Downes-O’Neill dairy broker Dave Kurzawski looks for more upside on the cash cheese market. Speaking in Wednesday’s DairyLine, Kurzawski said the market appears to be in balance in the mid $1.30s per pound “although the buyers put up a pretty good fight last week,” and he expects them to be back this week.
He adds that, when you also consider the butter price ($1.6150), which he doesn’t see dropping any time soon, that gap will likely be narrowed and cheese will soon be above $1.40 again.
He doesn’t expect much market reaction to National Milk’s proposed changes to U.S. dairy policy but quickly added that the market has “substantial premium on Class III futures right now,” but doesn’t see anything in the Federation’s proposal that is bullish or bearish for milk. He called it “progressive,” and one he likes.
Dairy processors have also praised the plan with the exception of its supply management provisions. Kurzawski said that when you compare National Milk’s version of supply management with other proposals, the Federation plan is leaner and more mild and there’s a sunset provision and “appears to be a little bit more palatable than some of the other growth management programs that are being discussed.”
When asked about the CME’s announcement of the June 21 startup of a new cheese futures and options contract, Kurzawski said “it’s going to be a great contract,” praising it as another risk management tool for dairy producers or end users.” He warned that a lot of times a new contract will have problems in it infancy but he doesn’t believe that will be the case for this one but “only time will tell.” For more information, call Dave at 1-800-231-3089.