Let's Chat Markets is a weekly podcast presented by HighGround Dairy, hosted by analysts Alyssa Badger and Lucas Fuess. Every Friday, they sit down to recap the week in dairy markets and summarize recent reports and relevant news. The podcast can be found here, or wherever you listen to your podcasts. Subscribe so that you never miss an episode!
Welcome back to another episode of Let's Chat Markets! Just me yet again this week with Alyssa still out of the office. We are excited to welcome her back on Monday–just in time for our monthly forecast update and the Global Dairy Trade auction that we are anticipating both on Tuesday the 15th.
Let's recap this week first. though. Taking a look at markets, we certainly ended the week on a high note. Strength across most products here throughout most of the week but highs across the board at the CME Spot Market into Friday. In cheese, the block market settling at $1.90 even during the first four days of this week, unchanged versus the end of last week, and then bumping up just a little bit on Friday to end the week. Barrels even higher than blocks closing at $1.91 on Friday. Strength persisting there in the cheese market, partially supported by higher class IV overall. Nonfat dry milk $1.8975 closed on Friday. We are at high is not seen since April of 2014 so sentiment is really unchanged there with demands still firm and supplies pretty tight from most regions of the globe. Butter, a very strong finish to the week, up significantly on Friday closing a $2.7550. That's the highest price since January 24th so moving close to about two or three-week highs in the butter market with supplies still tighter. Whey seeing some weakness into the middle of the week but closing also on a positive note, up on Friday.
On the domestic side of things, which was primarily where we were focused over this past week. Last Friday after recording, we did get the dairy products and dry stocks report from USDA. This is December data, of course. Significantly in there, we are watching this cheddar production number that was weaker versus prior year for the third consecutive month. That is maybe a little bit surprising considering some of the expanded capacity. Also, Italian cheese production lower as well but on a total cheese basis, able to eek out a slight gain, up 0.1%. Butter, not surprising, down 13% versus prior year. Just not enough milk in this tighter supply situation that we've seen as reducing the flows into those class IV plants. Nonfat dry milk and skim milk powder a similar story as well, down 21% versus prior year on a combined basis. On nonfat, there was a little bit of a November revision higher, both on production and stocks, but I don't think it was enough to really change sentiment overall. December nonfat dry milk stocks slightly higher yet again versus November but overall we are still in a pretty tight supply situation there in that market.
On Tuesday this week we did get dairy export data from the U.S. as well. Kind of a mixed picture across products, maybe a little bit disappointing to end the year. Nonfat dry milk, dry whey, and higher protein whey products, all weaker versus prior year. Although, I think if we look at the bigger picture we can celebrate that 2021 was a record year for exports overall. Cheese in December still strong, it was the sixth consecutive month of gains with decent demand from Mexico, really supporting that. On nonfat dry milk, though, fell to the weakest months since February of 2020 so 22-month lows there in nonfat dry milk shipments–possibly a sign that port congestion is impacting the ability of that product to move overseas, especially considering how strong global demand is and how prices have continued to tick higher. Dry whey, negatively impacted by China. Shipments falling to a 23-month low there. I think as the Chinese hog herd has rebounded, maybe fewer piglets in the country has reduced the need for dry whey overall.
At the beginning, I just mentioned that GDT is next week. No changes from Fonterra on both their 12-month overall volume forecast and in, specifically, offer volumes at the next trading event. Looking at the Singapore Exchange, traders generally expecting slightly higher prices yet again across all products. Certainly whole and skim milk powder vats as well.
I think that about does it! As I mentioned, GDT and our comprehensive forecasts are being released next week. If you have any questions in the meantime, especially as bullish sentiment largely persist across a lot of these markets don't hesitate to reach out, cheers!
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