Archive for Dairy Markets

January milk production is slightly down on the year.

U.S. milk production fell slightly in January. According to the USDA, production in the top 24 states was 18.3 billion pounds, down nine tenths of a percent from the previous year, due to fewer cows (8.873 million head) and lower average production (2,062 pounds per cow).

California ranked first in production and number of cows, followed by Wisconsin and Idaho, while Michigan led the way in average production.

According to the USDA, milk production in 2023 totaled 226.364 billion pounds, slightly less than in 2022, with a decrease in dairy cows canceling out an increase in the average.

The USDA’s next annual milk production projection is due March 8th.

Milk Prices: Will Class IV Outperform Class III This Year?

The cheese market appeared to be turning a corner, but Class III futures’ weakness indicates otherwise. Class IV futures have performed better as butter prices remain supportive. The USDA’s annual Agricultural Outlook Forum, held on February 15th and 16th, provided an outlook for the US dairy industry, indicating that Class IV prices will remain significantly higher than Class III prices. The average Class IV price this year is expected to be $20.20, up $1.08 per cwt from 2023, while the Class III price is expected to be $17.10 this year, up $0.08 per cwt from 2023.

The butter price is expected to remain strong and trend higher, with recent increases in international butter prices improving the potential for US butter to become more competitive on the international market and increasing demand. Butter exports for 2023 were significantly lower than the previous year, and if export demand improves significantly, butter prices will rise above current levels, potentially returning to 2023 highs or higher.

Traders anticipate higher prices as more premium is added to butter futures contracts through the end of the year. The October butter futures contract anticipates an average price of $2.92 per pound. However, the USDA was less optimistic about cheese prices, forecasting an average price of $1.69, or nearly $0.07 per pound less than in 2023. Whey demand has increased, both globally and domestically, providing some support to the Class III milk price.

The USDA also released grain production and price forecasts for the 2024/25 crop year, indicating lower grain prices and higher ending stocks. Corn planted acres are expected to be 91.0 million, with a yield of 181.0 bushels per acre, and ending stocks are estimated to be 2.532 billion bushels, with an average price of $4.40 per bushel, $0.40 per bushel less than last year. Soybean planted acres are expected to reach 87.5 million, with a yield of 52.0 bushels per acre, up from 83.6 million this year and 50.6 bushels per acre.

Mixed cash dairy and CME milk futures on Thursday.

On Thursday, the Chicago Mercantile Exchange saw mixed milk futures and cash dairy markets.

  • February Class III milk went up $0.02 to $16.18. March was down $0.22 to $16.80. April was down $0.17 to $17.13. May was down $0.16 to $17.50.
  • Contracts from June to December varied from seven cents lower in June to thirteen cents higher in October, with prices increasing each month following June. Thursday’s Class III transaction volume was little over 2300 contracts.
  • Dry whey went up $0.01, to $0.53. There were no sales registered.
  • 40-pound cheese blocks were down $0.0225 to $1.4925. Three transactions were reported, with prices ranging from $1.4925 to $1.50.
  • Cheese barrels were down $0.02 at $1.5550. There was one sale at that price. Thursday was the third consecutive trading day in which barrels were valued higher than blocks.
  • Butter was up $0.01, at $2.7275. Fifteen transactions were registered, with prices ranging from $2.7125 to $2.7325.
  • Nonfat dried milk was down $0.0050, to $1.1750. There was one sale at that price.

After a Time of Boom, the Dairy Markets Hit a Wall

  • Milk supply is scarce and demand for spot milk is steady, leading to weak demand.
  • US exporters delivered 5.806 billion pounds of dairy goods in 2023, totaling less than $8 billion.
  • Cheese exports grew 0.6% to 80.5 million pounds in December, the largest number ever observed.
  • Nonfat dry milk (NDM) exports increased by 0.9% compared to December 2022.
  • US whey product exports fell 14.9% year on year, while butter exports dropped 42%.
  • The GDT Price Index increased by 4.2% at the Global Dairy Trade (GDT) auction, reaching levels not seen since late 2022.
  • The CME butter market fell from its highs in January.
  • The spot dry whey market increased by 1.25¢ this week, closing the week at 52¢ per pound, the most since mid-2022.
  • Milk powder output fell 15.9% year on year to 194.8 million pounds, including NDM and skim milk powder.
  • Manufacturer stockpiles on NDM were 203.3 million pounds, a 20.5% decrease from the previous year and the lowest stock level since 2015.

The dairy markets have encountered resistance this week, with milk supply being scarce and demand for spot milk steady. This has resulted in a weak demand picture, with little motivation to drive the markets higher. According to December export figures, US exporters delivered 5.806 billion pounds of dairy goods in 2023, totaling little more than $8 billion. However, shipments to China and Canada dropped compared to the previous year, while exports to Mexico, the United States’ biggest trading partner, increased 12.8% to a new all-time high of 1.589 billion pounds.

Despite sluggish worldwide demand and competition from alternative providers, certain items saw moderate year-over-year growth in December. Cheese exports grew 0.6% to 80.5 million pounds in December, the biggest number ever observed, thanks to a particularly robust hunger among Mexican purchasers. Nonfat dry milk (NDM) exports increased by 0.9% compared to December 2022, as shipments to certain Asian destinations improved. Other product exports were under pressure due to negative international dynamics. In December, US whey product exports fell 14.9% year on year, while butter exports dropped 42%.

At this week’s Global Dairy Trade (GDT) auction, the GDT Price Index increased by 4.2%, with price increases noted in almost every commodity. This is the sixth straight auction in which the index has climbed, reaching levels not seen since late 2022. Butter, whole milk powder, and anhydrous milkfat prices increased by 10.3%, 3.4%, and 3.3%, respectively, as compared to the previous event.

Back home, the fat markets fell, and the CME butter market continued to fall from its highs reached in the closing weeks of January. According to the USDA’s Dairy Products report, butter output increased 4.4% year on year in December to 196.3 million pounds, a remarkable outcome considering the 0.3% decrease in milk production during the month and the significant draw from other manufacturers. Lower cheddar output may have boosted spot markets, which rebounded from late-December lows to surge steadily through the first few days of February.

The spot dry whey market increased by 1.25¢ this week, maintaining its upward trend. Prices closed the week at 52¢ per pound, the most since mid-2022. Participants report that the market for dry whey has tightened significantly, owing to increased domestic demand but also decreased output. December dry whey output declined 9.2% year on year to 66.062 million pounds.

In December, milk powder output fell 15.9% year on year to 194.8 million pounds, including NDM and skim milk powder. NDM prices have remained firmly entrenched in a small range, with no evidence that the market is eager to go beyond these limitations. At the end of December, manufacturer stockpiles on NDM were 203.3 million pounds, a 20.5% decrease from the previous year and the lowest stock level since 2015.

Original Report At:

U.S. dairy exports fall 7% in 2023

Weak demand and increased competition limit U.S. dairy export growth in 2023 to high-protein whey and lactose. 

Subdued demand, coupled with increased competition from the EU and New Zealand, translated into a U.S. dairy export decline of 7% in milk solids equivalent terms (MSE) in 2023. The factors complicating U.S. dairy export growth have been consistent most of the year: elevated inflation, disappointing economic growth in key export markets (particularly China), reduced demand for feed whey from China’s struggling pig sector, increased milk output from the EU and New Zealand, and reduced whole milk powder (WMP) purchasing from China causing New Zealand to shift its product mix and redirect exports to key U.S. markets.

U.S. export value finished the year at $8.11 billion. That is the second largest value of all time but down 16% from the record year of 2022 as both volume and prices eased.

U.S. suppliers posted volume gains in only two major product categories in 2023: high-protein whey (WPC80+) and lactose. Full-year U.S. WPC80+ export volume jumped 18% (+11,619 MT) compared to 2022, rising to a record 75,848 MT. Fueled by strong gains in the first quarter, lactose shipments rose 5% (+20,890 MT) to a record 471,918 MT.

But beyond WPC80+ and lactose, positive year-end numbers were nowhere to be seen. Nonfat dry milk/skim milk powder (NFDM/SMP) fell 3% (-24,570 MT); cheese dipped 4% (- 15,313 MT); low-protein whey dropped 20% (-125,165 MT); butterfat slid 44% (-44,795 MT). Milk protein concentrate, fluid milk and cream and whole milk powder fell 10%, 7% and 33%, respectively, for the year.

Chart6-1For more detailed information, as well as interactive charts and data, visit USDEC’s Data Hub.

That said, we started to see some positive signal to close out the year. U.S. cheese exports recorded gains in November (+4%) and December (+1%), with solid volume increases to Mexico, China, Central America and the Caribbean. 

U.S. NFDM/SMP shipments rose 1% in December, its first YOY increase since August 2023. December shipments to Southeast Asia jumped 23% (+3,634 MT) and volume to the Middle East/North Africa more than tripled (+1,868 MT). For Southeast Asia, it was the second straight monthly increase and an optimistic sign that demand in the No. 2 U.S. market is on the road to recovery.

Fluid milk and cream finished the year with four straight months of YOY gains. Volume rose 15% (+6 million liters) from September to December compared to the same period the previous year.

For a product-by-product breakdown of 2023 U.S. export performance, see below.

Chart5 (1662 x 900 px)

U.S. NFDM/SMP exports saw slight growth (+1%, 582 MT) in December—the first monthly increase since August. Overall NFDM/SMP exports for the year have been lackluster, with 2023 exports down 3% (-24,570 MT), but the decline only tells a portion of the story. U.S. NFDM exports to Mexico this year have boomed (+16%, 57,040 MT) although largely frontloaded in the year. NFDM exports to Mexico in H1 were up 39% (+62,842 MT). They eased in the back half of the year (-3%, -5,801 MT), but volumes were still large and up against strong exports in H2 of 2022. The Mexican economy has been very strong at a time when economies around the world mostly struggled. In addition to the strong economy, the peso has consistently strengthened against the dollar since Covid, making U.S. imports more attractive.

