Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The top news item for dairy prices in general is the oppressive heat wave in the western U.S. right now. The heat, which is in the triple-digits during the day and high 70s to high 80s overnight, is already taking a toll on both quality and quantity of milk produced ― and it’s not over yet. Based on preliminary reports we hear, that is already responsible for the loss of up to 9 pounds per cow in production.
Overnight, Class III futures were 5-15 higher on account of an excessive heat warning until Wednesday for the central and southern San Joaquin Valley in California.
California is not the only western state with unseasonably hot temperatures, and we will have further updates as to the extent of milk losses going forward. But, for now, we think that such hot weather ― even considering cooler temps in the Upper-Midwest ― is more than enough to provide a firming bias for Class III futures to start the month of July and perhaps provide a pivot point for Q3.
Spot session results:
Block cheese: $1.6375 (unchanged)
Barrel cheese: $1.5975 (down 0.5 cent)
Grade A NFDM: $1.73 (unchanged)
Butter: $1.4275 (unchanged)
The grain complex collapsed with the USDA report Friday. Everyone was focused on the Stocks Report. And while the report was friendly, there wasn’t the big surprise that would have sparked a rally. The surprise of the reports came in the Acreage Report, as corn plantings are now estimated to be higher than they were for the March Intentions Report at 94.7 million ― not lower as everyone expected.
The next chance for a planting revision will come in the August Monthly Supply and Demand Report. The August Report will also give us the official yield estimates.
We look for old crop grains to open higher and new crop corn slightly lower, while beans and meal should be firm.
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