The cheese market is starting to show a pattern. Class 3 futures build up through Thursday and then a big sell off on Friday. This has left the market a little mixed on a direction. Butter prices have started to push into the pre-pandemic ranges and demand is strong in both food service and retail markets. Finally Dry Whey continues to be red hot as it pushed to new highs this week.
Weekly Spot Prices
Weekly Future Prices
Cheese demand is mixed regionally. Retail demand, however, is strong throughout the country as the holiday season has arrived with the colder weather. Production remains similar to last week, as cheesemakers run busy schedules. Employee shortages continue to hinder some production. Milk availability is beginning to tighten up in the Midwest, but it is more available in the coastal regions. Milk spot prices ranged from $.50 to $1 over Class in the Midwest. Cheese market tone is mixed after several weeks of price fluctuations. Cheese inventories vary by region.
Butter market, cream availability is meeting production demands in the West. However, cream supplies are reported to be increasingly limited in the Central and East regions. Some butter production schedules are hindered by cream tightness, labor issues, and delayed deliveries. Reports of bulk availability diminishing in some parts of the country is offset by other areas reporting comfortable inventory levels. Butter sales are strong as demand increases across food service and retail sectors. Market tones are steady to bullish. Bulk butter overages range from 2 to 15 cents above market this week.
Dry whey prices have moved higher on both ends of the range. Demand for dry whey is increasing in domestic markets and international markets. There is strong interest from purchasers in Asian markets. Port congestion is still causing delays to exports. Likewise, the ongoing truck driver shortage is causing delays throughout country. Dry whey inventories are tight, though spot purchasers report being able to find loads to meet immediate needs. Some drying operations report an inability to run full schedules due to labor shortages. Plant managers are focusing their schedules on higher protein concentrates which is limiting the production of dry whey.
As cheese prices do another roller coaster of a week class 4 moves higher. This has largely been do to market factors of the last year. With grain price continuing to stretch dairy farmers budgets. The area’s that had there milk going to mostly class 4 have seen a drop in milk production. With butter price in 2020 and 2021 well below the previous years those dairy farmers were less able to absorb the high grain prices. That is why we are seeing stronger class 4 prices while class 3 has more fluctuation. If class 4 prices continue to stay strong I would expect milk production to slowly rebound in those areas which will eventually bring those prices back down. Recommendations this week, sell rallies in class 3 look to take profits on drops. Also, look to lock in Class 4 DRP at profitable levels.