Quiet week in the milk market as the gap between the blocks and the barrels slowly close. Good domestic demand as summer draws to a close with pizza sales picking up and schools back in session. The export market could be strong if transportation was not an issue. Labor shortages are plaguing production and transportation in all sectors of the market. Finally with reports of China’s economic slowdown – will demand slow down before manufactures can get their products shipped over there?
Spot Market Recap
Futures Market Recap
Cheese: Spot prices of milk have tightened this week with extra loads going for $.50 to $1.00 over class. With cheese demand steady to slightly weaker this week, inventories are mixed with the Midwest producers stating that most of their inventory is booked for the rest of 2021. Blocks still have more than a 28 cent price gap on barrels, although it did close a little bit this week. Barrels are more available then blocks and with the price gap this makes the market tone uncertain on a direction.
Butter: Cream supplies are tight with butter production trending downward. Staffing shortages have further impacted production schedules. Inventories are ample for the time being. Retail sales are growing but food service orders are somewhat mixed. Bulk butter is 1 to 8 cents over the market. Overall the butter market is stable.
Dry whey prices went sideways this week as employee shortages have slowed some class 3 production. Milk remains somewhat available but tighter than last month. Demand for dry whey is holding steady in the domestic markets, and export orders remain steady despite delays in shipping. Inventories are available for the spot market. The overall market tone for dry whey is mixed.
Milk went relatively sideways this week on low volume in class 3. With lower milk volumes and good export demand we should be heading higher. The obstacle is moving it and as China’s economy shows signs of slowing down is the market missing its window to move dairy products out. This last week option spreads have been trading. Look at the second and third quarter of 2022 for buying the 1750 put selling the 1550 put and selling the 1900 call for around 15 cents in class 3. Give us a call and we can tailor a hedge plan to your operation.