After five consecutive gains, the Global Dairy Trade average slipped 0.5% Tuesday, following a 1.7% increase on June 4 and 3.3% on May 21. Volume fell to 37 million pounds, down from 38.9 million on May 21, and the lowest since May 2020. The average metric ton price inched up to $3,893 U.S., from $3,824.
GDT butter was up 6.2%, following a 1.7% rise on June 4, though anhydrous milkfat was down 1.2%, after inching up 0.9%. Lactose was up 1.9%, following a 1.9% decline, and GDT cheddar was down 1.0% after inching 0.2% higher. Skim milk powder was up 0.7%, following a 3% jump, and whole milk powder was down 2.5%, after gaining 1.7% on June 5.
StoneX says the GDT 80% butterfat butter price equates to $3.2525 per pound U.S., up 21.5 cents from June 4, and compares to CME butter which closed Friday at a bargain $3.09. GDT cheddar, at $1.9075, was down 2 cents, and compares to Friday’s CME block cheddar at $1.8450. GDT skim milk powder averaged $1.2544 per pound, up from $1.2345, and whole milk powder averaged $1.5397, down from $1.5778. CME Grade A nonfat dry milk closed Friday at $1.2050 per pound.
The June 18 “Daily Dairy Report” stated that the GDT butter price was a record high and says, “Processors on both sides of the Atlantic and in Australia are directing more milk to cheese vats and butter production has waned.”
“USDA’s on-the-ground analysts project that 2024 butter production will fall 10% in Australia and 1.6% in Europe,” the DDR says, “Deficits that will be partially offset by a 2.9% projected increase in butter output from New Zealand. More will be needed to meet the world’s growing appetite.” Imports are adding to supplies in the U.S., DDR says, and butter production stands at all-time highs.
Fat is back in vogue, explained StoneX broker Dave Kurzawski in the June24 “Dairy Radio Now” broadcast. Buyers are finally capitulating into having to get ownership, he said. “They’ve waited for prices to come down but they haven’t.”
It’s not a milk supply situation in that part of the world or even in Europe, he said, as European output seems to be doing better, unlike the U.S. where seasonal weather may be impacting output. Our big problem is avian flu, he said. “It’s alive and well in the U.S. and knocking down milk production and something we’re going to be dealing with for a while.” There’s no word of it showing up in Canada or Mexico that he’s heard of yet, but “May just be a matter of time,” he concluded.
Meanwhile, the USDA’s latest Livestock Dairy, and Poultry Outlook reported that, “As of June 14, Highly Pathogenic Avian Influenza (HPAI) was confirmed in 12 states and 101 dairy herds. Since the previous report, HPAI in dairy cows has been identified in two more states, Iowa and Wyoming. The number of affected herds has doubled. USDA maintains the mandatory testing requirements for lactating dairy prior to interstate movement and mandatory reporting of positive influenza A test results in livestock.”
The USDA announced additional details May 23 to support the dairy operations affected by HPAI and to stop the further spread. USDA launched the Voluntary H5N1 Dairy Herd Status Pilot program to increase the agency’s abilities to monitor and limit the spread of the virus. For more information, log on to the USDA, Animal and Plant Health Inspection Service website for Highly Pathogenic Avian Influenza (HPAI) detections in livestock.
The Outlook also mirrored milk price and production projections in the June 12 World Agricultural Supply and Demand Estimates report and stated “While milk production on a per day basis has been declining year over year for 10 consecutive months, the production of milk fat continued to increase. Concurrently, skim solids have decreased year over year in most months, although in April they were up 0.2% from April 2023. Higher concentrations of fat, protein, and other solids (lactose and minerals) reduces the amount of milk required for manufacturing dairy products,” the Outlook reported.
The dairy herd forecast for 2024 was 9.345 million cows, unchanged from last month’s forecast. The forecast milk yield per cow is 24,320 pounds, 10 pounds less than last month’s forecast. Cow numbers for 2025 were raised 5,000 from the previous forecast to 9.37 million, while yield per cow was lowered 15 pounds to 24,470 pounds.
