The KDM Dairy Report 11/18/2023


The Cheese market lost more ground this week as December class 3 futures sunk back into the 16s.  Demand is on par with last year domestically but the economy is starting to show signs of slowing down.  Restaurant traffic has slowed and we have not seen holiday demand pick up in the retail market.  The jobs market has held in pretty well but inflation has taken a big chunk of take home pay and consumers are cutting back where they can. This is happening world wide and there is a good possibility of not getting the normal holiday bump in demand. 

Weekly Spot Prices
Weekly Future Prices

Cheese: Steady milk volumes are clearing into Class III operation in the Eastern region. Cheese production is steady in the East and cheddar continues to be the most in-demand American-type cheese. Demand is steady on the retail front. Spot milk availability remains somewhat tight in the Midwest with spot milk prices hovering around $1-over Class. Nonfat dry milk usage in cheese processing has increased as a result of limited spot milk offers ahead of the holiday week. Midwest cheese demand is steady to stronger. In the West, cheese makers are operating steady production schedules. Retail demand is steady to stronger. Across the country, demand from the foodservice sector has dwindled as high menu prices have deterred customers. Contacts relay domestically produced cheese loads carry a premium price over internationally produced loads, causing light export demand. (USDA Cheese Highlights)

Butter: Cream availability is increasing across all regions. Butter price on industry cash exchanges continue to fall to levels not seen since mid-summer. In the East, butter production is limited as many processors report micro-fixing to keep inventories under control through the end of the year. Butter processors in the Central region are also opting to micro-fix for the same reason. In the West, processors are utilizing some additional cream to operate stronger production schedules than in recent weeks. Some plant managers say they have started to shift production focus from retail towards bulk butter, especially as cream prices remain lower than in recent weeks. Holiday retail demand remains strong as many retail stores have butter on advertisements. Butter Bulk butter overages range from 2.0 to 10.0 cents over market value. (USDA Butter Highlights)

Dry Whey: Prices moved higher on the bottom of the range, while holding steady elsewhere. Market tones have held somewhat steady since the price runup early in the month. Most reported spot trades are at or near $.40/lb. There have been a number of contacts who suggest there is a resistance above that mark. Contracts are being worked up for the early quarter(s) of 2024, and market participants report agreements are working out smoothly. Milk is not abundant, yet, for Class III processing in the region. Cheesemakers continue to report spot milk loads above Class prices, and a number say offers have yet to start coming in at all, which is atypical this close to a major national holiday. Animal feed whey prices were unchanged this week on slow trading activity.  (USDA Dry Whey)

January Class 3 Futures

As the rally from early in the week ran out of steam the saying you need to feed the bull came to mind.  The class 3 market is not bearish but there just is nothing pushing the bull market.  Every time it fails to push into new highs the class 3 market drops a little lower.  2024 is looking more and more like it is going to be one step up and two steps back.  This kind of market does give you opportunities.  Recommendation, look for some cheep calls this week as the market is likely to get over done to the bottom.  Then put in some sell orders bellow the last highs as the next rally may not get as high as the last.  Give us a call and we can help you work out the exact numbers you should use.  KDM Trading will be closed Thursday and Friday this week for Thanksgiving and there will not be a report next week.  We wish everyone a Joyful holiday and if you don’t have anything to bring to your festivities consider a cheese plate it is always appreciated.