At the same time, exports to Southeast Asia suffered (-20%, -60,637 MT). 2023 for Southeast Asia was marked by high inflation and challenging domestic economics. Even with lower prices this past year, demand has been weaker. December did build on the slight growth seen in November with NFDM/SMP exports to the region up 23% (+3,634 MT) in the final month of the year.

Looking to 2024, we expect export volumes to Mexico to remain robust, but may not match the record volumes we saw in early 2023. In Southeast Asia, with easing inflation, lower NFDM/SMP prices and after a prolonged period of low import volumes, we expect demand to rebound in 2024. Overall U.S. NFDM/SMP exports should see some growth in the year ahead as the global economy continues to recover.

While YOY U.S. cheese exports fell in 2023, it was (at 435,569 MT) the second highest volume we ever shipped in a single year. Volume was driven primarily by a 41% jump (+39,959 MT) in shredded cheese sales to meet foodservice demand, mostly to our top market, Mexico, but also to China. U.S. exports of shredded cheese to Mexico soared 162% (+39,131 MT) last year, while shipments of shredded cheese to China increased more than eight-fold (+5,612 MT).

However, those impressive gains were still insufficient to offset a decline in overall U.S. volume. Inflation-related consumption headwinds in Korea and Japan combined with heightened competition from the EU and New Zealand in South Korea to undercut U.S. cheese sales to both East Asian countries. U.S. cheese exports to Japan fell 15% (-7,155 MT) in 2023 and shipments to South Korea plunged 40% (-30,175 MT). Looking forward, more competitive pricing, European milk production struggling and expectations that Japanese and Korean demand for U.S. cheese may be poised to turn a corner paint a more hopeful picture for the coming year. 

High-value U.S. WPC80+ exports crushed the previous volume record by more than 10,000 MT in 2023. Ongoing demand growth for high-protein foods in key markets coupled with lower WPC80+ prices in 2023 created a banner year for U.S. suppliers.

Gains were geographically broad-based. U.S. WPC80+ sales to Japan have risen now for nine consecutive years (+11%, +1,513 MT in 2023). The country took over as the top U.S. WPC80+ market from China in 2022, and despite erosion in YOY monthly growth at the end of 2023, Japan remains our No. 1 buyer. U.S. shipments to China rebounded last year (+47%, +4,520 MT) after higher prices weakened 2022 demand. And, driven by one of the biggest sports nutrition markets in the world, Brazil staked a claim as the fastest growing U.S. WPC80+ buyer in 2023. U.S. shipments of WPC80+ to Brazil are up now for four straight years and more than doubled to 8,462 MT last year. An even more encouraging sign is the ample room for growth. Demand for U.S. WPC80+rose in several developed and emerging markets last year, including Canada (+28%), Mexico (+35%) and India (+36%),while markets like South Korea and Southeast Asia are primed for demand rebounds.

Lower-protein whey (0404.10)
As we have noted in this column throughout the year, the U.S. low-protein whey export shortfall in 2023 is mostly about China. U.S. shipments of 0404.10 whey to China plunged 27% (-79,357 MT) as ongoing troubles in the nation’s pork industry severely curtailed demand. But China can’t be completely to blame for the decline. YOY U.S. export volume fell by a total of 125,165 MT in 2023, so the U.S. declined by more than 45,000 MT to other destinations.

Low-protein whey demand eroded across several geographies last year. In fact, U.S. shipments fell to eight of our top 10 markets in 2023. And exports declined for other suppliers as well. EU27+UK whey exports, for example, were down 10% (-62,429 MT) through November. 

The challenges within China appear likely to persist, but our analysts are optimistic that demand in Southeast Asia, where a large portion of the dry whey is used for food applications, will rebound with an improved economic outlook. Given low-protein whey accounted for over 70% of the U.S. dairy’s export decline in 2023, any improvement in demand would put exports on better footing for 2024. 

YOY U.S. lactose exports fell 3% (-960 MT) in December, but overall lactose exports for the year were up 5% (+20,890 MT)—largely driven by gains to China. U.S. lactose exports to China in 2023 grew 23% (+26,813 MT). Likely supporting the increased exports were lower prices last year and increased usage for standardization within China—as detailed in our October write-up. U.S. lactose prices over the summer reached the lowest levels in nearly a decade. Prices have firmed since then, up 48% since July, which may impact export volumes moving into 2024, but prices are still roughly 30% below the average price since 2020.

Overall, U.S. lactose exports over the last few months have somewhat plateaued after robust growth in 2022 and much of 2023. Looking to 2024, it’s hard to get overly excited about strong growth as demand remains uninspiring.


Looking Ahead to 2024: Milk Check Outlook

  • Class III average milk price is predicted to be $17.30, similar to 2023.
  • Class IV milk price could be closer to $21, over $2 more than 2023.
  •  On-farm feed prices are predicted to fall by 15% by 2024, potentially boosting Class II and Class I profits.
  • Heifers and cheese are the most optimistic aspects of the forecast.
  • Milk output in the second half of 2023 is expected to decrease by 0.6% from last year.
  • Heifers are in short supply, with a projected 1.1% decrease in calving in 2024.
  • New cheese production capacity is expected to increase cheese output by 5.5% between Q4 and mid-2025.
  • Dry whey, whey protein concentrate, and whey protein isolate are expected to see considerable demand and prices rise.
  • Butter is the most optimistic segment of the market, with domestic disappearance expected to rise by 8.8% in 2023 and production increased by 2.2%.

The Class III average milk price in 2024 is predicted to be approximately $17.30, comparable to 2023, which is bad news for producers. However, the Class IV milk price might be closer to $21, which is over $2 more than 2023. On-farm feed prices are predicted to fall by roughly 15% by 2024, which might boost Class II and Class I profits.

Heifers and cheese are the most optimistic aspects of the forecast, with milk output in the second half of 2023 down 0.6% from last year and a milking herd down 0.4%, or 39,000 head, from the previous year. Heifers are in short supply, with the USDA forecasting that the number of heifers projected to calve in 2024 would be 1.1% lower than in 2023. However, dairy cow slaughter is down more than 20% from last year, so producers are hanging onto cows for another lactation. Despite the scarcity of heifers, the herd may increase somewhat in 2024.

The bearish issue is increased demand and new cheese production capacity coming online. Domestic cheese disappearance is anticipated to increase by just 0.8%, while fluid milk is down 1.4% and nonfat dry milk (NFDM) is down 9.7%. Between the fourth quarter of 2024 and the middle of 2025, at least five new cheese factories or plant expansions are expected to come online, possibly generating an extra 800 million pounds of cheese, representing a 5.5% increase in cheese output.

Dry whey, whey protein concentrate (WPC), and whey protein isolate (WPI) have all seen considerable demand, and their prices have risen over the last six months. While there may be downward pressure on the whey complex once these new cheese facilities open, stocks are projected to remain light until then, and a relatively low dry whey price will support the Class III pricing somewhat.

Butter is the most optimistic segment of the market, with domestic disappearance expected to rise by 8.8% in 2023, while production increased by just 2.2%. With milk supply poor and new cheese facilities absorbing more milk, butter output in 2024 is likely to remain low, making it difficult to replenish supplies and keeping the market tight.

Fonterra raises farmgate milk price projection owing to rising demand.

Fonterra has increased its farmgate milk price projection for the 2023/24 season to NZ$7.30-NZ$8.30, while profits remain steady at 50-65 cents per share. The firm has seen an increase in demand for its reference commodity items, especially from the Middle East and South East Asia, as indicated in GDT pricing. Overall, GDT costs have risen 10% since the previous Farmgate Milk Price Report in December, while whole milk powder prices have risen 11.5%. The potential effect of geopolitical instability and supply chain disruption on demand in major importing areas is unknown. Fonterra’s market size and variety give flexibility, and its cooperation with Kotahi guarantees that its goods are delivered to clients on a continuous basis. The business has also upped its farmgate milk price prediction for the third time in five months, by 50 cents, citing improving supply and demand dynamics.

In 2024, can dairy producers expect profits?

According to the most recent analysis from Zisk, a free software that includes data from producers on their milk contracts, feed prices, and predictors of dairy firm profitability, milk farmers in the United States anticipate a lucrative year in 2024. The study, which has been downloaded by nearly 4,000 farm owners, covers 4.2 million cows, or 45% of the US herd. An overall trend analysis based on data gathered from all farms provides insights into herd size, average basis, and milk output.

The 2024 estimates also suggest that farm size matters; bigger farms will produce more money per cow, but smaller farms, particularly those with less than 250 cows, would be unprofitable. The paper demonstrates how many dairies, particularly major ones, have secured profits by locking in their pricing.

Herd sizes in the United States continue to grow, and according to the Zisk research, farms with more than 5,000 cows will be the most profitable. Even farms with over 1,000 cows are much more lucrative than those with less. In contrast to Zisk’s prior yearly reports, this year’s statistics suggest that larger farms have lower expenses, better pricing, and economies of scale, and they anticipate to earn more per cow.

The Southeast is forecast to be the most prosperous area in the United States by 2024, with an average estimated profit of $857 per cow. Smaller farms (those with less than 250 cows) plan to continue to lose money, although the total profit per cow for the area is expected to remain comparable to last year.

The Midwest will be the second most lucrative overall, with a projected $701 per cow, although smaller herds will earn far less. Wisconsin herds (average size 833 cows) anticipate $1,000 per cow earnings, whereas South Dakota, with almost double the average herd size, predicts $672 per cow.

The Northeast is the least lucrative area for milk production in 2024, although Rhode Island is projected to have the greatest profit per cow in the US despite an average herd size of 35. Massachusetts, New Hampshire, New Jersey, and Kentucky are forecasting among of the lowest average earnings in the United States in 2024.

