Heat's Affecting Cheese Markets, COOL Will Cost $1B, Corn's Getting Close to $5

Today we talk about how the hot weather is boosting cheese markets and hurting the butter complex. A Meat Institute study suggests Country of Origin Labeling will cost the industry $1 Billion annually. Corn and soybeans continue to rally. 

Transcript

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Hello and welcome to Chapp EDC. Here's the top stories from Blackbeard Daily today, which is Friday, July 24th. Today we're going to focus on how hot weather is affecting cheese markets, the impact of reinstating country of origin labeling, and some advice on planning the remaining 2026 crop marketing activities. So let's get to it. Starting off with Dairy News and an article on dairy herd management, cheese has been feeling the effects of the hot weather while Cow Comfort has been struggling with the inability to cool cows during a massive heat dome covering most of the country. With heat and uncomfortable cows, we see almost immediate drops in production, limiting supply for buyers and processors. While the timing of heat is something we see this time of year and milk production usually has a low by mid-summer, cheese plants are still feeling the struggle of sourcing milk for production. Many buyers have turned to the spot market to meet immediate needs, creating some excitement, especially in the cheese market. Blocks increased by over 17 cents in July, where barrels have increased by nearly 12 cents. On the other hand, butter has not had the same reaction. Cream remains plentiful despite lower milk production. Futures have fallen since the end of June and cash has declined over eight cents. Processors have not reduced production rates as they have not seen the supply constraints seen in the cheese market. While Class 4 has been able to gain ground since the first of the month, it has been handicapped by the downturn in butter, even though non-fat dry milk has been supportive. For producers, long-term hedging does not look as attractive as the prices today. Using market solutions that protect downside as opportunities arise can be useful tools as they allow for some upside should we see production take a longer time rebounding than expected, especially while demand is as strong as we see today. Any supply concerns can turn into bigger opportunities, but a month of hot weather isn't enough to get there today. Switching over to beef news and an article on Beef magazine, the Meat Institute announced a new economic analysis by Decision Innovation Solutions, finding that reinstating mandatory country of origin labeling for beef and pork would impose significant costs, which would be more than a billion dollars annually across the U.S. meat supply chain, increasing expenses for producers, processors, retailers, and consumers while providing little evidence of increased consumer demand for labeled products. The study updates previous USDA and industry research using current production, trade, consumption, and market data to evaluate the potential impacts of reinstating the 2013 country of origin labeling requirements. The findings show that compliance costs associated with tracking, record keeping, product segregation, labeling, and verification would substantially increase costs throughout the beef and pork value chain. According to the study, reinstating country of origin labeling would cost the beef and pork industries approximately $1.02 billion in just the first year, including $721 million for beef and $296 million for pork. Most of the expenses would be recurring operational costs rather than one-time investments. Wrapping up in commodity news and an article from Farm Progress, farmers face critical decisions as the market's July rally presents what economist Ed Usett calls a second chance to capture profitable pricing opportunities. He recommends diversifying strategies and selling the carry to capture returns instead of betting on storage alone. Looking at markets, December corn futures rose three and three quarter cents to four dollars and eighty-eight and a half cents a bushel late in overnight trading. After earlier reaching 489 and a quarter, the contract's highest intraday price since $4.90 and a quarter on May 22nd. September corn rose 3 cents to $4.65 a bushel. Corn Technicals extended this month's bull run overnight with December futures poised for a fifth straight daily advance and continuing to close the gap with the psychologically important $5 mark. There appears little standing in the way of further upside. Near-term resistance comes in around $4.90 with additional upside targets, including the May high at $0.5.06.5. Futures are up almost 63 cents or nearly 15% from a contract low of $4.25.3 quarter cents on June 30th. November soybeans rose 8.5 cents to 12.47.5 late overnight after earlier climbing to 12.47.3 quarters, which was the highest intraday price for a new crop contract since December 2023. Futures are pacing for a fourth advance in the past five days after a jump of 16.25 cents Wednesday. August soybeans rose 8.25 cents to 12.41.25. Soybeans extended bullish chart momentum overnight with November futures up 40 cents for the week and pacing for the contract's fourth advance in the past five days. November futures took out resistance around $12.35 and $12.40, putting the $12.50 level in both sites and stirring talk of a potential longer-term run to $13. Well, that's all for now. As always, thanks for tuning in. If you found it useful, drop a comment. Be sure to check out BlackDirtDaily.com as well for the full stories behind these topics. And don't forget to sign up for the Black Dirt Daily newsletter. I'll be back Monday with more business news across Connecticut and financial markets. Until then, I'm Mike Upperman and goodbye for today.