11/4/2023
A little rebound in the price mid week with a sell off on Friday. Good domestic demand a lack of exports and plenty of cheese production capacity has the market treading water in a range that still does not work for the average cost of production in this country.
Weekly Spot Prices
Weekly Future Prices
Cheese: Milk supplies are slowly increasing for cheesemakers in most of the country. That said, overall availability is not noted as abundant. The fall/winter holidays, though, are expected to bring more plentiful milk supplies for Class III use across the nation. Cheesemakers in the Midwest reported spot prices from flat market to $1-over Class III. Cheese demand is varied nationwide, but steady to hearty according to most cheese contacts. Labor issues continue to deter some processing in the East, while cheese production is generally stable. Cheese
market tones remain on somewhat shaky ground. One positive note is that the CME price spread between blocks and barrels is slight, which contacts view as an indicator of market stability. (USDA Cheese Highlights)
Butter: Markets are under some bearish pressure following a record-breaking run in the early fall. Starting the week on a high note, CME daily cash call prices jumped to $3.30, but by Friday market prices had slid into the $3.11 range. Cream availability is growing in the East and Midwest regions. Western availability remains somewhat snug, despite component level increases in that region. Central processors say churning rates have doubled (or more) since early October, and cream multiples at/around1.20 are clearly a major reason for that.
Eastern contacts say Thanksgiving orders are wrapped up, while Western butter plant contacts say Canadian demand for this quarter has held somewhat strong. (USDA Butter Highlights)
Dry Whey: Prices moved higher for both the range and mostly price series. Activity for non-preferred brand loads by spot load buyers has reportedly gained some strength. A few manufacturers indicate tighter inventories. Also, slightly tighter preferred brand availability is noted by stakeholders. Some manufacturers relay bleached dry whey spot load availability is limited. Demand from international buyers is moderate. A few stakeholders relayed sentiments that large yearly celebrations in Asia are expected to increase Asian purchasers. Cheese manufacturing is keeping ample amounts of liquid whey available to run steady dry whey production schedules. Dry whey market tones are bullish. (USDA Dry Whey)
The cheese market is in relative balance but the dry whey market is tightening up. As the Dry Whey pushes into the 40’s this will help support the class 3 market. Every penny higher in dry whey price is six cents higher on the class 3 price. If dry whey pushes up into the 50’s it will only take 1.85 cheese to be at $19.00 class 3. That is a number that most producers are profitable. Recommendation, Buy $19.00 call from 20-60 cents for Dec-May and then sell futures if they rally into the 19s. Give us a call to discuss this or another strategy.
