The KDM Dairy Report 10/15/2021


Good rally this week in class 3 even though cash blocks and barrels finish lower then last week. Strong demand in both domestic and international markets for all dairy products has kept the bull market moving higher.  Labor shortages have restricted both production schedules and export sales.  This and other factors are giving the dairy markets a lift this week.

Weekly Spot Prices
Weekly Future Prices

Cheese: Milk production is increasing slightly.  Discount milk is starting to show up at flat to $1 under class.  Cheese demand is strong and strengthening in both retail and food service.  Export interest is also improving with contracts going to both Asian countries and Mexico.  Inventories are building in the west due to logistical challenges in shipping.  Cheese markets tone is steady to bullish.

Butter: Cream availability is mixed.  Most butter plants are reporting that they have plenty of cream coming in.  Labor issues has slows some production schedules especially in the east.  On the west coast there are reports of transportation issues that is slowing both production and sales.  Inventories are generally available with the Midwest on the tighter side.  Retail demand is strong but food service is mixed.  Bulk butter is ranging from 1 to 8.5 cents higher then the market.

Dry whey prices held steady this week.  Demand is holding steady in the domestic market, with exports demand reported as strong.  Purchase interest coming from both Asian markets and Mexico.  Dry whey inventories are available for spot purchases but deliveries are facing delay especially in the export market.  Dry whey production is steady.  Dry whey market tone is steady.

Dairy markets push higher this week with the November 2021 contact pushing above 1950.  This is showing a premium to both cash and the NDPSR.   We are starting to see a pattern with a run up on Thursdays and then dropping back down on Fridays into the first of the week.  With the average for 2022 class 3 now above 1800, DRP is over 17 which is better then the average prices of the last 5 years.  I also like buying the put selling the call.  Buying the 1750 put sell the 1950 call could be done for around 10 cent this last week for most of 2022.  As all ways if we can help with any of your contracting needs give us a call.