The KDM Dairy Report 9/23/2023


Milk production was out this week.  It was down 0.6 which means the cows were dealing with the heat better than most people thought.  Also with the jump in price exports tapered off.  This all put some pressure on the market the last couple of weeks to drop the Spot price.  Cold storage is out Monday and could prove to be a big market mover.

Weekly Spot Prices
Weekly Future Prices

Cheese: Milk available for cheesemaking is somewhat snug in the Northeast and Midwest, as Class I processors continue to pull on volumes. Some cheesemakers in the Midwest say they have room for more milk, but spot loads are unavailable, and spot loads that are being traded in the region are at above-Class prices. In the West, cheesemakers say milk volumes are in good balance with production, though some processors are unable to obtain additional spot loads of milk to run desired production schedules. Cheesemakers in the Northeast say limited milk availability and labor obstacles are limiting their production schedules. Some Midwest cheesemakers are scheduling more downtime weekly due to recent declines in milk availability. In the Midwest, cheese demand varies. Contacts report seasonally busy curd sales, while barrel demand is steady to busier. Retail and food service demands for cheese in the West are strong to steady, but export demand is more moderate. Contacts in the Northeast note the strongest demand for cheddar among American-type cheeses. Mozzarella cheese is in high demand in the Northeast due to steady food service demand. (USDA Cheese Highlights)

Butter: Cream supplies are tight in the Northeast, as demand is outpacing supply in the region. Butter makers in the Northeast are largely relying on contracted loads for production. In the Central region, butter makers say there are some cream loads available for churning this week. In the West, cream volumes vary somewhat, but butter makers say cream is tight in the region. Butter production is mixed in the West, as some processors say they are running busy schedules which are only limited by current cream availability. Meanwhile, others in the region report churning less bulk butter than anticipated. Demand for butter is strong to steady in retail and food service markets in the West. Contacts in the East relay increasing demand for butter ahead of the holiday baking season. In the Central region, food service demand is steady, while retail demand is mixed. Earlier this week, butter prices on the CME moved to the highest point they have been this year, and some contacts in the Central region suggest $3/lb butter prices are a possibility. (USDA Butter Highlights)

Dry Whey: The dry whey price range and mostly price series are unchanged as both held firm. More activity with nonbrand preferred loads has supported prices on the bottom ends. Demand is steady domestically. A few manufacturers report inventories as slightly tighter. However, loads are available to meet current spot market demand and contracted obligations. Supplies of bleached dry whey compared to unbleached dry whey are reported as tighter by some stakeholders. Export demand is moderate. Cheese manufacturers are running steady schedules making enough liquid whey to keep dry whey production steady. However, supply and production are noted as tighter in the southwestern area. Some processors, with the ability to produce both whey protein concentrate and dry whey, are focusing more on whey protein concentrate, with the whey protein concentrate market being comparatively stronger.  (USDA Dry Whey)

Milk Production report did not drop as much as expected in august.  Part of that is that heat set in early so July production was already showing signs of heat stress on the cows.  The other reports we are hearing is that feed has been better this year.  Ether way there was not as much of a drop from July to August as we typically see.  That new has now pushed the market lower this week and by Thursday and Friday we saw the buyers step back into the spot market and pick up a few loads.  Now Cold Storage is Monday and is setup to have the potential to move the market.  Weekly Cold Storage had no change for the month of August.  If cold Storage comes out flat we could see the buyers step to the side lines again.  Recommendation, buy puts, they are low risk and if cold storage is bearish towards the market you will be glad you have them.