Cheese and Butter Continue Slide: CME spot Cheddar blocks dropped below $1.90/lb. in Friday’s session, the lowest they have been since early August, and DOWN over $0.40/lb., since making their 2024 high on September 11. Barrels also fell to sub-$1.90 levels beginning on Tuesday. The week’s low point for barrels came on Thursday, $1.865/lb., with a slight bounce to $1.8875/lb. on Friday. The decreases in both markets slowed from the prior weeks, suggesting the bottom is near. The very high cheese prices from three to four weeks ago, and the run-up to them, likely killed off demand, causing the free fall in the Cheddar markets. The block-to-barrel inversion ended on Monday after 40 sessions. However, on Friday, blocks and barrels settled even with each other.
CME spot Butter prices were red from Tuesday to Friday, with Monday logging a $0.025/lb. increase. Like the cheese market, though, the momentum of the declines slowed. Friday’s close of $2.625/lb. was the lowest since January, and sellers seem eager to offload product. Ninety loads traded on the week, the third-highest volume since at least 2014. Manufacturers have made copious amounts of product thus far in 2024 to keep up with Americans’ renewed appetite for butter. Buying for holiday demand is over, though, and the nervousness that ran the market through the spring and summer has dissipated, driving prices lower.
More HPAI in California: In the past month, 92 cases of avian influenza have been detected in California, bringing the state’s total to 100 cases. According to the Los Angeles Times, some cows have died in California, and production is down on impacted farms. The newspaper notes that there have been heat waves over the past six weeks in the Central Valley, the heart of California’s dairy industry, and temperatures have exceeded 100 degrees, further compounding the impacts of the disease. Veterinarians familiar with the cases noted that HPAI is not the direct cause of death, but pneumonia and bloat, occurring secondarily to the disease, are responsible. For the first time since September 2023, Region IX, which includes California, posted a week-on-week increase in slaughter rates, likely due to the impacts of the disease.
US Dairy Trade Rises in August: US dairy exports climbed 2% year-over-year in August, marking their third consecutive month of growth, but were smaller than the same month in 2021 and 2022. Compared to July, international shipments slowed by 1%. Cheese exports remained strong, surpassing 90 million pounds. Nonfat dry milk exports dropped for the tenth time in the past year (-1.1% YoY) but were the second-highest volumes in 2024. August’s sales were likely booked in late May or June when CME NFDM was trading under $1.20/lb., a value for most buyers.
GDT Event on Tuesday: The Oceania market is poised for the second GDT auction in October, the month with the most offer volume for buyers to chew through. With the price rally thus far, SGX futures traders are still optimistic that whole milk powder (WMP) prices will further climb, with as much as a 2.3% gain penciled in. Skim milk powder (SMP) futures are trading sideways, with trepidation from traders coming to play after the European market has sold off over the last fortnight. Likewise, the milk fat market might lose some ground this week, again, as the European market bounces off of its recent price ceiling. Chinese buyers have been very active in the last handful of auctions, and recent inventory and milk production data add to the prospect of this trend continuing for the coming auction.
Last Week’s Reports & Analysis
August 2024 US Dairy Export & Import Volume Analysis
August cheese exports surpassed 90 million pounds for the fifth time in 2024. Mexico and South Korea, the US’ top destinations, increased volumes YoY… Full Report
Pre-GDT Forecast Volume Analysis – 10 October 2024
There has been a significant premium on returns for manufacturers opting to produce Fat/SMP instead of whole milk powder (WMP). While this is not unusual, the premium has been historically wide in 2024. As a result, it is no surprise that less WMP is expected from New Zealand. Last season… Full Report
Reports/Events This Week
- Crop Progress Report – Monday, October 14
- Global Dairy Trade Auction – Tuesday, October 15
- HighGround Monthly Global Forecast Snapshot – Tuesday, October 15
- Aug ‘ 24 US Dairy Supply and Utilization – Tuesday, October 15
- Weekly EU Dairy Commodity Prices – Wednesday, October 16
- HighGround Dairy Monthly Outlook Webinar – Wednesday, October 16
- National Dairy Products Sales Report (NDPSR) – Thursday, October 17
- Pre-GDT Pulse Fonterra Offer Volume Forecast – Thursday, October 17
- Aug ‘ 24 EU-27+UK Milk/Dairy Production Report – Thursday, October 17
- Aug ’24 EU-27+UK Dairy Export Volume Report – Thursday, October 17
- USDA Dairy Market News Weekly Midpoint Prices – Thursday, October 17
- USDA Upper Midwest Spot Milk Basis – Thursday, October 17
- USDA Weekly Dairy Cow Slaughter Report – Thursday, October 17
The post Monday Morning Huddle – 14 October 2024 appeared first on HighGround Dairy.