In your July issue . . .
THE WILD COMMODITY RIDE CONTINUED as Class III futures contracts dropped by a $1.40 average between June 1 to July 7 trading on the CME. At the beginning of June, July-to-December contracts averaged $23.70, and by early July that same bundle had receded to $22.30.
CLASS IV ALSO FELL, but only by 60 cents during the same window. At June’s open, the six-month group traded at $24.75 and fell to $24.10 by July 7. July Class IV traded at $25.63 and August at $24.71.
WHILE MANY COMMODITIES REACHED HISTORIC HIGHS earlier in 2022, prices began to slip as investors have seen market signals indicating that inflation may ease. Overall, commodities garner extra interest from traders and investors to counteract rising prices.
CORN FELL 26% off its historic high at the end of the second quarter on June 30. Soybeans fell by 18% and wheat dropped 32%. On the fuel front, gasoline and diesel prices showed some relief while natural gas, a key ingredient for fertilizer, dropped by 65%, reported FactSet. At the close of July 7 trading, September corn stood at $6.10 per bushel.
RISING INTEREST RATES have begun to stomp down inflation after Federal Reserve officials voted to raise their benchmark rate by 0.75 points in June. That was the largest one-time rate increase since 1994. The move was a counter offensive to inflation that reached a 40-year high.
THROUGH MAY, THE CONSUMER PRICE INDEX had been climbing by 8.6%. That, too, is at a 40-year high with half attributed to fuel and food.
EVEN THOUGH RISING INTEREST RATES could spur a recession, the Federal Reserve appears poised to take an even more restrictive stance in the coming months as rampant inflation is a greater concern.
BUILDING ON A RECORD 2021, U.S. DAIRY EXPORTS grew even further in May by posting a record monthly export volume, by growing 4.8% over the same time last year. During the first five months of this year, exports grew 1.3% when compared to the previous year.
CAN THOSE SALES HOLD? That question is being asked as the U.S. dollar reached a 20-year high when compared to a bundle of international currencies. When the dollar is strong, U.S. goods cost more to international customers, and that can reduce sales to other countries.
CLASS I, II, AND IV SET NEW RECORDS IN JUNE with Class II leading the way at $26.65 per hundredweight (cwt.), while Class IV rose 84 cents to notch a new $25.83 watermark. The $25.87 Class I price, which is an average of Class III and Class IV plus 74 cents, was also a record.
CHEESE PRICES BEGAN TO SOFTEN, and hence Class III prices receded to $24.33. That was down 88 cents from May’s historic high. Overall, cheese production has grown for 19 straight months.
WHILE MAY’S ALL-MILK PRICE NOTCHED a $27.30 mark, the new record is expected to be broken for the fourth straight month once USDA economists calculate and release June’s All-Milk price.
THIS MONTH MARKS A FULL YEAR of declining U.S. milk production, reported NMPF’s Peter Vitaliano. “Beginning last June . . . within the space of four months . . . production downshifted from 4.6% annual growth to nearly 1% under a year ago by September. That’s an almost unprecedented drop over that short of a space in time.”
FROM SEPTEMBER 2021 TO MAY 2022, the average monthly changes on key statistics were: dairy cow numbers, down 0.7%; milk production, down 0.7%; milk solids, up 0.2%; and milkfat production, up 1%.
“THIS UNUSUAL AND PROLONGED PERIOD of constrained U.S. milk supply has generated a strong milk price run up, as domestic demand for dairy products, particularly in food service, has been recovering from the pandemic, and export demand has increased in face of lower production for other major world market suppliers as well,” added Vitaliano.