent range as supplies are still tight. Animal feed whey prices were unchanged on the week. Export demand is steady.
More volatility this week in class 3 as severely months in the futures went above $20. This was only temporary as the futures came back off by the end of the week. Grain prices also dropped this week as exports backed off and the WASDE reporting more carryover with higher planted area. This took the wind out of the bulls sails and we saw corn, and beans drop the rest of the week. The grain prices had just started to take a bite out of many dairies bottom lines. This has not effected milk production yet as there is usually a six month gap between when grain prices go up and when milk production starts come down. Grain prices are still extremely high and if they stay elevated I would expect to see lower milk production in the next three or four months. If grain price continue to fall I would look for class 3 futures to follow. In the current market I would look to sell any months over $20 in class 3, and look to put spreads on grains to ketch some of the down side. As always give us a call and we can tailor a hedge strategy to fit your needs.
