Implied Class III moved higher today, dragging futures along with it. Spot butter continued to decline, and Class IV followed along. The decline in butter prices comes despite inventories below expectations and short of the five-year average. Inventories are telling us one thing, but the CME market, butter production and cream supplies all point to surplus butter. If the inventory numbers are correct and we get no material revisions higher, we should expect tight supplies in Q4. The big question will be how much of the holiday demand has already been accounted for and is that what’s eating into those inventories on top of record exports?
The CME butter market resumed its downward trajectory. The spot price dropped to $2.185 per pound, shedding 5.5¢ to hit a new year-to-date low, with one load exchanged. Spot blocks rose 1.5¢ to $1.81 per pound, while barrels jumped to $1.80, 4¢ higher. One lot of blocks traded. NDM slipped a half cent to $1.2525 per pound, with one load changing hands. Dry whey held steady at 57¢.
The drop in CME butter carried over to futures markets. Q4 Class IV contracts declined to $17.85 per hundredweight, a 19¢ loss. Fourth quarter butter futures tumbled to $2.3425 per pound, 6.04¢ lower. Class III futures jumped, with Q4 settling up 24¢ at $18.10 per hundredweight.
Milk powder prices slipped at this week’s GlobalDairyTrade Pulse auction. SMP closed at $1.22 per pound, down 4.9% versus the latest Pulse and -1.6% from the previous main event. WMP eased to $1.79 per pound, down 0.1% on a Pulse-to-Pulse basis and -1.7% compared to the most recent main auction.
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