DHM Markets/Marketers: Margins, CME, California powder

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CME Group, Chicago, IL



Daily Cash Trading on Tuesday, April 1, 2014




















California NFDM prices

The weekly nonfat dry milk powder report has been posted to the California Department of Food & Agriculture Dairy Marketing Branch website.

For the week ending March 28, the average price was $2.0262/lb. on total sales of 17.64 million lbs.

For the week ending March 21, the average price was $2.0332/lb. on total sales of 12.75 million lbs.


Dairy Margin Watch: Late March margins tighten

Dairy margins have weakened slightly over the last half of March, due mainly to higher feed costs as milk prices stayed elevated, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC. Margins remain historically strong, at or above the 90th percentile of the past 10 years.

Milk prices continue to be supported by record high cheese prices due to excellent export demand. Cheese prices once again achieved a new all-time high price last week, only to come under some pressure from weaker global prices. The CME cheddar blocks averaged over $2.40/lb. last week, which represented a significant premium to both Oceania and European cheddar pricing, making U.S. cheese prices the highest in the world for the first time in nearly 15 months.

Global milk production is currently on the rise; however, processors have been focused almost exclusively on filling milk powder demand rather than cheese demand. China’s February imports of skim milk powder and whole milk powder amounted to 270.7 million lbs., nearly twice what they imported in February of last year, and the second-highest total on record in China for any month.

USDA recently released its quarterly grain stocks report, revealing corn stocks in all positions as of March 1 at 7.01 billion bushels, up from 5.4 billion bushels last year. Although ample at present, the March 1 corn stocks implies good demand for livestock feeding during the period, and slightly tighter ending stocks than previously forecast.

Soybean stocks in all positions were estimated at 992 million bushels, 6 million bushels below last year’s inventories at this time.

Forward margins remain at historically high levels and attractive to protect.

Visit www.cihmarginwatch.com.

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