Dairy market jittery ahead of key USDA monthly reports
Valentine’s Day must have fanned the flames of dairy bulls as the Fonterra Global Dairy Trade auction registered its third consecutive hike in prices. The Feb. 15 event saw prices rise across all product categories with a cumulative growth of 4.2 percent. Core products such as butter (up 5.1 percent) and milk powders were the largest gainers. Whole milk powder and skim milk powder rose 4.2 percent and 6 percent, respectively.
New Zealand is now past peak flush, and demand from Asia was evident as traders returned from the Lunar New Year holiday. Prices have appreciated since the start of the year, up more than 13 percent on keen demand as many countries, such as China, attempt to rebuild stocks of dairy products. This is one of the strongest bull cycles in memory, with the composite benchmark showing a nearly 45 percent increase over the past year and one month. Bidders have not even been discouraged by dollar strength as the Fed appears poised to start tapering and raising interest rates to stem inflation.
So, what are the next critical data points for buyers to evaluate the state of dairy markets? This coming week will see the release of two important reports. On Tuesday, Feb. 22 (3 pm EST), the February cold storage report was published, covering inventories of dairy products such as butter and cheese. Today, at the same time, will see the publication of the all-important milk production report, including key statistics of herd size, yield per cow, and total production through January 2022.
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