Rebound for Global Dairy Trade Index

The Global Dairy Trade index is up for the seventh consecutive trading day. The index gained 4.2% to an average price of $3,571 per metric ton on Tuesday morning. The butter market rose 10.3% to $6,516 per metric ton, or $2.95 per pound. Cheddar cheese prices climbed 6.3% to $4,469 per metric ton, or $2.02 per pound. Skim milk powder rose 4.6% to $2,758 per metric ton, or $1.25 per pound. Whole milk powder was also up 3.4% at $3,463 per metric ton, or $1.57 per pound. Anhydrous milk fat prices increased 3.3% to $6,033 per metric ton, or $2.73 per pound. Lactose prices rose 2.6% to $785 per metric ton, or $0.35 per pound. Buttermilk powder rose 1.2% to $2,412 per metric ton, or $1.09 per pound. The only commodity to lose value during Tuesday’s trading session was mozzarella cheese, which slid 1.8% to $3,760 per metric ton, or $1.70 per pound. Tuesday’s 21 bidding rounds yielded 104 victorious bidders, who sold 24,836 metric tons of dairy goods.

Replacement heifer supply tightens, prices soar

Milk futures have recently increased, prompting dealers to become more open to the market. However, worries about future milk supply may grow as farms depart the dairy industry and the availability of dairy replacement heifers tightens dramatically. Cow slaughter has not risen as expected owing to low milk prices, but a tighter heifer supply will keep cows in demand.

The Bi-Annual Cattle Inventory data stated that the number of milk cows on January 1st was 9.358 million, down 41,000 from the previous year. The heifer-to-milk cow ratio is likely to tighten further in the coming years. Buyers of dairy products may have considered this and purchased supply earlier at cheaper costs, resulting in the subsequent price hike.

The strength of dry whey has given substantial support for the Class III market, with butter and cheese receiving the majority of attention in the cash market. Dry whey has gradually climbed, adding around 62 cents to the Class III pricing in the last three weeks. Butter is predicted to stay stronger than cheese, resulting in Class IV milk prices being much higher than Class III pricing.

Robin Schmahl, a commodities trader with AgDairy, the dairy business of John Stewart & Associates Inc. (JSA), feels that the ideas presented and the underlying facts from which they are derived are regarded to be credible but cannot be guaranteed. Any views presented herein are subject to change without notice, and the simulated performance outcomes have inherent limitations. Trading commodities futures and options on futures has a risk of loss and is not for everyone. Accepting this message means you realize and agree that you will not depend primarily on it to make trading choices.

Projection for U.S. dairy in 2024

The all-milk price in the United States is predicted to reach $20.60 per cwt in 2023, the fourth time in the last 20 years. However, the inflation-adjusted milk price has resulted in historically low milk-to-feed margins and significant dairy margin coverage (DMC) payments. The cull cow market has been a bright light in 2023, with prices exceeding $100 per cwt. Dairy farmers will make a profit per cow on average in 2023.

Dairy producers are predicted to have 9.35 million head in 2024, a tiny decrease from 2023 but around 300 pounds more milk per cow. According to the USDA’s January dairy projection, the all-milk price average for the year will be $20 per cwt, somewhat lower than in 2023. The cull cow and bull calf markets should remain robust, with average fed cattle market values expected to be 2% higher in 2024 than in 2023. Feed prices are also expected to be reduced in 2024, resulting in smaller DMC payments. The milk-to-feed margin in 2024 is expected to be $10.70 per cwt, at least two months lower than the $9.50 margin.

Despite the unpredictable nature of the milk and feed markets, some farmers may find 2024 to be a low-margin year. Domestic dairy consumption, especially butter consumption, is likely to rise, with the forecast Class IV milk price exceeding Class III. The all-milk price is determined by the produced commodities of Class III and Class IV milk, with Class IV milk accounting for roughly 23% of the total milk price.

The export market is predicted to expand in 2024, with increased production of cheese, butterfat products, and whey products. Total exports are forecast to increase by 0.7% over 2023, with only the United States and Australia likely to witness rise in exports. Argentina, New Zealand, and the European Union’s total milk output are all predicted to fall.

Even with somewhat reduced milk prices in 2024, there are still chances for dairy farm profitability. Using marketing methods to ensure reduced feed costs for bought feeds, as well as lucrative Class III or Class IV milk futures, will help safeguard milk checks. Class IV milk futures are expected to climb by more than $3 per cwt by the fourth quarter of 2024.

December USDA price indexes slightly lower

Both USDA farmer pricing indexes fell in December. The USDA reported a 0.4% drop in prices due to losses in cattle, pigs, milk, and turkeys offsetting increases in maize, broilers, eggs, and onions. According to the USDA’s December 2023 dairy index, all milk prices were $20.60 per hundredweight, down 5.1% from November and 16% from December 2022. The index of prices paid fell 0.5% as feeder cattle, complete feeds, diesel, and gasoline fell while feeder pigs, potash & phosphate, nitrogen, and LP gas rose. Prices received fell 18% and prices paid fell 0.6% in 2023, representing farmers’ and ranchers’ losses.

Growth in U.S. Milk Production Levels Off by 2023’s End

Milk production growth in the U.S. sputtered at the end of 2023, leaving the full year result nearly unchanged from the previous year. After expanding during the first half of the year, volumes contracted between July and December as milk prices remained under pressure. December milk production totaled 18.843 billion pounds, a decrease of 0.3% compared to the same month last year, with notable declines seen in the western states. A shrinking national dairy herd has driven the production drop, as December’s herd size rang in at 9.357 million cows, 39,000 head less than at the same time last year and representing the smallest herd size since June 2020.

European production has been trending downward, with volumes in the European Union and United Kingdom falling by an estimated 2.5% year over year in November. Many of the bloc’s largest milk producers, including Germany, France, and the Netherlands, saw pronounced declines in November output. Strict environmental regulations in many European countries are likely to interfere with milk production recovery and have sparked high profile protests in the region. In South America, volumes in Argentina recoiled by 7.7% in December as producers confront deep economic and political uncertainty. Oceania, however, is expanding with Australia and New Zealand both posting gains in the most recent month for which data is available.

International demand is also limping along, with China’s December import statistics finalizing a disappointing year for the world’s largest dairy importer. Whole milk powder, China’s most important import in volume terms, had an incredibly weak year with cumulative shipments for 2023 down 38.4% to the lowest volume since 2016. UHT milk, butter, and whey imports were also down on an annual basis while skim milk powder eked out an annual gain despite falling 36.9% year over year in December. Cheese had a standout year as a record 392.8 million pounds were imported, 22.5% more than in 2022.

The CME spot market boasted a week of gains, but prices for most dairy commodities remain weak. Lower prices in the U.S. should help to encourage additional export sales that will help to clear domestic volumes, though his dynamic has been slow to materialize.

Original Report At:

Dairy markets affected by weather, according to USDA

The USDA reports that winter weather has had an influence on several dairy markets during the last week.

According to the Agricultural Marketing Service’s most recent report, winter weather impacted dairy operations in eastern states, and some milk destined for Class III cheese manufacturing was shifted into bottling for grocery stores. According to the USDA, the weather also had an impact in the central area, where milk was plentiful, but some cheesemakers had to change their production schedules.

The USDA reports that milk output is constant in the east, robust in the northeast, and somewhat lower in the Midwest, where winter storms have passed. The Western area has consistently boosted milk output.

Butter demand is consistent throughout the nation, and some factories have increased output, while others have decreased due to weather or scheduled maintenance.

December milk output took a nosedive.

U.S. milk production fell slightly in December 2023. The USDA reported that the 24 main milk-producing states produced 18.1 billion pounds of milk, a one-tenth of a percent decrease from the previous year.

The USDA also reduced November output down by six-tenths of a percent from early estimates to 17.3 billion pounds, 14 million pounds less than the previous year.

There are 8.9 million dairy cows in the 24 main dairy states, and 9.36 million throughout the country.

Production per cow increased in the first half of 2023 but decreased in the final half of the year. Last year, January had the highest milk output and per-cow production rate.

California is the leading total milk producer, producing 3.44 billion pounds, followed by Wisconsin, which produces 2.67 billion pounds. Michigan continues to top the country in milk-per-cow output, with 2,210 pounds per cow.

Global Dairy Trade index rises fourth time

The Global Dairy Trading Index rose 2.3% in Tuesday’s trading session.

Butter was the biggest gainer, up 5.8% to $5,906 per metric ton ($2.67 per pound).

Anhydrous milk fat rose 4.3% to $5,842 per metric ton, or $2.64 per pound.

Whole milk powder prices increased 1.7% to $3,353 per metric ton, or $1.52 per pound.

Lactose rose 1.3% to $760 per metric ton, or $0.34 per pound.

Skim milk powder prices increased 1.2% to $2,638 per metric ton, or $1.19 per pound.

Cheddar cheese prices were up 1% to $4,217 per metric ton, or $1.91 per pound.

The only product to lose value during Tuesday’s trading session was mozzarella cheese, which fell 3.3% to $3,830 per metric ton, or $1.73 per pound.

During Tuesday’s trading event, 100 buyers out of 167 bidders participated in 15 rounds of bidding. Overall, 24,909 metric tons of dairy products were purchased on Tuesday.

Cheese Exports Reach All-Time High

The T.C. Jacoby Weekly Market Report Week Ending January 12, 2024

Cheese Market Outlook

  • U.S. cheese exports reached the highest volume for the month in November, up 3% from the previous month.
  • Record-setting shipments to Mexico offset softer demand from Japan and South Korea.
  • The trade is hopeful that the trend will continue.
  • Processors from Waupun to Warsaw to Waikato are boosting cheese output.
  • New Zealand cheese output surged 7% in 2023 and is likely to hold steady in 2024.
  • Processors are expected to funnel a larger share of the milk pool toward cheese production, prioritizing it over other dairy products.

Whey Market Outlook

  • Whey exports fell 13.4% short of year-ago volumes in November.
  • Slower shipments to China accounted for 97% of the decline.
  • CME spot whey powder rallied 1.75ȼ this week to a nine-week high at 43ʼ.
  • Class III futures jumped 37ȼ and March Class III rallied 17ȼ this week.
  • CME spot nonfat dry (NDM) milk gained a little ground this week and closed at $1.185, up 1.25ȼ.
  • U.S. NDM exports to all foreign markets were 2.7% lower than the 2022 pace, but year-to-date exports to Mexico were 18.1% greater than January through November 2022.

