The KDM Dairy Report 3/10/2024



Spot cheese crashed this week dropping to levels we have not seen sense the beginning of this year.  More and more we are hearing about dairies heading to auctions as current price are having devastating effects on producers bottom line.  The market is still looking for what is finally going to tighten cheese up.  Whether that be demand or further drop in production.

Weekly Spot Prices
Weekly Future Prices

Cheese: Cheese plant managers in the eastern U.S. relay steady cheese production schedules. Contacts anticipate growing milk availability in the coming weeks as spring break school closures begin. Contacts continue to share that block cheese demand is light. Retail demand is steady, and contacts expect spring holiday demand to increase in the coming weeks. Cheesemakers in the Central region share cheese demand has already begun to pick up, with strong sales expected by the end of March. Plant downtime, due to scheduled maintenance, has freed up some milk supplies. Spot milk prices were reported as low as $3.50-under Class III. In the West, Class III spot milk load availability varies from area to area. Cheese manufacturers relay steady production schedules. Some contacts say they are primarily making cheese to fulfill contractual obligations. Spot loads of cheese are available for buyers.  (USDA Cheese Highlights)

Butter:  Retail and food service demand vary across the country. For the Central region, overall butter demand is noted as steady, and contacts relayed seasonally moderate retail demand. For the East, contacts conveyed steady to stronger overall butter demand and strengthening retail demand ahead of spring holidays. For the West, strong to steady retail demand and steady to lighter food service demand is indicated. Cream is readily available throughout the nation, but some stakeholders say cream is starting to be tighter than in recent weeks. Butter churning schedules are lighter in the Central region and strong in the rest of the country. Some butter makers note tight unsalted inventory for Q1/Q2 spot purchasing. Bulk butter overages range from 3 to 12 cents above market, across all regions. (USDA Butter Highlights)

Dry Whey: Dry whey prices moved lower in most facets this week. Large volume trading continues to put pressure on the low end of the range. That said, processors say availability is still somewhat snug, specifically for recently processed loads. They do relay the possibility of decreasing offer prices, to incentivize customers, based on market activity. Milk availability has grown, but processing capacity is far from full in the region. There are plant managers reporting downtime, and some plants are scheduled down for multiple weeks. This has kept milk handlers busy and brought down the Class III spot milk price in the region. Animal feed whey trading was busier
this week. Spot prices dropped on both ends of the range. Whey market tones are bearish to uncertain. (USDA Dry Whey)

The class 3 market has turn more bearish this week as both blocks and barrels move into the 1.40s.  These numbers do not work for dairy farmers and we should see the dairy herd shrink more.  Trust the market to push way past where most experts think it should be.  Until cheese tightens up the spot prices will pressure NDPSR lower.  Recommendation, buy puts, stick to the front months as the market is not likely to stay down in this range for an extended period of time.