The KDM Dairy Report 1/5/2025

1/5/2025

Hope everyone had a good holiday season.  All of us at KDM Trading would like to thank our customers for another year of trusting us with your business.  Looking at the year to come we expect quite a bit of volatility in the markets.  We have had good demand at these prices thanks to exports to Mexico and South America.  Domestic demand is good but not great.  Therefore, fluctuations in currency and trade policy will be the big movers in the dairy price this next year.

Monthly Spot Prices Comparison
Monthly Future Prices Comparison

Cheese:  Milk is available for cheese production throughout the country, but cheesemakers say the end of year holidays contributed to lighter production schedules. In the Central region, reported spot milk prices this week ranged from $7 to $0.50-under Class. Spot loads of cheese are available for purchasing in the East, but inventories are snug. Contacts in the West report some varieties of cheese are available for spot purchasing, while others are more difficult to obtain. The end of year holidays contributed to mixed cheese demand in
the Central region. Retail demand for cheese is strong in the East, but food service sales are mixed. In the West, stakeholders say domestic demand is strong and export interest is lighter. (USDA Cheese Highlights)

Butter: Across the nation, cream volumes have continued to be abundant into the start of the New Year. Contacts say they don’t expect cream availability to tighten this quarter, and this is favorable for processors. Butter makers have been running lighter schedules over the past couple of weeks due to the mid-week holidays. Plant managers say they expect to return to regular schedules as workers come back from leave. Industry contacts say butter is available. Inventories are steady in the East, while Central and West inventories are reported as slightly lighter due to slower holiday production. Demand for butter in the East and Central regions is steady. West contacts are seeing mixed butter demand.  (USDA Butter Highlights)

Dry Whey: Dry whey prices in the West were unchanged due to slow holiday trading activity. Expectations are that Q1 West dry whey markets will remain bullish. The final weeks of Q4 2024 were notably bullish. As high protein concentrate markets continue to exude bullish tones and hearty demand, lighter dry whey processing schedules are expected to remain in place. Increasing market trading activity over the coming weeks will likely provide more of a directional narrative than the past two weeks can offer due to limited trading activity and
downtime on both the processing and trading sectors. (USDA Dry Whey)

The graph above shows a pretty bullish image with November ending cold storage stocks on cheese the lowest we have seen in the last 5 years.  It is typical that cold storage draws down this into November but there has also been a steady draw down starting in March which means this is less of the normal trend and more of a demand out pacing supply.   This has been in large part due to good exports this year and with the new administration in Washington that could change.  Recommendation, get covered.  I would expect for the next month the picture to look pretty good and to see some good numbers for the next year.  Give your broker a call there are some good opportunities out there to lock in profitable margins.