Cash dairy prices in the Juneteenth holiday-shortened week were mixed as traders awaited Friday afternoon’s May Milk Production report. StoneX expects output to be down 0.5% but adds; “Even with headline milk production down 0.5% that would still leave component adjusted production up about 1.3% thanks to strong year over year gains in fat and protein in the milk for May.”
The cheddar blocks closed Friday at $1.8450 per pound, down 12.50 cents on the week, but still 44 cents above a year ago. The barrels saw their Friday finish at $1.92, 10 cents lower, lowest since May 10, but 42 cents above a year ago and 7.50 cents above the blocks. Sales totaled 34 loads of block and 24 barrel.
Summer heat is no doubt taking a toll on cow comfort and milk output, adding to the losses incurred by avian influenza. Most Midwest and Central cheese contacts tell Dairy Market News that cheese demand is holding strong. Early in the week, milk availability was reported to be steady with previous weeks.
Western cheese production remains steady or lighter. Milk demand from cheese manufacturers is steady though milk volumes have become tighter as output is decreasing to various degrees. Heat levels have contributed to some unplanned downtime, says DMN. Domestic cheese demand is steady. Export demand is in line with recent weeks but less hearty than domestic demand.
CME butter jumped 1.75 cents Monday, fell to $3.08 Thursday, then closed Friday at $3.09, unchanged on the week, but 67 cents above a year ago, with 12 sales for the short week.
Cream continues to tighten in the Midwest and Central region, says DMN. Some butter plant managers say they are waiting for the Fourth of July holiday to see about getting more enticing spot offers, but “current prices continue to edge out of their fiscal realm.” Plant churning rates are holding, though they do not expect this to last much longer. Current production is focused on upcoming seasonal demand which is expected to pick up later in the summer and early fall. Current butter availability is in some balance for 80% salted loads, but notably limited for 82% varieties. As cream begins to tighten throughout the region, even 80% butterfat loads are expected to tighten. Increasing ice cream production is also puling cream away from the churns.
Churning is mostly steady in the West. A few manufacturers were making a final push before shuttering their plants for lengthy maintenance. Retail and bulk production lines are running to various degrees. Sources says salted butter is plentiful however unsalted bulk butter is tight. Cream availability continues to tighten in some parts but volumes are meeting needs. Domestic butter demand is steady for retail and food service, says DMN, while export demand is moderate.
Grade A nonfat dry milk climbed to $1.2075 per pound Thursday, highest since Feb. 7, 2024, but closed Friday at $1.2050, 1.25 cents higher on the week and 7.25 cents above a year ago. There were 6 sales reported on the week.
StoneX pointed out that, in the 23-sales day month of May 85 spot loads were traded. So far in 14 trading days in June, 63 spot loads have changed hands. It adds that “U.S. spot prices are now in line with EU prices which could create some headwinds for the U.S. exports but could also be due to potential Chinese tariffs on EU dairy products. That is still a developing story that we are watching closely as no concrete details are out yet as to which products would be affected.”
Dry whey gained a penny Monday but gave it back Friday to close unchanged on the week at 47 cents per pound, 20.50 cents above a year ago, on 2 sales.
The Agriculture Department announced the July Federal order Class I base milk price at $21.11 per hundredweight, up $1.03 from June, $3.79 above a year ago, and the highest Class I since Jan. 2023. It equates to $1.82 per gallon, up from $1.49 a year ago. The seven-month Class I average stands at $19.16, down from $19.42 a year ago, and compares to $23.69 in 2022.
Fluid milk sales showed gains in January and February of 2.4% and 2.5% respectively, though February’s data is skewed due to the leap day. March sales dropped 4.1% but they reversed in April, according to USDA’s latest data.
Packaged sales totaled 3.6 billion pounds, up 5.9% from April 2023. Conventional product sales totaled 3.3 billion pounds, up 5.3% from a year ago. Organic products, at 251 million pounds, were up 14.6%, and represented 7% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, 5.7% from a year ago, up 3.4% year to date, and represented 34.6% of total sales for the month. Skim milk sales, at 159 million pounds, were down 8.1% from a year ago and down 12.6% year to date.
