Morning Dairy Comments, 02/19/2016

Friday, February 19, 2016

General  Market News

· New Zealand January Milk Solid Collections flat from last year (down just 0.25%)

· The Gold Bull Begins to Stir

· China’s PBOC injects another $1.53 billion

· How China’s dairy industry continues to grow

· Here’s why oil rout is hurting the global economy instead of helping



Class III, Cheese & Dry Whey

Class III and cheese futures saw a little bounce in pricing yesterday, but nothing more than a normal vibration in a market that is otherwise waiting for more news.  Spot pricing continues to be modestly supportive, but there is not a lot of worry from buyers today and that tends to limit upside price movement on futures. Market participants are also squaring away some positions ahead of this afternoon’s milk production report, which can make for a choppy trade

We’re looking for milk production to rise by 0.8% over January 2015, which would likely be a fairly uneventful number relative to current pricing. It will be important to see if there are any surprises to this report in terms of cow numbers or milk-per-cow, but the bigger issue may be that California seems to be flushing a little early here again this year. Reports from that state over the past few weeks continue to proclaim growing milk production already. Juxtapose that with another healthy weekly slaughter number, however. Dairy cow slaughter under federal inspection was up 2.9%, at 64,600 head for the week ending February 6. Year-to-date slaughter levels are 0.5% lower than 2015 levels, with 369,400 head slaughtered.

Dry whey futures saw an uptick in both price and volume yesterday. 114 contracts traded between unchanged and about ¼ penny higher on the day. The market looks to be opening a little weaker this morning, but we expect a more mixed trade this morning. The Central Mostly Dry Whey powder price was up 0.25 cents from the previous week at 24.25 cents, while the Western Mostly price was steady at 25.00 cents.

We look for a mixed opening for Class III, Cheese and Dry Whey to open steady/lower.

Spot Session Results


















UP ¼














UP 1 ¼




Butter and Non-Fat Futures

Butter futures found some support yesterday stemming recent losses above the $2.00 level along with a rousing spot session in which 15 loads of butter traded $2.0425 and $2.0575.  The $2.00 level looks to be, for at least the time-being, a level of pretty good support for butter.  We expect this to continue for potentially the next several weeks.  We look for butter futures to be mostly mixed this morning, but still supported around current levels going into the weekend.

Spot NFDM dropped a penny, but futures wanted nothing to do with weakness yesterday.  With the exception of the March contract, futures prices got what appears to be a nice little short-covering bounce.  We’d expect that the market will chop back to the downside in short order since it doesn’t look like short-covering will scare new longs into the market. Not yet at least.

The Dairy Market News Western Mostly NFDM price was unchanged from the previous week at 72.75 cents per pound. Last week’s CA Weighted Average price was 77.67 cents, down 0.30 cents from the previous week.

We look for the Butter to open slightly higher, NFDM to open steady/lower and Class IV to open mixed.


The grain markets have been rather choppy and quiet here lately.  By far the most anticipated event today is the holiday-delayed export sales report, which showed some strong sales for corn in particular. Overall, however, the market is dealing with large crops in both North and South America and that continues to keep a lid on prices.


The latest brick in the bearish fundamental wall is a set of extended NWS forecasts that look very favorable for the U.S. planting season – warm and dry for most key areas for March-April-May. Range-bound grain trade has been the norm since mid-Jan and there’s little expected to change that as we coast into the end of the week.
We look for corn and soybeans to open slightly higher this morning.

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