Exports pick up but domestic demand looses steam. This week there was a noticeable increase in exports with prices continuing to drop. Domestic demand is trending down as retail demand has lowered in some verities of cheese and food service demand has been spotty.
Spot Market Recap
In the Northeast there is plenty of milk for cheese production. Inventories are stable to growing. Food service is not taking on additional loads at this time. Retail demand is unchanged, with most of the demand focused on grilling. In the Midwest cheese production is strong with most cheese markers running 6 to 7 day work weeks. Barrels are tighter then blocks with some block makers stating that they have extra block available. Spot loads of milk remains at a discount as cheese plants are already at capacity. In Western cheese domestic demand has held steady but exports demand has picked up. Transportation for export has been difficult to obtain. Cheese production is strong and spot loads are available. Over all market tone is stable to bearish.
Cream continues to be available for butter production this week. Although butter making operations are funning shorter production schedules. Inventories are building but butter makers are not concerned as they anticipate increase demand in the fall. Retail demand is slow but food service demand is steady to strengthening. Butter prices range form 1 to 8 cents above the market. Butter market tone is stable.
Dry Whey prices have slipped this week as Asian buyers have found competitive prices from European producers. Still dry whey availability is tight as producers meet existing orders. There is an increase in whey availability for the spot market as inventories remain steady. Producers continue to focus on higher whey protein concentrates and permeate. Over all market tone is steady to lower.
Dairy markets are showing some weakness this week with blocks down mid week and the separation between the block and barrel prices growing. If high grain prices continue I would expect milk production to come down. Which would support the class 3 futures price later on this year. With that said Sunday night grains started to come off. At this point I would start to look and buying back any sold calls that you have done earlier this year and adding a few put spreads, Look at buying the 18.25 selling the 17.25 Aug 21 – Nov 21 for around 35 cents.