9/10/2021
Spot Market Recap
Prices steady to high this week for the milk market. Have we topped out or is there some more room at the top? Milk production is backing off seasonal and staffing problems has thrown off many plants production schedules. Lack of workers has also made for delays in trucking and shipping which has slowed exports. Overall dairy markets are steady to a little bullish this week.
Futures Market Recap
Cheese Northeast region milk supplies have been tightening. Although there is still enough milk for cheese makers immediate needs. Cheese inventory levels are available for contracts and for the spot market. Food service demand is good and retail sales are stable. In the Midwest cheese makers report that milk is available for manufacturing needs. Food service and retail demand is good with pizza cheese, curds, and cut and wrap moving into retail are all moving well. In the west, cheese sales have remained steady, with reports of export demand coming from the Asian market. Transportation is still hamstring export orders with delays. Cheese is available for the spot market with blocks tighter then barrels. The overall market tones is steady to bullish.
Butter production schedules vary this week, With plant staff shortages and trucking issues continuing to impact schedules. Butter inventories are stable to growing as some plant managers are building stocks ahead of the holidays. Retail and food service demand are steady. Bulk butter ranges from 1 to 8 cents over the market this week.
Dry whey prices decreased on the top of the range. Prices finding a narrow price difference around the 50 cent mark. Lighter milk supplies moving into cheese production has decreased whey output. Demand has also decreased loosing up the availability for the spot market. Demand has held steady in the international market, but further delays has back product up int warehouses. The overall tone in the whey market is steady to weaker.
With the current market tone I would look for put spreads or some selling in the second and third quarters of next year. There is still a good possibility of a rally up front as higher demand going into the fall pushes prices up. This is likely to have a muted effect on the futures going further out into 2022. If grains continue to drop mid to high 17s start to look like a pretty good floor price. Give us a call and we can tailor a hedge plan to your operation.
