The Class III complex opened with continued strength from yesterday, propelled by anecdotal news of cheese being sold above spot market prices. The CME spot auction followed suit, with both blocks and barrels bidding higher with no aggressive seller present. While US prices are a significant discount to international prices and should be incentivizing exports, international price discrepancies are rarely filled quickly. Eighteen dollar handle Class III is likely to represent a profitable margin for many producers and continued movement higher in futures may be met by new selling.
Today’s Highlights from Ever.Ag’s Know Your Markets
- CME cheese markets continued to rebound. Spot blocks jumped to $1.7250 per pound, 5.5 cents higher, and barrels advanced to $1.6700, adding 2.5 cents. Volume traded: two lots of blocks and three of barrels. Spot butter gained a penny to close at $2.3400 per pound, with nine loads exchanged.
- US dairy products currently sit well below global competitors’ pricing, notably so when adjusted to US dollars, though tariffs and other factors will also have an impact on demand. The spot NDM average for the week so far is $1.16 per pound versus $1.24 in New Zealand and $1.21 in the EU. The US butter average of $2.33 is more than a dollar below New Zealand’s $3.35 and EU’s $3.57. US cheese is also less expensive at $1.67 compared to $2.23 in New Zealand and $2.39 in Europe.
- The February inflation rate was lower than expected, though tariffs could cause things to heat back up in future months. Inflation rose 0.2% on the month and +2.8% year-over-year versus +0.5% and +3.0% in January. Grocery prices were flat month-over-month and up 1.9% on the year, while menu prices ticked up 0.4% and +3.7%.
Ever.Ag - The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.
