Dairy and Grain Report

Dairy and Grain Report

November 15, 2019


  • Turns out past performance may be indicative of future results on occasion. As noted here a week ago, week 45 historically marks fourth-quarter peak pricing for barrels…and here we are in week 46 and prices are lower. CME spot barrels finished the week at $2.1975 per pound, down $0.1325 from last Friday. Some more barrel volume is finding its way to Chicago with four cars trading. Blocks tumbled back below $1.90 for the first time since late August, with Friday settlement at $1.8900 per pound, down $0.1250 with three lots trading.
  • The decline in spot prices sent nearby futures reeling, with December Class III contracts seeing a 53-cent drop on the week down to $18.56 per hundredweight. But first quarter contracts are in convergence mode. January through March cheese futures fell to $1.8183 per pound, down $0.0060. First quarter Class III contracts rose to $17.42 per hundredweight, gaining 13-cents.
  • Contacts report that barrels were a little more available this week, while both 40-pound and 640-pound blocks were still easy to come by. With  640s readily available, are some end users shifting away from barrels to meet their needs? USDA noted spot milk in the Upper Midwest was trading within last week’s range. That flat class midpoint is more expensive that the usual $1.10 under class average over the last five years.
  • Looking ahead to next week’s Cold Storage report, total cheese inventories typically drop by 16 million pounds between September and October. That would take October 31 inventories to 1.353 billion pounds, down around 1.5% year-over-year.
  • How are consumers going to encounter, and react to, higher wholesale cheese prices? That’s the question many market participants are asking. Grocery scanner data indicates that, so far, they’re still buying. Persons familiar with the data say volume sales picked up around 1.0% year-over-year for the four weeks ending November 2. The data also noted higher prices—particularly for branded product. Bureau of Labor and Statistics data, meanwhile, cited cheddar prices averaging $5.28 per pound in October, up 2% on the year but down 2% on the month.
  • History says that chunk cheese promotions heat up heading into the holidays, with more cheese platters on the menu. High wholesale prices this year may be stifling some of that activity. The USDA National Retail Report counted 6,427 stores promoting eight-ounce chunks next week at an average price of $2.33. That was 3,620 fewer stores running ads than last year, with prices 35-cents higher. For shreds, 9,358 stores are running ads with an average price of $2.36. That’s 516 fewer stores than the year prior and 17-cents higher.
  • The US Census Bureau Retail Sales report cited October “food and drinking place” sales at $65.3, down 0.3% from September but 4.7% higher than 2018. Higher menu prices continue to play a big role in supporting the growth in total dollars collected, however, with “food away from home” inflation running 3.3% year-over-year.
  • For the first time in 18 weeks, German gouda prices moved…and moved higher. Prices climbed to €3,125 per metric ton ($1.57 per pound), up 1.6% in Euro terms. 


  • History sometimes repeats itself in the butter market, too. The records show week 46 butter prices are typically higher than week 45—this year was no exception. CME spot butter prices rose to $2.0675 per pound, picking up three-cents with eight lots changing hands.
  • The catalyst? A symptom of the season. Thanksgiving is just around the corner and people are ready to dig into cream-heavy dips, dessert, and drinks. Eggnog, anyone? That means more butterfat diverted from churns and into other products. At the same time, this week is one of the last ones that make up the final push to finish up Thanksgiving orders. This last pull on fat—and sometimes bulk butter—can temporarily change the dynamics of the entire complex.
  • Anybody looking for butter shouldn’t need to search too hard, with reports pointing to plentiful bulk supply. Cream multiples did push a little higher this week as dip and whip demand picked up, but are still below average for this time of year. USDA implied Class II multiples in the Upper Midwest steady at 130, off 11 points from last year and a point lower than the five-year-average. Eastern implied multiples came in at 130, up from 129 last week but off from 154 last year and the 139 five-year average. USDA reported the cream multiple across all classes in the West at 115, up a point from last week, but down from 123 last year and the 121 five-year-average.
  • Next week’s USDA Cold Storage report will provide better insight on October inventories. Over the past five years, stocks decreased by 29 million pounds from September to October. An average drop would put inventories at 274 million pounds, 18% higher than October 2018.
  • Thanksgiving is two weeks away, and despite lower CME butter prices, promotional activity has yet to really heat up. USDA’s National Retail Report showed an average price of $3.17 at 9,012 stores with ads on one-pound packages. For comparison, butter was advertised at $2.88 per pound at 11,977 stores last year. However, we are starting to see week-to-week prices declines heading into the holiday.
  • International prices were steady across the board. German values lingered at €3,625 per metric ton ($1.77 per pound at 80% test), while the Dutch quotation held steady at €3,550 per metric ton ($1.74 per pound adjusted to 80% fat).

Nonfat Dry Milk

  • Another week, another new high. CME spot nonfat dry milk prices climbed to $1.2175 per pound on Tuesday—up $0.0125 from last Friday to the highest price in five years—and held for the rest of the week. Volume totaled 18 lots.
  • First quarter NDM futures jumped to $1.2361 per pound, $0.0164 higher on the week.
  • While anecdotal reports say supply is incrementally better, the demand story may hinge, in part, on the US cheese market. Strong demand from cheesemakers seeking to fortify vats has been a major factor supporting prices the past several weeks. If the cheese market continues to unwind, that may alter appetites for NDM for fortification going forward. International buyers, however, reportedly remain active.
  • Snug European supply continues to push prices higher. The Dutch SMP quotation rose to €2,490 per metric ton ($1.25 per pound), up 2.0%—the highest price in five years. First quarter NZX SMP, meanwhile, climbed to $2,995 per metric ton ahead of next Tuesday’s GDT auction, $20 higher.

Dry Whey

  • Temperatures may be falling, but CME spot dry whey is feeling the heat. Prices climbed to $0.3200 per pound, gaining $0.0450 on the week. Volume totaled 29 cars.
  • First quarter whey futures pushed to $0.3713 per pound, a $0.0290 increase.


  • Uncertainty around a US-China trade truce kept the soybean market on edge throughout most of the week.  Friday had a more positive feel, with USDA announcing China was the top buyer of US soybeans last week, accounting for 61% of weekly sales. Futures still finished down on the week. January contracts retreated to $9.1825 per bushel, losing $0.1275.
  • Brazil corn exports continue to outpace US shipments, due to its record harvest earlier in the year. According to official Brazilian data, the country exported a historic 34.7 million metric tons of corn year-to-date through October—60% higher than the prior record for the period. The US, meanwhile, exported 36.2 million metric tons in the same period, 40% lower on the year.
  • Increased competition and a struggling harvest weighed further on nearby corn futures. December corn futures dropped to $3.7125 per bushel, six-cents lower.


The United States remains our major ally, we need them, we are close and we share the same values. I care a lot about this relationship and have invested a great deal in it with President Trump. But we find ourselves for the first time with an American president who doesn’t share our idea of the European project, and American policy is diverging from this project. We need to draw conclusions from the consequences.

—Emmanuel Macron

Please click here or on the button in the sidebar to download the report or, for Lotus Notes users, copy and paste the following url into your browser to access the report.


Josie Russo





Futures trading and OTC swaps trading involve substantial risk of loss and are not necessarily appropriate for all persons.  Past results are not necessarily indicative of future results. Statements of fact herein contained are derived from sources believed reliable, but are not guaranteed as to accuracy, nor do they purport to be complete.  No responsibility is assumed with respect to any such statement, nor with respect to any expression of opinion herein contained.  Any data contained herein is proprietary and may not be copied, disseminated, or used without the express written permission of Roger W. Blimling, Inc., Blimling and Associates, Inc., or  Blimling Management Services, Inc.