Butter Market

  • Spot butter settled at $2.5675, down 0.75ȼ since last Friday.
  • Class IV futures fell back, but are more than adequate to provide profits for those dairy producers who benefit from Class IV income.

USDA’s Corn and Soybean Forecasts

  • USDA raised its estimate of the 2023 corn yield to a new record at 177.3 bushels per acre.
  • The 2023 corn crop is officially the largest ever at 15.23 billion bushels.
  • USDA also raised its assessment of U.S. soybean yields, which pressured soybean prices.

The dairy trade is experiencing a downturn in the cheese market, with U.S. cheese exports reaching their highest volume in November, up 3% from the previous month’s high. However, domestic cheese demand remains weak, but exports are starting to pick up. This has led to a rebound in Chicago, with CME spot Cheddar blocks and barrels rising 12.75 and 3.5 percent respectively.

The ceiling for cheese exports is likely far lower than dairy producers would like, as processors from various countries are boosting cheese output. New Zealand cheese output surged 7% in 2023 and is likely to hold steady in 2024, even as milk output retreats. In Europe, milk output is also expected to wane this year, but processors are expected to funnel a larger share of the milk pool toward cheese production, prioritizing it over other dairy products.

Whey exports disappointed in November, falling 13.4% short of year-ago volumes. Slower shipments to China accounted for 97% of the decline. Domestic demand looks much better, with American consumers being hungry for high-protein whey products. CME spot whey powder rallied 1.75 to a nine-week high at 43 degrees Celsius.

Class III futures have seen some strength in the spot markets, with February contract jumping 37 degrees and March Class III rallying 17 degrees, respectively. However, February Class III futures remain depressed, and futures forecast that Class III prices won’t be high enough to pay the bills until later this spring.

CME spot nonfat dry (NDM) milk gained some ground this week, closing at $1.185, up 1.25 degrees. NDM exports fell 4.1% short of year-ago volumes in November, the third straight month of year-over-year declines. Shipments to Mexico were respectable, but fell 5.4% below last year’s record-high volumes. There’s likely room for even stronger U.S. milk powder exports in 2024, as Europe and Oceania are likely to rein in output.

The butter market took a small step back this week, with spot butter settled at $2.5675, down 0.75 degrees since last Friday. The butter market is suffering from the typical post-holiday hangover, with many bracing for powerful winter storms that will temporarily disrupt foodservice demand. Class IV futures fell back, but they are more than adequate to provide profits for dairy producers who benefit from Class IV income.

USDA raised its estimate of the 2023 corn yield to a new record at 177.3 bushels per acre, up 2.4 bushels from December’s estimate. The 2023 corn crop is officially the largest ever at 15.23 billion bushels, thanks to crop genetics and modern farming advancements.

Original Report At:

Ukraine’s raw milk shortage drives up prices

The Ukrainian Union of Dairy Enterprises reported a 36% increase in raw milk prices in the second half of 2023, exceeding the level of some European countries. In July 2023, the average farmgate price of raw milk in Ukraine was €33 per 100 kg, but it has now risen to €42 per 100 kg. Farmgate raw milk prices in Ukraine have reached parity with those in other European countries, with milk costing 3.77% more than in Sweden, 3.38% more in Slovakia, and 10.77% more in Latvia. Ukrainian dairy products are no longer appealing to European consumers at their current prices.

A raw milk shortage persists in Ukraine, with prices reaching €50 per 100 kg in recent weeks. This reduces processors’ profitability to zero, making the dairy industry the worst of all agricultural sectors. Authorities could encourage milk farmers to increase production and supply in order to halt the mad rush among processors to fill their capacities. Subsidies for capital costs for new farms could turn the tide in the dairy industry. Meanwhile, milk farm profitability in Ukraine has reached a new high of 30-60%, according to Vadim Chagarovsky, head of the Union of Dairy Enterprises of Ukraine.

Dairy Farmers Face Another Year of Low Milk Prices

The Dairy Margin Protection (DMC) program:

  • Provided monthly payments to farmers at a chosen price level.
  • No extension to 2024, no signup period.
  • Significant price difference between cheese and butter.
  • Domestic demand for butter absorbs international market decrease.
  • Butter exports down 47.7% from 2022, but new record reached in October.
  • Milk supply is unaffected by mild weather and good feed quality.
  • Hopes for short-lived depressed milk prices, but potential for prolonged low prices without significant demand increase or tighter supply.

The Dairy Margin Protection (DMC) program has been a significant assistance for many farmers in 2023, providing payments for each month if the price level was chosen at $9.50. However, the program has not been extended to 2024, and there is no signup period. The price difference between cheese and butter remains substantial, with Class IV futures having a premium of more than $1.00 throughout the year. Domestic demand for butter remains strong, absorbing much of the decrease in the international market. Butter exports were down 47.7% from 2022, but the price reached a new record in October. Milk supply is not a concern, and mild weather and good feed quality have led to sufficient butter supply. The hope is that depressed milk prices will be short-lived, but without a significant increase in demand or tighter milk supply, low prices may persist for a longer duration.


What are the 2024 dairy market worries?

In the Parlor to Plate podcast, Ever.Ag experts discussed concerns for dairy producers heading into 2024. They noted that while markets have been quiet, there are still dangers and concerns, particularly regarding milk prices. Analyst Colin Kadis noted that 2022 was one of the greatest years for dairy producers, despite higher costs. He also predicted that 2023 would be difficult, especially for Class III producers. While lower dairy prices are welcomed, global and domestic demand for some dairy product categories is lower. Brian Fletcher, a risk management expert, noted that if a demand resurgence occurs, it could lead to elevated prices. He suggested that if demand remains mediocre, more supply erosion is needed to stabilize prices. Kadis concluded that dairy farmers may not be excited to sign up for this, as they believed they had liquidated enough six months ago.


Despite record cheese sales, November dairy exports fell.

According to the United States Dairy Export Council, a record month of cheese exports did not overcome decreases in virtually all other dairy categories in November.

Total values fell 21% from 2022 to more than $630 million, while volumes fell more than 8%.

Cheese exports increased by 4%, with shipments to Mexico jumping by 42% for the month, owing mostly to increased demand for shredded cheese in food service. Exports of high-protein whey surged by 37% this month due to rising worldwide demand.

Nonfat dry milk/skim milk powder (-5%), low protein whey (-14%), and lactose (-7%) were all lower this month.

Dairy Markets Unsettled in First Trading Week of 2024

Mild winter conditions across most of the country have supported milk production though margins remain thin, especially for producers in the western U.S. Milk remains readily available for manufacturers.

The new year has officially begun. But as Auld Lang Syne faded into the background, the dairy markets were unsettled in the first holiday-shortened trading week of 2024. Most products saw prices oscillate without much conviction as buyers and sellers jockeyed to set the tone early in the new year.

Mild winter conditions across most of the country have supported milk production though margins remain thin, especially for producers in the western U.S. Bottling demand has picked up as schools go back into session following the winter break. But despite this pull, milk remains readily available for manufacturers. Spot loads of milk can reportedly be picked up for discounts as deep as $8 under Class III prices. While that feels like a big discount, it is less than the $10 discounts available last year at this time and which stretched through the first half of the year. Dairy Market News reports that, “most [contacts] expect milk prices to move nearer to Class III as the holidays grow more distant in the rearview mirror.”

All in all, milk remains available to cheese processors should they choose to accept it. However, tepid demand is dampening their enthusiasm for moving additional milk volumes through their vats. Market participants indicate that cheese inventories are plentiful, and that retail demand is stable to weak. Some are optimistic that football season will encourage additional cheese usage through both foodservice and retail channels.

Cheese production was robust in November, rising 0.7% year over year to 1.163 billion pounds. The increase was particularly notable given the 0.6% decline of milk production during the month. Manufacturers increased production of American varieties at the expense of Italian types, however Cheddar production failed to impress, falling 0.4% year over year to 322.57 million pounds. Robust production of cream cheese, up 5.7% to 91.737 million pounds, helped to boost the overall cheese figure.

The CME spot Cheddar block market reflected the uncertainty of supply and demand, gaining a penny on the first trading day of the new year before giving up ground on Wednesday and Friday to end the week at $1.435/lb., down 3.5¢ from last week. Barrels followed a similar path but a 4¢ gain on Tuesday netted out to a 1¢ gain for the week as Friday’s session finished at $1.41/lb. It was an active week for barrels as 26 load changed hands.

On the other side of the Class III complex, spot dry whey markets showed much more decisiveness, moving steadily upward over the course of the week. Friday’s session ended at 41.25¢ per pound, an increase of 2.75¢ compared to last week. Domestic demand is steady and export demand appears to be improving, especially from Mexican buyers. Whey manufacturers continue to route the whey stream toward the production of high protein products, which is likely helping to put some support under dry whey prices. In November, output of whey protein isolates and whey protein concentrates (WPC) with more than 50% protein rose by 16.4% and 7.5%, while production of dry whey and lower protein WPCs fell by 10.9% and 16.8%, respectively.

Strong cheese production pulled milk away from the manufacture of Class IV products late last year. Butter production declined during November as production fell 3.7% to 165.183 million pounds. Cream supplies are relatively plentiful as component values remain robust. Churns in many parts of the country are capitalizing on available supplies as operating schedules range from steady to active. Following the holidays, most butter market participants note that demand is understated. These dynamics were reflected at the CME as the spot butter market felt the biggest loss to start the year across all the commodities. A 2¢ increase on Tuesday was again wiped out by larger losses on Thursday and Friday. Butter prices fell to $2.575/lb. by the end of the week, a decline of 9¢ versus last week as 11 loads traded hands. Despite the decrease, butter prices remain almost 20¢ higher than a year ago.

