The slow sneak higher Grade A Non-Fat Dry Milk has caught traders by surprise as the rest of the dairy sector is knee deep in doom and gloom from high milk production woes. The last week has left everyone in awe at the strength of the cash market to continue to find demand for Non-Fat Dry Milk and Skim Milk Powders.
Exports have been strong; however traders are beginning to speculate as to when we will hit the threshold of value to the world market, especially in the last week as prices skyrocketed higher. At some point, high prices weigh on demand, and the fear is that we are there now. But buyers keep buying, even today, after an impressive close last week, buyers secured another 5 loads, increasing the price to new heights by another 1.75 cents.
Class IV milk has reaped the benefits of the strength of Nonfat Dry Milk as butter has fallen back in price despite the strength of the milk powders. For every penny that Grade A Nonfat Dry Milk increases, it heavily influences the Class IV milk price by approximately 9 cents. Dry Whey, on the other hand, only impacts price by 6 cents for every 1 cent move.
While the question of if the demand will continue is on the forethought of traders’ minds, what goes up usually comes back down. In the meantime, we are going to be thankful for the one bit of shining light in the dairy market today and hope to reap the benefits in the Class IV price for a bit longer.
Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net.
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