Class III futures ended the week with mixed, but mostly lower price action.  The April contract gained 8 cents while the remaining 2015 contracts settled between 3 and 18 cents lower with just over 900 contracts changing hands.  The second quarter futures pack average shed just 2 cents Friday to finish the week’s trade at $15.72, having dropped 59 cents lower over the course of the week while posting a month over month decline of just 11 cents.

Friday’s trading session saw a late day bounce higher in prices with some short covering ahead of the weekend, yet the downward trend looks to remain in place as milk production is steady to increasing as we approach the spring flush.  Milk production in the West has recently been steady to increasing while some production levels have dipped in the North Central region due to recent frigid temperatures.  Production levels in the East and Northeast has been climbing.

The U.S. dairy cow slaughter under federal inspection for the week ending February 21st was estimated at 57,300 head, down 6,400 head (10%) from the week prior while 1.9% lower than last year during the same period.  Year to date the estimated slaughter for the year is 492,900 head, 4.6% higher year over year. 

We look for Class III to open 5 to 20 cents lower

Cheese Futures

Cheese futures settled between unchanged and 1.1 cents higher in the March through May contracts while the June through December contracts fell between 0.4 and 1.5 cents lower on nearly 560 total trades.   The second quarter futures pack average decreased by just 0.1 cents to close out the week at 1.6253, yet fell 3.94 cents lower over the course of the week while marking a month of month decline of 1.77 cents.  Cheese production has been increasing along with available milk supplies while buy side demand has offset the increase in supply leaving prices relatively stable of late. 

We look for Cheese futures to open 0.5 to 1.5 cents lower

Dry Whey Futures

Dry whey contracts ended Friday’s session with contracts settling between unchanged and 1.7500 cents lower.  The second quarter futures pack average slipped 0.1750 cents lower Friday to settle at 42.0000 while dipping 3.4000 cents lower week over week, yet has declined by just 0.5833 cents month over month.

We look for Dry Whey to open steady to a penny lower

Class IV Futures

Class IV contracts sold off in the face of weak butter and NFDM price action, settling between unchanged and 55 cents lower with the April through August contracts declining between 26 and 55 cents.  The second quarter futures pack average shed 37 cents Friday to close at $15.18 with a week over week decline totaling $1.08 and has lost $1.16 in value over the previous month. 

We look for Class IV futures to open 15 to 25 cents lower

NFDM Futures

NFDM futures settled mostly lower, as the December contract remained unchanged while the remaining 2015 contracts fell between 1.25 and 4.00 cents lower.  The selling pressure was ignited by yet another decline in the spot price, which fell 2.5 cents lower to $1.0250 with a total of 18 loads traded.  The CWAP for the week ending February 27th posted at $1.0512, up 5.27 cents (5.3%) from the week prior while 8.6% higher month over month.  Total sales for the week were estimated at 8,144,002 pounds, down 38% week over week.  The second quarter futures pack average closed out the week’s trade at 114.067, down 3.422 cents on the day while having dropped 11.441 cents lower week over week.  Over the past month the second quarter pack has declined by a total of 10.775 cents.

We look for NFDM futures to open 0.5 to 1 cent lower

Butter Futures

Butter futures closed out the week with contracts settling between unchanged and 2.500 cents lower, with the greatest losses posted in the April and June contracts.  The second quarter futures pack average dropped 1.492 cents lower to end the week at 178.175 while losing a total of 4.083 cents in value over the past week, yet has declined 2.825 cents in the last month.  The front month butter contract price now sits in line with its five year average, depicted in the graph below, thanks to its recent surge in price and is the only dairy market price that does not reside within the lower 30% range.  Butter production has remained steady of late as spring holiday demand orders have increased lately, yet manufacturers continue to build inventories.  Once this holiday demand has subsided we expect to sell butter prices decline as the spring flush sets in. 

We look for butter futures to open steady to a penny lower


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