Morning Dairy Comments, 02/22/2016

Monday, February 22, 2016

General Market News

· Britain announced over the weekend a referendum on whether the U.K. should remain in EU set to take place June 23

· IEA sees global crude oil supply glut easing in 2017

· Chinese stocks advance after replacement of securities chief

· Dean Foods shares up 7% in premarket trading



Class III, Cheese & Dry Whey

Spot cheese on Friday showed blocks drop ¼ cent to $1.4875 on one offer and barrels bid up ¾ to $1.48 on one trade. This market continues to chop in this tight range as domestic demand stays relatively firm in the face of a challenging export market.

Class III futures followed the path of least resistance chopping lower, as cheese futures were mixed, and whey was soft. On Thursday AMS reported dry whey prices dropped 1 cent to 23.75 cents. Although this week Dairy Market News prices were firm as the lower end of the ranges were up as inventories are relatively comfortable and manufactures are less aggressive with their offers.

Friday’s January Milk Production Report printed up 0.3% for the 23 States against expectations of a 0.8% increase. Although the December milk production was revised up 19 mil pounds or 0.7% higher than the preliminary estimates. Most of the trends have stayed in place as California was down 2.7% although the Midwest has shown some resilience as Wisconsin showed a 4.1% increase.

We look for Class III and cheese to open lower, whey steady

January 2016 Milk Production by State:


Spot Session Results











DOWN 1/4







UP 3/4







UP 1/2











Butter and Non-Fat Futures

The Class IV complex finished the week on a mixed note as spot NFDM was bid up ½ to 74 cents with no trades. This was following GDT results down 1.4% for SMP and down 3.7% for WMP. The Algeria tender wrapped up last week as the EU won most of the SMP business and NZ dominating the WMP volumes. Over 7,000mt of SMP entered the EU’s intervention last week. At this pace the intervention program will reach it 109,000mt cap in about 4 weeks. At that time the EU will open a tender with prices likely lower than the current €1,698/mt price.

The spot butter market was unchanged at $2.055 on an unfilled bid. The past few sessions buyers have been stepping back in to perhaps cover shorts. Butter manufactures out West have been less aggressive acquiring spot cream to churn, and have relied upon their internal or contracted cream supplies. 


We look for the Class IV complex to open steady.


The corn market traded in a tight range Friday despite a stronger than expected export sale number of 1.05 MMT. Commitments remain 25% behind last year’s pace and 12% behind the pace needed to fulfill the USDA’s 1.65 billion bushel number. Producers have been uninterested in selling at current price levels, focusing on cutting expenses relating to the upcoming season’s inputs. 

The soybean market finished Friday with weaker prices after a mostly range bound trading session.  Soybean export numbers came within expectations with 567,000MT. Soybean commitments are down 11% from last year’s pace, but only lag the USDA’s current expectations by 2%.  Recent rains in Argentina have removed any concerns relating to a drought, but an overabundance of moisture has now led to six major producing districts operating under flood emergency conditions.

Concerns over the U.S. HRW wheat breaking dormancy over a month and a half early had futures values firming through the end of Friday’s trading session.  Soft wheat values are still under pressure as European values are weak and Egypt continues to buy their wheat from other cheaper sources.



We expect the grain markets to open higher, corn up 2-4 cents, soybeans up 4-7 cents and wheat up 1-3 cents. 


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