Meanwhile the nonfat dry milk (NDM) market continues to move sideways. Modest gains early in the week were mostly eliminated by a decline on Friday that left the price at $1.1725/lb. up just a quarter cent compared to last week with 19 loads moving. The NDM market spent 2023 in a remarkably narrow range, trading between $1.0575/lb. and $1.3225/lb. the entire year. 2024 appears to have begun on the same note as the market looks for direction. Production remains weak as combined output of NDM and skim milk powder (SMP) totaled just 173.552 million pounds in November, a year over year decline of 17.3%. However, while NDM production tumbled by 28%, SMP production rose 17.8%, perhaps indicating that demand is perking up from export markets. On the demand side, domestic buyers are buying steadily. Participants are optimistic that the new year will bring additional interest from international buyers.

The grain markets saw some modest losses over the course of the week as slower export activity and improving South American weather pushed markets down. MAR23 corn contracts settled on Friday at $4.6075/bu. while MAR23 soybean meal settled at $369.4/ton. Lower feed prices will be welcome news to producers, but margins remain tight at the hand of stubbornly low milk prices, particularly for those with high Class III exposure.

Original Report At:

Global Trade Index Kick Starts New Year

In the first trading day of the new year, the Global Dairy Trade index increased 1.2%. The index has risen for the third trading event in a row.

The average price per metric ton was $3,363.

Values for whole milk powder increased 2.5% to $3,290 per metric ton, or $1.49 per pound.

Butter prices increased 2.1% to $5,514 per metric ton, or $2.50 per pound.

The price of anhydrous milk fat increased 0.2% to $5,595 per metric ton, or $2.53 per pound.

The price of mozzarella cheese remained stable at $3,960 per metric ton, or $1.79 per pound.

The price of butter milk powder fell 0.1% to $2,384 per metric ton, or $1.08 per pound.

Prices for skim milk powder fell 0.9% to $2,613 per metric ton, or $1.18 per pound.

The price of cheddar cheese fell 2.4% to $4,165 per metric ton, or $1.88 per pound.

Lactose prices fell 5% to $753 per metric ton, or $0.34 per pound.

In twenty rounds of trading on Tuesday, 155 victorious bidders acquired 26,206 metric tons of dairy goods.

Supply of Heifers and Demand for Dairy Products Around the World Remain Stallant Into 2024

With revised holiday sale dates, the dairy replacement heifer trade was modest countrywide through December. Between year-end 2022 and 2023, the average Holstein heifer springer price for the four reported markets was almost comparable, at about $1,700 per head. Global dairy demand is also in the “steady-but-uninspired” category for the end of 2023. Phil Plourd, President of Ever.Ag Insights, detected poor comments on dairy demand globally on Ever.Ag’s monthly Forecast Update Live webcast. “Until we see some traction in global demand, it’s difficult to believe that these markets can go much higher,” Plourd mentioned this. Meanwhile, beef-cross calves continue to be the year’s biggest dairy market story. In the last month, Holstein heifer calves in Pennsylvania averaged $50-90/head. Their beef-cross heifer equivalents were 7 to more than 10 times more expensive, ranging from $460-685/head.

Fresh Cheese Production Rises Unexpectedly

The T.C. Jacoby Weekly Market Report Week Ending December 8, 2023

Cheese vats remain full, despite lower milk output. U.S. cheese production reached 1.19 billion pounds in October, up 0.8% from the year before. Given the continued investment in U.S. cheese production capacity, cheese output is likely to grow for the foreseeable future, to the detriment of U.S. cheese and Class III prices. But the details of U.S. cheese production offered some fodder for the bulls. In October, cheesemakers shifted milk into fresh cheeses like cream cheese and Neufchatel (+6.8% year-over-year), cottage cheese (+13%), Hispanic cheeses (+5.7%), ricotta (+12.2%) and Mozzarella (+2.3%).

Cheese vats remain full, despite lower milk output. U.S. cheese production reached 1.19 billion pounds in October, up 0.8% from the year before. Given the continued investment in U.S. cheese production capacity, cheese output is likely to grow for the foreseeable future, to the detriment of U.S. cheese and Class III prices. But the details of U.S. cheese production offered some fodder for the bulls. In October, cheesemakers shifted milk into fresh cheeses like cream cheese and Neufchatel (+6.8% year-over-year), cottage cheese (+13%), Hispanic cheeses (+5.7%), ricotta (+12.2%) and Mozzarella (+2.3%). Unlike Cheddar, fresh cheeses are made to be consumed immediately. They won’t show up on a Cold Storage report or at the CME spot market in Chicago. Stronger output of these cheeses hints at better domestic demand and greater export prospects for Mozzarella after a cruel summer of slower orders. The focus on these cheese varieties allowed U.S. cheesemakers to turn out 2.5% less Cheddar in October than they did the year before.

While the latest production data and reports of lower milk and cheese output in Europe fueled hopes for a rebound in U.S. cheese exports, shipments in October remained soft. The U.S. sent just 76 million pounds of cheese abroad in October, 3.4% less than the year before. Shipments to Mexico set a new high for the month, but sales to key buyers in Asia faltered, as cheaper European product dominated those markets. Despite the disappointing export data, U.S. cheese prices climbed this week, boosted by continued strength in European pricing and an impressive jump at Tuesday’s Global Dairy Trade (GDT) auction. CME spot Cheddar blocks rallied 6ȼ this week to $1.58 per pound. Barrels advanced 3ȼ to $1.55.

The Dairy Products report confirmed that whey processors have finally shifted more of the whey stream to whey protein concentrates and isolates, leaving less for the drier. Dry whey output slumped 1.2% below year-ago volumes in September and October output was down 2.6% year over year. Whey stocks waned, but they remain above year-ago levels for now, and exports are soft. Dry whey exports fell to 30.8 million pounds in October, down 37.6% from a year ago. U.S. whey exports are likely to struggle until Chinese hog producers are back in the black, and that may not happen until the Chinese economy finds its footing. Whey prices are holding above the summer lows, but they’re not climbing. This week CME spot whey slipped to 39.5ȼ, down a half-cent from last Friday.

Milk powder prices also retreated, despite convincing rebounds in both skim milk powder (SMP) and whole milk powder (WMP) values at the GDT auction. CME spot nonfat dry milk (NDM) lost 1.5ȼ this week and dropped to $1.165, the lowest price since September. U.S. milk powder output remains in the doldrums, as cheesemakers continue to pull milk and cream away from the dryer and the butter churn. Combined production of NDM and SMP totaled 169.1 million pounds, down 12.9% from October 2022. Manufacturers’ stocks of NDM dropped to 223.6 million pounds, down 10.8% year over year to the lowest stockpile since November 2019. But whittling down inventories through industry attrition is not enough to lift prices any further. We’ll need better global demand for milk powder or even steeper declines in milk powder output from Europe before prices can climb. For now, U.S. exports are too slow to provide much support. U.S. milk powder exports lagged last year’s volumes by 11.8% in October.

Butter production totaled 160.6 million pounds in October, down 0.9% from a year ago. Exports are abysmal, but it doesn’t matter. The U.S. has a butterfat deficit, and butter prices remain well supported. CME spot butter rallied 1.5ȼ this week to $2.67. That’s down significantly from the pre-holiday peak, but it’s still a pretty hefty price.

The setback in the milk powder market weighed on nearby Class IV futures. The December contract slipped 4ȼ to $19.20 per cwt., and January Class IV futures tumbled 28ȼ to $18.94. But deferred Class IV contracts gained a little ground this week and so did most Class III futures. However, Class III prices remain dishearteningly low. December Class III settled at $16.20 and January finished at $16.34. Further down the board, prices look more promising, but there will be plenty of red ink between here and there.

The corn market held in a relatively tight range. March corn futures settled today at $4.855 per bushel, up a fraction of a cent from last Friday. The soy complex continued to retreat. January beans closed at $13.04, down 41.5ȼ for the week. January soybean meal finished at $404.70 per ton, down another $8. There were no surprises in USDA’s monthly update to crop balance sheets. The agency confirmed that U.S. and global corn supplies are plentiful, while soybean and soybean meal stocks are tighter. The United States is going to crush a record volume of soybeans into oil and meal in the 2023-24 crop year. But soybean meal exports will also set a new all-time high, so U.S. dairy producers and livestock growers will have to pay up to keep their share of U.S. soybean meal at home.

Original Report At:

October US milk production fell from 2022

Milk output was somewhat higher than in September, but slightly lower than in October of previous year. According to the USDA’s National Agricultural Statistics Service, milk output in the 24 main producing states was 17.9 billion pounds, up one-tenth of a percent from the previous month but down four-tenths of a percent from the previous year.

In October, production per cow averaged 2,013 pounds, three pounds less than the previous month. The number of milk cows on farms was 8.91 million, down 5,000 from the previous month and 19,000 from the previous year.

With 9.37 million cows, total production in all states was 18.7 billion pounds of milk.

California produces the most milk in the United States, with 3.31 billion pounds, followed by Wisconsin (2.69 billion pounds) and Texas (1.4 billion pounds). Michigan still has the greatest average yield per cow, at 2,240 pounds.

Dairy Markets Are Not Feeling Festive

The T.C. Jacoby Weekly Market Report Week Ending November 17, 2023

The holiday season is upon us, but the dairy markets haven’t been feeling particularly festive. Nearly all products lost value over the course of the week as plentiful supply and understated demand collided to pull prices downward.

The holiday season is upon us, but the dairy markets haven’t been feeling particularly festive. Nearly all products lost value over the course of the week as plentiful supply and understated demand collided to pull prices downward. Lower spot prices have put some pressure on milk futures with both Class III and Class IV moving modestly lower through the week. DEC23 Class III futures settled at $16.64/cwt. on Friday while the DEC23 Class IV contract fell to $19.16/cwt.

