Whey Price Dip is Substantial

December 13, 2013 — FC dairy broker Dave Kurzawski said on this morning’s DairyLine that the large spread between block and barrel cheese will eventually come back in line and “the pattern the past several months is that when the spread gets out of whack the barrels rise to meet the blocks and that patterns seems to still be in people’s minds as we enter the second half of December.”

The big issue Thursday was the future’s response to the cash bidding. The response was relatively negative, he said, steady to about 8 cents lower. Class IV, nonfat, and butter futures were down as well, he said, and indications to him are that this is a short-lived scenario we’re seeing.

When asked if the failure to pass a Farm Bill was having any effect on the markets, Kurzawski replied, “Not really. The market hasn’t focused on the fact that Congress can’t get it together,” and commenting on Land-O-Lakes joining the Global Dairy Trade auction, Kurzawski said it was a “step in the right direction.” He believes there’s going to be more and more of the large U.S. dairy based processors getting involved with global export and certainly global pricing.”

The 3.4¢ fall in the AMS-surveyed dry whey price is also weighing on trader’s minds, according to Kurzawski. “The questions are coming fast and furious as to why this is going on,” he said, but he is also hearing that dry whey has been trading slightly below the AMS prices anyway. “It is a substantial drop,” he said, “And we’re not sure why that is but there’s been talk that there’s some supply out there that’s starting to make its way to the market.”

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