Dairy Product Spot Call Reporter

Heavy demand for both block and barrel cheese was the feature attraction at today’s spot call.  Ten loads of block cheese traded at unchanged, with buyers left still wanting for more.  Bids for 5 loads of barrel cheese materialized at unchanged, but the sole trade occurred at $1.4950, with buyers bidding 0.25¢ higher still afterwards.  Dry grade X was pushed further down by sellers in the absence of buyers.  Butter decided to take the day off.

Dairy Futures

Demand for cheese during the spot call injected some much needed life into Class III futures.  Before the spot call, the March Class III contract had fallen to $15.52/cwt, a level we have not seen since January 20^th, 2011. However, a decent rally occurred during the day leaving Class III and cheese futures up, while whey prices continue to slip due to the abundance of whey hitting the market in anticipation of increased Class III supply.

Milk Margin

News of favorable weather for wheat dropped the commodity slightly today as concers eased over Ukrainian winterkill fears and beneficial snow and rain are expected to cover the American central mid-west. Corn was up 1.5¢/bu on mixed news from Argentina and Brazil. Soy Meal however went on a tear, gaining $5.2/ton due to reports from a large private news service that yields for the second soy crop in South America are worse than current estimates suggest. The long awaited uptick in class III was able to counter balance these effects to raise the milk margin by 6¢.

The Weekly NASS Survey and California

To nobody’s surprise, the NASS Survey prices for week ending in January 28^th fell, with the exception of NFDM, which rebounded somewhat from last week’s steep drop-off in price.  While butter and block cheese only suffered mild losses (down 0.26¢ and 0.67¢ respectively), barrel cheese and dry whey experienced more substantial declines (down 2.65¢ and 3.6¢ respectively). The January USDA price for Class III milk is $17.05/cwt.  The abundance of Class III milk is being reflected in the spot market and the West dry whey price, and will most likely be shown in the NASS surveys in the upcoming weeks.  As such, it is very likely for February and March USDA prices to be below January’s.

For the week ending in January 28^th, weakness in the spot market was reflected in the California Class 4b price.  The Mostly West dry whey price remained inconsequential as the whey pricing factor stayed at the 65¢ threshold.

Questions? Ask the Dairy Division today at 312-264-4373