Across most of the country milk volumes and component levels are rising as autumn sets in and temperatures cool. The largest exception is in parts of the Southwest where the mercury has remained persistently high and as a result, milk production has not expanded materially. Bottling demand has begun to slow as institutions prepare for the Thanksgiving holiday and stakeholders are anticipating a further increase in spot load availability next week as some manufacturing plants take downtime.

The CME spot butter market continued to put on a show this week. Gains of 4.5¢ on both Monday and Tuesday took the price up to $2.69/lb. The market took a breather on Wednesday before losing 9.25¢ on Thursday and another 10.75¢ on Friday. When the dust settled, the butter market closed this week at $2.49/lb., a loss of 11¢ compared to last week and the lowest price seen since July.

Ample cream supplies are weighing on the butter price. Multiples have fallen for several weeks in a row and while churns are not enthusiastic about building inventories, many are willing to convert affordable cream into butter that will be frozen for future needs. With holiday purchasing largely in the rearview mirror, butter demand has softened somewhat compared to recent weeks. Nevertheless, demand remains seasonally respectable and market stakeholders suspect that lower butter prices will be sufficient to generate additional interest.

In sharp contrast to butter’s volatility, the nonfat dry milk (NDM) market has been remarkably stable. The CME spot NDM price lost just .75¢ over the week, wrapping up Friday’s session at $1.1925/lb. Condensed skim supplies are plentiful and growing, but dryers have maintained active schedules and demand has been sufficient to keep the market in check. Firming signals from the international arena have also likely helped to prevent NDM prices from falling more dramatically. At this week’s Global Dairy Trade Pulse auction, skim milk powder prices moved upward, extrapolating the increase seen at last week’s full auction. Dairy Market News reports that Mexican interest is mixed but suggests that the pace of buying may slow as the holidays approach.

Growing supplies have also increased the amount of milk available to cheese vats, though spot milk prices remain resilient. Current spot supplies are running at a premium of between 25¢ and $1 over Class III prices, driving many cheesemakers to fortify with milk powder. Cheese demand is mixed. The foodservice channel continues to suffer as high menu prices are spooking customers. On the other hand, retail demand has remained robust and is expected to remain so through the coming weeks. Data collected by Dairy Market News indicates the number of cheese advertisements recorded last week increased by 60% compared to the prior period. Traders and key players suggest that U.S. cheese continues to be price uncompetitive with international alternatives, which is expected to stifle export sales.

At the CME, spot Cheddar prices started off strong but deteriorated in the second half of the week. Blocks gained 4.25¢ and .5¢ on Monday and Tuesday but would see these gains wiped out, ultimately closing the week at $1.60/lb., unchanged from last Friday. Barrels gained a more modest 3¢ early in the week before losing a penny on Thursday and 11¢ on Friday, pulling the price down to $1.56/lb., 9¢ less than last Friday’s close. After holding a premium to blocks for six sessions, Friday’s loss pulled barrels back below blocks with a 4¢ spread.

While other markets slumped, dry whey defied the trend and managed to eke out some gains at the spot market this week. Increases on Monday and Tuesday were partially offset by losses on Wednesday and Thursday. Even so, the spot price ended the week at 41¢ per pound, up 1.25¢ from last Friday as 10 loads moved. Raw whey supplies are available but not excessive as cheesemakers still face a premium for spot milk. Market participants indicate that they are in the midst of negotiations for early next year and are finding resistance at the 40¢ price level.

A mixture of weather news out of South America has caused fluctuations in the grain markets this week as alternating swaths of excessive heat and torrential rains have moved across the region in recent days. Recent precipitation should have helped to get Argentina planting back on track while Brazil continues to face significant challenges. Despite headwinds, MAR24 corn futures settled on Friday at $4.8525/bu., down a few cents from Monday’s settlement. Meanwhile JAN24 soybean meal capped the week at $436.50/ton, down about $17 from Monday.

Original Report At:

What goes up must come down in butter prices.

Butter price movement has been spectacular over the last two and a half months. The butter price was $2.62 on August 30th and increased by 88 1/2 cents, hitting a record high of $3.50 1/4 on October 6th. The price then dropped 90 1/4 cents to $2.60 on November 10th. We believed the end of 2021 and most of 2022 would be a crazy ride for butter, but this year has surpassed that time. Even though prices gained $1.24 1/2 from late 2021 to early 2022, the market then chopped about for a while before continuing its uptrend, finally hitting a peak on October 6, 2022, before falling again.

Nothing like the current price movement has occurred in history. The last time prices decreased this quickly was in late 2014, when the price plummeted $1.29 from September 25th to October 28th. But we’ve never seen it fluctuate so rapidly in such a short period of time.

The insane component of the butter movement was not a fear of a butter scarcity this year, as it was in 2022. Exports fell more in contrast to 2021 and early 2022. Butter exports reached 2,294 metric tons in September, a 46.4% decrease from September 2022. To make things worse, exports in September 2022 were 35.5% lower than in September 2021.

September exports were the lowest since 2020, while the monthly amount of butter exports was the lowest since November 2020.

Domestic butter demand surged as the second half of this year progressed, increasing purchasers’ willingness to acquire stock ahead of time. Butter output has also slowed, while cream supplies have tightened and churning has been decreased. As bidders got more aggressive, the expectation of increased prices became a self-fulfilling prophesy. Once the purchasing frenzy was over, sellers were more aggressive in order to shift high-priced supplies as fast as possible, resulting in a downward leap-frog effect. It is unclear how far prices will fall, but it is yet another typical example of a market that always falls faster than it rises.

Not only are we dealing with decreased milk costs and decreasing demand for fluid milk consumption, but schools are also facing a milk carton scarcity that might last many weeks or months. According to Pactiv Evergreen, the main maker of milk cartons in North America, demand for half-pint milk cartons is much more than predicted. The immediate consequences will be felt in New York, Pennsylvania, California, and Washington. School authorities are trying to find alternatives to cartons or restricting milk options. Not only are schools at risk, but so are hospitals, nursing homes, and jails. I’m not sure how demand for half-pint milk cartons can be much greater than predicted. According to fluid milk sales figures, there hasn’t been an increase in demand from schools or other organizations. It seems that this primary corporation was unable to provide its consumers, forcing them to turn to other companies for supplies or alternatives. It is undeniably an intriguing market.

U.S. Dairy Production Has A Rough Month

In September, the USDA reported a broadly mixed month for US dairy product output.

The overall cheese volume of 1.15 billion pounds was up 0.1% month on month but down 0.3% year on year, with advances in American and Hispanic cheeses wiping out losses in Italian cheeses.

In preparation for the holidays, butter output reached 145 million pounds, a 3% rise over the previous month and last year.

Dry milk product output was considerably lower, while whey product production was firm to higher, and frozen product production was lower than a year before.

The USDA will release its next set of dairy supply and demand estimates on November 9th.

Milk futures and cash dairy down Tuesday at CME

On the Chicago Mercantile Exchange, milk futures and cash dairy markets were down on Tuesday.

November Class III milk went down $0.11 to $17.06 a gallon. December’s price went down $0.24 to $16.87. January saw a $0.16 decrease to $17.04. In February, the price went down $0.15 to $17.56. Contracts for March through September varied from unchanged in May and June to fifteen cents lower in April.

The price of dry whey remained steady at $0.3850. One transaction was reported at $0.3825.

At $1.6975, forty-pound cheese bricks were down $0.0025. There were no sales registered.

Cheese barrels fell $0.0350 to $1.5450. Seven transactions were registered, with prices ranging from $1.5450 to $1.5725.

At $2.8975, butter was down $0.1125. Twelve transactions were registered, with prices ranging from $2.89 to $2.93.

Nonfat dried milk fell $0.0050 to $1.17. At that price, one sale was recorded.

Dairy Market Report: Lower production, strong domestic demand set the stage for milk price rebound

Reduced production and strong domestic consumption are showing up in dairy product production and inventory levels, offsetting weaker exports and setting the stage for the milk price rebound long foreseen in dairy futures markets and beginning to show up in dairy statistics. U.S. consumers continued their strong uptake of dairy during the summer.


Health of Global Demand for Milk Powder Sparks Fear

The T.C. Jacoby Weekly Market Report Week Ending October 27, 2023

SMP fell hard at the GDT Pulse event on Tuesday. It’s too soon to know whether the Pulse auction represents a good indication of global SMP values or if it can be dismissed due to limited participation in such a nascent event. But it certainly sparked fears about the health of global demand for milk powder.

A poor showing at the Global Dairy Trade (GDT) Pulse auction spooked the milk powder markets this week and another month of disappointing trade data from China added further fright. The GDT debuted its Pulse auction in August, offering an indication of trends in whole milk powder (WMP) prices in the weeks between the full bimonthly events. This month, GDT added skim milk powder (SMP) to the Pulse docket. SMP values stabilized at the GDT in September and staged a convincing recovery in the first half of October. But SMP fell hard at the GDT Pulse event on Tuesday, retreating 4.7% from the comparable contract at last week’s full auction. WMP prices also took a step back, slipping 1.1% from last week’s mark. It’s too soon to know whether the Pulse auction represents a good indication of global SMP values or if it can be dismissed due to limited participation in such a nascent event. But it certainly sparked fears about the health of global demand for milk powder. CME spot nonfat dry milk slipped 3.5ȼ this week to $1.1975 per pound.


Chinese dairy import data was similarly unsettling. China brought in less than 42 million pounds of WMP in September, the lowest volume in five years. Chinese SMP imports also notched five-year lows at 43 million pounds. All told, Chinese milk powder imports fell 29.5% from year-ago volumes. These numbers are disheartening but not surprising. The product that arrived on China’s shores in September was purchased months before, at a time when China was notably absent from the global marketplace. But Chinese milk production has fallen below year-ago volumes for several months now, and Chinese buyers have been a little more active at the GDT and elsewhere. China still has large milk powder stocks, but it’s possible that China’s appetite for foreign product will improve going forward.

China’s imports of other dairy products were more reassuring. Butter and cheese imports both topped year-ago volumes once again. Chinese whey imports fell 11.6% short of the September 2022 tally, but Chinese imports of U.S. whey jumped from the very low volumes seen in February through August.

