11/5/2021
Spot cheese put in new lows this week as cheddar has become harder to move. Dairy products report came out Thursday and put September cheese production at 3.3 % higher then last year. This means any pull back in milk production is not slowing down cheese productions.
Weekly Spot Prices
Weekly Future Prices
Cheese production is receiving plenty of milk to run full production schedules. Spot loads of milk are trading at class to $1 above class. Demand is stable to good with blocks a bit tighter then barrels. Cheese inventories of older barrels have been trading at a discount. Cheese production is managing to stay ahead of buyers with the holiday buying in full swing. Cheese market tone was steady this week.
Butter: cream is tighter in the East and Central regions, with the Western region more available to meet production needs. Delays in the trucking co cream supplies have interrupted some production schedules. Retail butter demand is strong across the country as retailers prepare for the holiday season. Food service demand is steady to slightly higher. Inventories are tight in the East and Central regions. Western region reports buyers from other regions expressing interest despite the high freight costs. Bulk butter spot prices range from 2 to 15 cents above the market. Butter market tone is firm.
Dry whey moved up a half a sent as demand is outpacing supply. Dry whey stocks are tight as production continues to focus on the higher protein concentrations. Manufactures are finding it more lucrative to produce this variety even though it uses more whey solids then other varieties. The Whey market is bullish.
As cheese prices slip other dairy products surge. Milk production and cow numbers have come down, but the drop is concentrated in areas that produce butter/powder. This has sent butter rocketing higher with $2 butter well within reach. Strong demand and production of high protein lower production, dry whey, has also pushed that market to new highs. Cheese on the other hand has increased production capacity from previous years with an adequate milk supply. This has out paced our current demand and cheese spot prices have started to fall. With the current market I would look to get covered in the first half of 2022 for your class 3 needs. Recommendation: buy the 1800 put sell the 1600 put and sell 2000 call; look to pay 10 to 20 cent to get it done.
