10/16/2023
Another notch higher for whey this week as it makes its slow climb out of the basement. Every penny higher in dry whey is 6 cent higher in class 3. A little bit slower week for blocks and barrels this week which could be a sign that lower production has started to tighten up the cheese market. Butter is starting to show some signs that it is topping out as it bumped up into the $3.50 range and came back off. As of Friday spot class 3 is pricing at $16.49 and class 4 is pricing at $22.57.
Weekly Spot Prices
Weekly Future Prices
Cheese: Milk output is increasing in the Northeast, and contacts report more volumes are becoming available for cheese production. In the Midwest, milk production is trending higher, but contacts report spot loads remain somewhat limited. Spot loads of milk are trading in the Midwest at or near $1 over Class III. Demand for Class III milk is strong in the West, and cheesemakers in the region say extra spot loads of milk are limited. Cheese production in the region is steady. Contacts in the Midwest report steady to lower cheese production this week, as some plants are down for scheduled maintenance. In the Northeast, cheese production schedules are steady to stronger, despite persistent labor issues. Cheese inventories are growing in the Northeast, while holding steady in the Midwest. Meanwhile in the West, some cheesemakers say inventories are declining slightly. Retail and food service cheese demands are strong in the Northeast and steady in the West. Contacts in the Midwest report health demand for cheese. (USDA Cheese Highlights)
Butter: Milk output is increasing in the Northeast, and contacts report more volumes are becoming available for cheese production. In the Midwest, milk production is trending higher, but contacts report spot loads remain somewhat limited. Spot loads of milk are trading in the Midwest at or near $1 over Class III. Demand for Class III milk is strong in the West, and cheesemakers in the region say extra spot loads of milk are limited. Cheese production in the region is steady. Contacts in the Midwest report steady to lower cheese production this week, as some plants are down for scheduled maintenance. In the Northeast, cheese production schedules are steady to stronger, despite persistent labor issues. Cheese inventories are growing in the Northeast, while holding steady in the Midwest. Meanwhile in the West, some cheesemakers say inventories are declining slightly. Retail and food service cheese demands are strong in the Northeast and steady in the West. Contacts in the Midwest report health demand for cheese. (USDA Butter Highlights)
Dry Whey: Dry whey prices held firm for both the range and mostly price series. Recently, improved trading activity of non-preferred brand loads is steadier mid-way through October. A few manufacturers relay Grade A dry whey and bleached dry whey inventories are tighter. That said, loads of both bleached and unbleached dry whey are available for meeting spot buyers’ current needs. Export demand is moderate. Cheese manufacturing is making enough liquid whey to allow for steady dry whey production schedules. Some processors, if capable of whey protein concentrates manufacturing as well, are focusing production on inventory for a comparatively stronger whey protein concentrates market. Sentiments of stakeholders lean towards some tightening of spot load availability (USDA Dry Whey)
Milk going into class 3 should continue to tighten. With a big price jump to class 4 and good class 1 demand more of the available milk should flow that way. With that said there is still an issue with demand. Exports have been slow and world prices on cheese are dropping. Domestically cheese demand is steady to strong but there is enough cheese to fulfill spot demand. Recommendation: by calls on pull backs, if the economy can hold and cow numbers continue to drop, at some point there should be a good rally. Dec 23 – Apr 24, buy 1950 calls for 35 cent average. No report next week as I will be traveling. Give us a call for market updates or more specific recommendations.
