October 11, 2017

Powder Prices Plummeting

 |  By: Know Your Market

In August of 2015 the nonfat dry milk market made a new low at 68 1/2 cents. It was the lowest price that had been witnessed since nonfat dry milk began trading at the CME near the turn of the century. That low would be again tested in February of 2016 when the markets returned to a price of 69 cents. That price was repeated again in April of that same year. 

On Wednesday prices dropped another 3 1/4 cents to finish at 77 1/4 cents. This adds to Tuesday's drop of 1 3/4 cents, pulling prices down 5 cents in the last two sessions and returning it to levels not seen since last Spring. The sharp selloff puts an uneasy tone in the marketplace, not just for powder but for the protein market in general. The reaction in the whey futures market was to drop 2 1/2 to 4 1/2 cents in 2018 futures contracts. The first half of next year carries an average price near 30 cents per pound, while nearby contracts remain at 35 cents. 

Rounding out the spot session, butter rose 2 cents to finish at $2.34 1/2 per pound. Barrels rose a penny to move to $1.71 1/2 and blocks finished unchanged at $1.75 3/4. 

Despite the positive effect of the higher barrel trade, the softer powder market brought Class III values lower. The average price for the fourth quarter now stands at $16.22, down 7 cents. Class IV markets dropped as well, finishing at $14.95, down 4 cents in their 4th quarter average. 

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