The Chicago Mercantile corn contract traded over $7.00 the first week of May, which is the first time we’ve seen that since 2013. Dairy futures, and maybe even spot prices, have been pulled higher by the increasing feed prices.
With all 10,000 of our lakes here in Minnesota currently frozen solid, this may be a strange analogy, but dairy prices move like the waves rippling out from a rock thrown in the water.
We all talk about dairy demand as if we know what we're talking about. If you are trying to sell cheese to an importer in Mexico and you sell them 10% more than you did last year, is that good demand? What if you had to cut your price in half from last year to make that sale? Is that still good demand?
I promise not to use the words unprecedented, uncertain, essential or new normal. I never want to hear those words again. The main part of my job is tracking, modeling and forecasting the supply, demand and prices of dairy products around the world.
On Jan. 15, 2020, the United States and China signed "phase one" of a trade deal. The countries' relationship has been trending downward for the past two years, and the deal does mark a possible inflection point.
The tricky parts is figuring out whether the 10% drop in prices today
was the blow-off bottom or the 10% drop tomorrow will be the
bottom. Very strong retail sales in the US are keeping physical supplies in balance or a little tight, but consumers are now stocked up
and the retail side will cool down.
The state of the export market for U.S. dairy products is mixed: It depends on the dairy product that you’re exporting and on the destination of the product.