- 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: https://www.jacoby.com/market-report/after-period-of-exuberance-dairy-markets-run-into-resistance/
