The KDM Dairy Report 04/12/2019

The block/barrel average gained a penny for the week, settling at $1.63/lb. We’ve been watching this chart for the past few weeks. After rejecting the $1.68/lb level three times (red circle), it is definitely an area of established resistance (horizontal orange line). However, over the past two weeks (last two green bars), it’s retested the blue downtrend line and appears to have bounced off of it. These are small bars to be sure, but considering the aggressive barrel bidding we saw this week, it could mean a 4th attempt at breaking above resistance is in the works. Watch this space!

Milk production in the Northeast is increasing seasonally, with many balancing plants at or near full capacity. In the Mid-Atlantic, milk output is also on the rise, but most processors in the region are not at capacity. Milk is being shipped out of the region, which is keeping balancing plants on lighter schedules. In the Southeast, the increase in milk production has not been enough to fulfill production needs, thus milk from other parts of the country are being imported. Class I sales are up, with some bottlers requesting additional milk. Cream availability has tightened in the region due to improved demand. Class II operations are pulling strong cream orders. In the Central region, individual farms are reporting increases in milk output, but processors are reporting a net decline in milk receipts due to more and more farm closures. Spot loads of milk were reported at $1 over to $2 under Class III, compared to $2 under to  $3.50 under Class III last week. Moving West, California processing plants report milk receipts are steady this week. Despite strong milk production throughout the state, handlers have been able to find homes for the milk. Arizona milk output is trending higher, as are components. Milk handlers have so far been able to manage all the milk within the state. Milk output is steady to lower in New Mexico, with no surplus milk reported. Finally, in the Pacific Northwest, milk production is moving higher along seasonal patterns. Supply and demand seem to be in good balance.

Butter output in the Northeast has been somewhat constrained this week, as Class II production has limited surplus volumes of cream. Retail butter demand is good, as print orders have strengthened. Manufacturers in the Central region are taking notice of the increase in cream prices. Some churners are not as full as they would like to be, and an number of plant managers are out looking for additional cream. Domestic demand is meeting expectations, while export demand has been strong. Inventories are in good balance. Western butter demand is increasing as bakers prepare for spring sales. Butter output is mixed, with some areas seeing tighter cream supplies due to increased Class II usage.