The KDM Dairy Report 1/27/2024



A little life at the end of the week for the class 3 milk market.  With milk production and cow numbers down from a year ago, the buyers showed back up and push the spot prices higher this week.  The big question is demand.  Will we see supplies start to run tight.

Weekly Spot Prices
Weekly Future Prices

Cheese: Strong milk volumes continue to be available for Class III manufacturing in the East where plant managers note steady production schedules. Cheddar and mozzarella inventories are noted to be comfortable. Food service demand is higher than in recent weeks. Retail cheese demand is steady to stronger. In the Central region, some cheese plants have come back online after scheduled downtime. Cheese processors relay spot milk availability has tightened, and prices were reported above Class III for the first time since before the winter holidays. Cheese demand is stronger, but on par with this time in previous years. Food service and retail contacts note American-style cheese orders are stronger than normal for late January. Winter weather interrupted some retail and food service cheese demands in some western states. Spot milk availability is mixed as some contacts note transportation delays. Other contacts note spot loads of milk being offered below Class III prices. Cheese inventories are readily available for spot purchasers. Export demand is noted to be steady. (USDA Cheese Highlights)

Butter: Retail demand is steady, aside from winter storm activity negatively impacting demand in some northwestern parts of the West region.  Food service demand across the nation is mixed. Harsh snow and ice storms in the West have lightened buyer activity in the region. Food service demand is reported as increasing slightly in the East region. Bulk butter demand is steady. Cream loads are readily available.  However, butter production is mixed throughout the country. Some butter makers in the Pacific Northwest have contended with power losses and transportation difficulties from harsh winter weather. Some stakeholders note tight unsalted butter availability. That said, current salted and unsalted inventory levels are sufficient to meet most immediate buyer needs. Bulk butter overages range from 1 to 8 cents above market, across all regions.  (USDA Butter Highlights)

Dry Whey: Prices firmed on the top of the range and top of the mostly price series this week. Animal feed whey prices held steady on slow trading activity. Feed whey end users say offers are regularly coming in, but those prices are edging nearer to edible grade whey. Edible dry whey processing is steady, in relative terms. Contacts relay with continued firmness in the high-protein concentrate markets, there are strong pulls for whey solids into the processing of whey protein concentrate 80% and the like. Dry whey availability reports are mixed from contact to contact. Some end users say offers are incoming regularly, but they are not urged to add to their inventories. Some brokers relay recent searches for dry whey in the countryside have become more difficult to close. They say manufacturers are less pressured to move loads at below the $.40/lb mark in the region. A number of contacts were attending industry conferences this week, and they say dry whey market tones there were perceived with some bullish sentiment in the near-term. (USDA Dry Whey)

A little bit of bullish sentiment has peaked through with Milk Production out this week.  With a decrease in milk production and the lowest cow numbers the market has seen sense 2019 the market saw a little turn around on Friday.  The jury is still out on weather demand is going to be strong enough to tighten cheese up and send prices back into profitable numbers.  Recommendation, technically the market is still on the bearish side so hedgers should continue to buy puts, but if you want to go against the grain and take a stab at higher numbers now may be the time to get some call.  A little increase in demand could spin this market around and it does not look like milk production will be heading back higher any time soon.