Closer to home, indications of demand were similarly mixed. USDA’s Cold Storage report showed that cheese stocks declined 23 million pounds from August to September. There were 1.47 billion pounds of cheese in refrigerated warehouses at the end of last month, up just 0.2% from September 2022. The month-to-month decline was stronger than usual, which might hint that cheese demand was better than previously thought. But it’s more likely that buyers had some catching up to do after very slow sales in August. Inventories of American-style cheeses, including the Cheddar that determines CME spot market values, hardly budged, slipping just 2 million pounds for the month. American-style cheese stocks were up 0.9% from a year ago. There simply wasn’t enough good news in the Cold Storage report to prop up prices in Chicago. CME spot Cheddar blocks fell 5.75ȼ to $1.73. Barrels slipped 2.75ȼ to $1.6825.

Butter stocks dropped 16.3 million pounds from August to September, clocking in at 275.4 million pounds. Butter stocks declined at a rapid clip in June through August, but the drawdown last some momentum in September as soaring prices det would-be buyers. September 30 stocks were much lower than those seen in 2019 through 2021, which explains why prices climbed this fall. But inventories were 3% greater than in September 2022, undermining the argument that prices should top year-ago levels. CME spot butter prices dropped hard this week, plummeting 16.75ȼ to $3.1925 per pound. As grocers and buyers finish stocking up for the holiday baking season, prices are likely to fall further, echoing last year’s sudden selloff.

As it often does, the whey market bucked the trend. CME spot whey powder climbed a half-cent this week to 40ȼ, hitting that mark for the first time since April. Dairy producers can expect 60ȼ per cwt. more from their Class III checks with whey at 40ȼ per pound than they could when it was languishing at 30ȼ. Stronger Chinese imports of U.S. whey likely helped at the margins, but the real reason for the whey rally is a dramatic increase in domestic demand for high-protein whey concentrates.

With most dairy products in the red, both Class III and Class IV futures took a sizeable step back this week. November and December Class III futures lost 72ȼ and 80ȼ, respectively. The futures forecast milk in the mid-$17s into early next year. Class IV contracts lost nearly as much ground, but prices are much, much higher. The October contract settled at $21.60, with November a dollar lower than that and December at $19.49.

Combines are rolling and grain prices are falling. December corn settled today at $4.8075 per bushel,


down more than 15ȼ for the week. There is plenty of corn on the U.S. balance sheet to satisfy domestic demand and keep prices relatively low. Grain values will spike if the trade becomes worried about a steep decline in South American crop prospects, which would quickly boost U.S. corn and soybean exports. But the forecast calls for showers in the driest parts of northern Brazil and Argentina, so those fears are taking a backseat for now. Indeed, U.S. corn and soy export prospects have diminished in the past few weeks as the dollar strengthened and U.S. export logistics faced additional complications. Low water levels on the Mississippi River have reduced barge traffic, and – just as grain started to flow in the northern United States and southern Canada – a labor strike has shut down all shipping on the St. Lawrence Seaway, a vital artery connecting the Atlantic Ocean to ports on the Great Lakes.

Nonetheless, USDA reported a spate of new corn and soybean export sales this week, and soybean meal is leaving our shores at a record-setting pace. Argentina is the world’s largest soybean meal supplier, and the U.S. is filling in the vacuum left by last year’s very small Argentine soy crop. December soybean meal jumped to $442.40 per ton today, up $18.50 from last Friday.

Original Report At:

With the exception of cheese barrels, milk futures and the cash dairy market fell.

On the Chicago Mercantile Exchange, milk futures and cash dairy markets were down on Tuesday, with the exception of cheese barrels.

November Class III milk was $17.19, a $0.10 decrease. December’s price was $17.05. January saw a $0.11 decrease to $17.32. February’s price went down $0.11 to $17.71. Contracts from March to September varied from twelve cents lower in March to three cents higher in May.

Dry whey fell $0.0075 to $0.3650. Twelve transactions were registered, with prices ranging from $0.3650 to $0.3725.

Cheese blocks weighing forty pounds were down $0.03 at $1.6850. Three transactions were registered, with prices ranging from $1.6825 to $1.6850.

Cheese barrels were $0.0050 higher at $1.6550. Four transactions were registered, with prices ranging from $1.65 to $1.6550.

Butter went down $0.02 to $3.28 per pound. There were no sales registered.

Nonfat dried milk fell $0.01 to $1.1875. One transaction was reported at $1.1975.

Cash dairy prices and milk futures both fell on Tuesday.

On the Chicago Mercantile Exchange, November Class III milk futures are down 16 cents to $17.67. December 33 is $17.56 lower. The January contract is down 12 cents to $17.85. Contracts are 9 to 18 cents lower from February to April.

Dry whey fell $0.0125 to $0.3675.

At $1.7425, blocks are down $0.0225.

Barrels are flat at $1.7350.

Butter has dropped $0.01 to $3.3650.

Nonfat dry milk is now $1.22, a $0.02 decrease.

Butter Market Descends in Dramatic Fashion

The T.C. Jacoby Weekly Market Report Week Ending October 13, 2023

The butter market’s luck has changed dramatically. After repeatedly setting record highs since late September, the market descended in dramatic fashion this week. Despite the decline, butter prices remain historically strong as cream is tight and buyers are making their final orders ahead of the holiday season.

Whether or not black cats or broken mirrors were involved, the butter market’s luck has changed dramatically. After repeatedly setting record highs since late September, the market descended in dramatic fashion this week. A quarter cent loss on Monday was followed by another two-cent decline on Tuesday. After taking a breather on Wednesday, another 8.5¢ loss on Thursday and 3.5¢ decline on Friday ultimately pulled the price down to $3.36/lb. at the end of today’s trading session. Cumulatively, the market lost 14.25¢ compared to last week. Lower prices helped to facilitate trading as eight loads moved during the week.

Despite the decline, butter prices remain historically strong as cream is tight and buyers are making their final orders ahead of the holiday season. But while the fundamentals hold, nobody wants to be stuck holding expensive inventories if prices fall further, in some cases leaving buyers and sellers in a standoff. Export demand remains understated while the pull from retail is steady to lighter, depending on the region, according to Dairy Market News.


On the heels of the weak production figures disclosed in last week’s Dairy Products report, nonfat dry milk (NDM) markets found the traction to move higher this week, busting through the $1.20/lb. threshold for the first time since the end of February. Half-cent increases on Monday and Thursday were complemented by a 3¢ gain on Wednesday that ultimately lifted prices to $1.22/lb., up 4¢ compared to last week. A total of 14 loads moved during the week.

After listing sideways for months, the NDM market seems to have found the conviction to move higher, albeit in a measured way. Several market participants indicate that Mexican demand remains robust and, remarkably, could even be strengthening. Logistical bottlenecks at the border threaten to slow the movement of product, but they have not yet been severe enough to affect market sentiment. After months of lackadaisical activity, demand from other global regions is also appearing to perk up. Domestic demand for milk powders is healthy. Meanwhile, condensed skim is relatively available, but Dairy Market News mentions that several dryers are performing regular maintenance which will curtail throughput and could fuel additional market gains.

Within the Class III complex, most of this week’s drama was found with dry whey. The spot dry whey market appreciated every day this week, adding a total to 3.75¢ to the price. At the end of today’s session, the price stood at 33.5¢ per pound, the highest dry whey price seen since early May. Not only were the gains impressive but the market was thrumming with activity as 70 loads traded hands.

Dry whey prices appear to be tracking the entire whey portfolio up as manufacturers of whey protein concentrates and whey protein isolates are also seeing the value of their products increase. Domestic whey demand is healthy while export demand is at least steady.


Cheesemaking remains active but as spot milk is now consistently priced at a premium, the whey stream is not excessive. With a limited whey stream and healthy demand for lucrative higher protein products, dry whey production is likely to slip around the edges, keeping support under prices in the coming months.

The cheese markets were relatively subdued again this week as they waited for a signal to push them one way or the other. Cheddar blocks were mostly unchanged except for a quarter cent loss on Thursday as two trades were made which pulled the price down to $1.70/lb. Barrels were somewhat busier, notching gains on Tuesday, Wednesday, and Thursday, lifting the price to $1.645/lb. an increase of 6.75¢ compared to last Friday. This narrowed the block barrel spread to 5.5¢, the slimmest it has been since late July.

For the moment, cheese seems to have struck a balance between supply and demand. Cheesemaking remains active though several plant managers reported to Dairy Market News that their facilities are down for maintenance, potentially slowing production. Domestic demand is steady to higher, with particularly upbeat retail demand reported in the Northeast. While current price levels should be sufficient to generate some additional export activity, most stakeholders report that meaningful new international sales have yet to materialize.

Cooler autumn temperatures have improved cow comfort in many parts of the country and have boosted yields as a result. Milk and cream availability have increased somewhat though processors are still paying a premium to get their hands on spot milk for manufacturing.

Bottlers remain active, placing additional pressure on spot milk supplies. Class IV milk futures markets largely dismissed the weakness seen in the spot butter market as prices remained resilient. On Friday, the NOV23 Class IV settled at $20.88/cwt. The Class III markets were mixed as nearby contracts lost a few cents while contracts later in 2024 mostly appreciated. The NOV23 Class III contract settled Friday at $17.41/cwt.

USDA trimmed yield expectations for the 2023/24 corn and soybean crops in its World Agricultural Supply and Demand Estimates report, released Thursday. The agency dropped corn yields to 173 bu./acre, slightly lower than most analysts’ expectations, in turn reducing production by 70 million bushels. Soybean yields were reduced to 49.6 bu./acre, also modestly lower than the average trade estimate. Both corn and soybean futures moved up on the news though they retreated today. DEC23 corn futures settled Friday at $4.9325/bu. while DEC23 soybean meal futures settled at $390/ton.

Original Report at:

Wednesday CME milk futures mixed, cash dairy stable to higher.

