Lackluster Dairy Auction Results Sends Butter Prices Reeling

Butter futures took another trip south today spurred by dairy activity around the globe. Butter futures for September delivery are down $0.015 cents today currently trading at $0.236 per pound at the Chicago Board of Trade. While European dairy activity “appears” optimistic, the latest in a series of dismal GlobalDairyTrade actions in New Zealand suggests dairy prices are heading lower with butter futures leading the way. Although whole milk powder rose nearly 2% recently, the products that are made with it have seen losses. Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shared his fundamental view of the butter futures market by stating, “The butter (futures) market was believed to be strong because of the strength of the European market and the reasonable demand for butter and cheese.” Craney adds, “In other areas of the world, such as on the Asian continent, the weak demand is helping to shift prices lower.” The trend for butter futures has been sideways to down at best since a significant rally in mid-June. What butter futures prices are doing to the dairy farmer may be a boon to us consumers. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...

Butter Prices On the Rise (Again…)

Butter prices are said to be rising substantially for two-fold reasons: a demand for milk-fat, and a recent drop in production. So what is going on with the domestic butter market that hasn’t seen these high $2 per pound butter prices since November? California dairy farmers are the nation’s top producers of butter and they have been reportedly struggling with lower profit margins since last year which has caused a 1.5% reduction (that’s 8.8M pounds!) in butter production. In other parts of the nation the dairy-milk supply appears to being devoted toward the making of cheese – at the expense of the consumers of butter. “With CME spot butter prices now over the $2/lbs level, it might make more sense for dairy producers to reconsider how they allocate their product,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, regarding the fundamental assessment of the CME spot-butter market. Craney added, “It wouldn’t be surprising to see more milk headed toward the churn at this point, rather than the cheese vat.” The Chicago Mercantile Exchange’s spot butter prices – according to my study – are clearly in an uptrend. Before butter prices get too crazy I’m confident the dairy producers will see the profit margin potential to step up production once again. At least from a business prospective this makes sense. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...

Butter Futures Expected Lower With Milk Production Increase

Butter eaters around the world will delight with an extra helping as wholesale milk prices continue to drop from all-time highs in September. Dairies have kept the milk flowing like never before the former high milk (futures) prices have helped to expand production around the world. USDA data shows farmers have taken advantage of the spike in milk prices as well as low animal-feed costs which has sent production for the year ending in October up almost 2% from the same period last year. Top producers around the globe are contributing to the global milk glut with our domestic dairy exports dropping to a year and a half low. “The all-time milk (futures) highs this past September drew a tremendous response from dairies “down under” and Europe,” said Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, sharing his fundamental analysis insight regarding the current milk futures situation. Medina added, “With more milk & butter on the int’l market, our domestic brands have backed-up putting pressure on milk (futures) & butter (futures) prices. That simple.” As with falling oil (lowering transportation costs) and overall commodity prices, milk futures and butter futures are not immune to glut prices. We don’t trade butter futures or milk futures from the Chicago Mercantile Exchange, but this human interest story is out to assure the financially “tapped-out” public that the pendulum does indeed swing the other way! ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER...