The KDM Dairy Report 11/19/2021


Big jump in class 3 with production report out this week.  Good demand across the dairy spectrum, in domestic and international markets.  The tone this week is bullish.

Weekly Spot Prices
Weekly Future Prices

Cheese demand is strong nationwide as retail purchases are busy in the Eastern region. Milk is available, although overages from $.40 to $1 are being reported in the Midwest. Contacts are uncertain as to what will take place next week as plants close down an extra day, or more, for the Thanksgiving holiday. Speaking of production, staffing shortages continue to be reported regularly from all regions. Market tones are uncertain, and contacts say the questions regarding market tones due to freight cost increases, supply chain snags, and employee tightness are far from being answered.

In Butter supplies of cream are tight in the East and Central region, while mixed across the West. Labor shortages as well as a shipping delays are causing some butter production plants in the West to run below capacity. Labor issues are also limiting some plants’ production schedules. Although, plants in the East are, reportedly, well stocked for Thanksgiving holiday. Butter demand is strong, seasonally, across all regions. Spot inventories are tight in the West, while remaining available to meet current demand in the East. Butter market tones are steady to bullish in the Central and West regions. Bulk butter overages range from 3 to 15 cents above market this week.

Dry whey prices are trending higher in the across the range. Demand for dry whey is steady in domestic and international markets. Dry whey market prices are trending higher. Contacts note that there is strong demand for dry whey for export to Asian markets. Port congestion is causing delays to these exports, while contacts report that loads throughout the region are also facing delays due to a shortage of truck drivers. Spot inventories of dry whey are, reportedly, tight. Dry whey production is limited, as plant managers focus their schedules on higher whey protein concentrates and permeate.

Milk Production Report this week sent the entire year of 2022 class 3 futures to new highs.  Cold storage report is out Monday and if there is not a draw down on cheese in cold storage I would expect those numbers to disappear.  With that said the updates the last couple of weeks have mentioned good demand and I would expect that to be shown on the cold storage report.  For a recommendation, sell what you can afford to margin or look at buying the put selling the call.  Buying 1850 put selling the 2200 call for 35 cent Jan 22 through Oct 22.