Milk futures were down in the short term but higher in the long term, while cash dairy markets were stable to higher on the Chicago Mercantile Exchange on Wednesday.

October Class III milk was $0.01 lower at $16.84. November’s price went down $0.10 to $17.23. December’s price went down $0.10 to $17.49. January saw a $0.07 increase to $17.99. Contracts from February to August varied from nine cents lower in July to twelve cents higher in February. July was the only month with a decreased price after January.

Dry whey was trading at $0.3150, up $0.0050. There were 21 transactions, with prices ranging from $0.31 to $0.3150.

For the third day in a row, forty-pound cheese blocks stayed steady at $1.7025, with no sales reported.

Cheese barrels gained $0.0075 to $1.6175. There were no sales registered.

The price of butter remained constant at $3.48. There were no sales registered.

Nonfat dried milk increased $0.03 to $1.2150. There were eight transactions, with prices ranging from $1.20 to $1.2150.

Cash dairy stable to higher Tuesday, CME milk futures mixed.

On the Chicago Mercantile Exchange, milk futures were neutral, while cash dairy markets were mainly higher, with the exception of butter.

October Class III milk was $0.03 lower at $16.85. November saw a $0.17 decrease to $17.33. December’s price went down $0.10 to $17.59. In January, the price went down $0.06 to $17.92. Contracts from February through August varied from unchanged in April, May, June, and August to five cents higher in July.

Dry whey was trading at $0.31, up $0.0075. Four transactions were made, with prices ranging from $0.31 to $0.3125.

For the second day in a row, forty-pound cheese blocks stayed steady at $1.7025, with no sales reported.

Cheese barrels increased $0.0325 to $1.61. There were two sales at $1.6025 and $1.6075.

Butter went down $0.02 to $3.48 a pound. There were two sales for $3.48 and $3.4850.

The price of nonfat dry milk remained steady at $1.1850. There were no sales registered.

CME Spot Butter Soars

The T.C. Jacoby Weekly Market Report Week Ending September 22, 2023

CME spot butter soared an astounding 28.25ȼ this week and closed right at the $3 mark. Exports are out of the question, but domestic demand is firm, and butter churns are running light.

Three dollar butter is back. CME spot butter soared an astounding 28.25ȼ this week and closed right at the $3 mark. Exports are out of the question, but domestic demand is firm, and butter churns are running light. Cream supplies are tight thanks to lower milk output and fierce competition from cheese vats and makers of whips and dips. Butter buyers are anxious as baking season looms large. They fear a repeat of last year’s persistently high prices and they’re chasing the market upward. October and November futures jumped 7.5ȼ today, the maximum gain allowed under the CME’s daily trading limits.

Milk powder prices also climbed, buoyed by a strong showing at the Global Dairy Trade (GDT) auction. Buyers in North Asia – which includes South Korea, Japan, and, most notably, China – snapped up more milk powder at the GDT than they have in two years, and they pushed prices higher to boot. Both whole milk powder (WMP) prices and the GDT Index rallied 4.6%, their second straight positive performance. GDT skim milk powder (SMP) finally showed some signs of life as well. In Chicago, CME spot nonfat dry milk (NDM) leapt 5.75ȼ to $1.17 per pound, matching its highest price since May.

Global milk powder production is slowing as milk output wanes and manufacturers direct milk to other uses. In Europe and the United Kingdom, milk collections topped year-ago volumes by just 0.2% in June and July, and driers ran light. New Zealand’s new season is off to a poor start. August milk solids output fell 0.9% from the prior year to the lowest volume since 2017. U.S. milk production continues to shrink. USDA trimmed its estimate of July milk output and now reports mid-summer production down 0.7% from July 2022. But August milk output was larger than expected, down just 0.2% from last year.

Lower milk production is obviously supportive of milk powder prices, but demand matters too. The market was relieved to see China getting more aggressive at the GDT, but it remains wary, and the latest round of trade data offered little fodder for the bulls. China imported less WMP last month than it has in any August since 2016. China’s year-to-date WMP imports also stand at seven-year lows. And Chinese SMP imports, which had been going strong, fell 36% short of year-ago volumes last month. Despite disappointing trade from China, the U.S. milk powder market is as taut as a bowstring. It will shoot even higher at the first sign that China’s appetite for foreign milk powder has recovered.

Whey powder followed NDM upward. CME spot dry whey gained a half-cent and reached 30.5ȼ. High-protein whey prices continue to climb, and manufacturers are sending more of the whey stream into concentrates, which is helping to tighten up supplies of whey powder. But the whey market is also capped by poor demand from China. Chinese imports of U.S. whey fell to a 17-month low in August.

Cheese bucked the trend and suffered huge losses this week. CME spot Cheddar blocks fell a dime to $1.78 per pound, a two-month low. Barrels were even worse. They plummeted 21ȼ to $1.60, also the lowest price in two months. High prices this summer have stymied export opportunities this fall, and, now that the heat has abated, there is more fresh Cheddar making its way to Chicago. The trade expects cheese output to remain strong, as Midwestern milk output held firm in August despite the heat. There are also plenty of cows in the cheese states. Dairy slaughter volumes are not running quite as hot as they did this summer, and USDA reported no change in cow numbers from July to August. However, the agency did trim its assessment of the July milk-cow herd by 10,000 head, confirming the prevalence of sellouts and very high cull rates this summer.


The setback in the cheese markets took a heavy toll on Class III prices. October Class III fell 94ȼ this week to an inadequate $17.16 per cwt. November was not much better. It dropped 99ȼ to $17.34. Fourth quarter Class III futures now average just $17.45, which will not pay the bills. Dairy producers outside the cheese states will enjoy much better prices, although the share of their milk check derived from Class IV is likely falling as underutilized balancing plants represent an increasingly small share of the blend price. October Class IV jumped $1.24 this week and both October and November Class IV topped $20 for the first time since February. Dairy producers will certainly welcome these higher prices. This has been a tough year on the farm, and they have a lot of rebuilding to do.


Choppers and combines are rolling through the Corn Belt. Yields are extremely variable, but most farmers have been pleasantly surprised at how well their corn has held up through strange and often unfavorable weather. There is plenty of corn, and prices are approaching two-year lows. December corn settled today at $4.7725 per bushel, up a penny from last week. Corn futures often notch their seasonal low in late September. This looks like an opportunity for dairy producers to lock in grain costs at relatively attractive levels.

Soybean supplies are much tighter, and the soy crop appears to have struggled a bit more than corn through the late-season heat and drought. Crop analysts warn that scarce soybean supplies could reduce the crush and limit soybean meal output over the next 12 months. Nonetheless, soybean and soybean meal prices continued to fade. November soybeans finished at $12.9625, down another 44ȼ this week. December soybean meal settled at $385.80 per ton, down $6.30 from last Friday.

Original Report At:

August cheese sales break all-time records

The most recent U.S. dairy stock data indicates minor month-to-month reductions for August. According to the USDA’s Cold Storage report, cheese stockpiles are approximately 1.5 billion pounds, down slightly from the previous month but up 1% year on year. Total cheese and other varieties of cheese, such as mozzarella and parmesan, set new monthly highs. Butter stocks were down 12% from the previous month but up 4% from a year earlier, totaling little more than 289 million pounds.

Australia will produce least dairy in 30 years. It might drive skyrocketing

Australia is on track to produce the least quantity of milk in 30 years, bringing dairy prices to all-time highs.

Australians can now hardly afford their own local goods because the dairy business has dropped so much.

However, there are still many people prepared to roll up their sleeves and tackle the problem.

In South Gippsland, farmer Benjamin Vagg’s mild encouragement is all that is required when 420 dairy cows arrive for their afternoon milk. After all, this is a $900,000 move.

Seven days a week, he begins his day at 5.30 a.m.

Vagg is half the age of the typical Australian dairy farmer, at 34. Even more unusual, he’s delighted about it.

“We have some of the best dairy farmers in the world In Australia,” Vagg said.

“It’s incredible. I’m sure I wouldn’t want to work in an office.

“In fact, I started my career out in a suit trying to be someone in a corner office in Melbourne somewhere, and then decided, ‘Nah I didn’t want to do that,'” said the man.

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However, not everyone is as enthusiastic about farming as Vagg. 20,000 Australians got money milking cows back in 1980. There are now less than 4000 remaining.

According to Michael Whitehead of ANZ’s Agri-Insights, Australian milk output is declining year after year, with this year projected to be the lowest in three decades.

Whitehead has been keeping a careful eye on things, and he believes this is why dairy products are becoming so pricey.

“We’ve got the same number of dairy processing companies, so they have to compete to get an ever-shrinking supply of milk,” he said.

“That pushes up the cost, which cuts their margins and means higher prices at the supermarket.”

According to John Williams, president of the Australian Dairy Products Federation, it was one of the most difficult periods the sector has ever encountered.

Williams, who represents cheese, butter, and yoghurt producers, believes the high pricing will drive Australians away from pricey Australian dairy and toward less expensive imported products.

“Look it’s not lost on me in this market,” he said.

“In particular, consumers are having a difficult time right now due to cost inflation, but this is true across the board.”

“They’re going to make choices they probably weren’t making 12 months ago”

Australians are increasingly unable to afford to produce their own dairy. Cheaper, foreign goods are taking over the nation.

In fact, the quantity of New Zealand dairy in Australia is now about 30% greater than it was this time last year.

So, unless you’re quite certain you’re eating Australian dairy, you probably aren’t.

“It’s occurring right now. “Right now, two of the top four butter brands in Australia are imported,” Whitehead said.

Farmers like Vagg are opposed to imported butter being slathered on top of Vegemite… yet he claims he can’t sell his milk for much less.

After all, his expenses have risen as well.

When asked whether he felt sorry for the manufacturers who are now paying him top price, the harsh farmer said, “About time.”

“It’s more difficult for shoppers,” he admits.

Australians are discovering that they may purchase dairy that is either local or inexpensive, but not both.

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