The KDM Dairy Report 7/17/2021


The roller coaster continues, as futures hit 1900 this week for a brief second only to crash back down.  From what we are hearing out there, demand is good. Exports would be stronger if there wasn’t such a shipping bottle neck. But there is also no let-up in milk production; even with the heat and cows drying up out west.  Spoiler alert:  I recommend offsetting hedges and buying calls.

Spot Market Recap
Futures Recap

Cheese: Northeast is running at full production schedules with plenty of milk available. Cheese inventories are generally available with fresh cheese on the tighter side.  Cheese producers in the Midwest are running at full schedules with milk production still widely available.  Demand is steady to strong with the over all market tone in the Midwest being bullish.  On the West coast demand in retail and food service is steady with export demand as strong.  There is a bottle neck problem at the ports and finding a container to export cheese is getting harder.  This has caused a backup and inventories are growing.  The immediate market tone is weaker but, looking long term, if transportation can get sorted demand should take up any excess cheese in the market.

This report is short and sweet.  We have very good demand as people continue to get out and food service needs to reload their freezers.  Exports are strong and would be stronger if there was not transportation did not bottle neck. We saw the spot market drop this week as inventories have built up. If transportation can start to move more product there is a market for it.  I would look for the market to bottom out soon. My recommendations are, buying calls or call spreads in the next couple of weeks, and or. looking to offset sold futures and reset at higher levels.