Packaged fluid sales in the first four months of 2024 totaled 14.5 billion pounds, up 1.5% from 2023. Conventional product sales totaled 13.5 billion pounds, up 1.2% from a year ago. Organic products, at 1.0 billion pounds, were up 5.3%, and represented 6.9% of total milk sales in the four months.
Consumer Price Indexes (CPIs) for most of the selected dairy products were year-over-year lower in May, says DMN, while the CPIs for all products and food increased. The CPI for butter increased for the second consecutive month, likely supported by record-high butter prices in April and May at the wholesale level.
“Dairy margins were relatively flat over the first half of June except for the spot period due to continued strength in Class III Milk,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.
“Strong cheese demand continues to support the market along with renewed strength in whey,” the MW stated. “CME spot whey prices reached the highest level since February as tighter whey powder inventories have pushed prices up around 30% or 11 cents in less than 2 months which has been responsible for about 66 cents of the gain in Class III futures during that span.”
“Strong demand from Mexico has supported U.S. dairy product prices, particularly cheese. USDA reported total U.S. dairy exports to Mexico in April of 142.9 million pounds, up 18.3 million from last year. This was the second highest level of monthly exports on record to Mexico. Cheese exports of 38 million pounds set a new record, besting the previous high in February. Nearly 30% of total U.S. dairy exports go to Mexico and their demand has been key to keeping demand and prices from eroding as shipments to China and Southeast Asia have slowed since early 2023,” the MW reported.
The MW warned however, “There is concern moving forward following Claudia Sheinbaum’s recent presidential win to succeed Andres Manuel Lopez Obrador that socialist policies will erode the Mexican Peso’s value which dropped 5% in just 2 days to the lowest level since October 2023 following the landslide victory.”
The latest Crop Production report shows 93% of the U.S. corn crop was emerged, as of the week ending June 16, up from 85% the previous week, 2% behind a year ago, and 1% ahead of the five year average. 72% was rated good to excellent, down 2% from the previous week, but up from 55% a year ago.
Soybean plantings were 93% completed, 4% behind a year ago but 2% ahead of the five-year average. 82% were emerged, 8% behind a year ago but 3% ahead of the average. 70% were rated good to excellent, down 2% from the previous week, but up from 54% a year ago.
Dairy cow slaughter for the week ending June 8 totaled 46,600 head, up 3,700 from the previous week but 10,700 or 18.7% below a year ago. Year to date, 1,249,800 have been culled, down 198,300 or 13.7% from 2023.
In politics, Green Bay-based Edge Dairy Farmer Cooperative announced efforts, in partnership with several other dairy supporters, to “Codify the protection of timely payments and accurate testing as legislative text in the next farm bill.”
An Edge press release stated, “The request to move these specific FMMO provisions into legislation was prompted by the uncertainty created when volumes of milk are de-pooled, leaving farmers outside of the FMMO and oversight of the U.S. Department of Agriculture’s Agricultural Marketing Service.”
“This action aims to extend these protections, currently granted when a processor is pooled, to all farmers and processors regardless of their participation in the FMMO,” the press release states. “Only 70% of U.S. milk is covered by the FMMO today, which leaves the farmers that produce those 68 billion pounds of milk outside the order and its protections,” Tim Trotter, Edge CEO, said. “It is time to ensure that all dairy farmers are granted the same confidence and assurance as those within the FMMO system.”
“Moving these basic practices into the farm bill will prevent the expansion of milk payment terms and maintain third-party verification of milk weights and components for farmers and processors,” says Edge Cooperative.
“Without these protections, farmers outside the FMMO could see payments extended past the current twice-monthly practice to 30, 60 or 90 days, leaving farmers without consistent cash flow. They would also be without USDA recourse should they have a discrepancy with their milk testing verification.”
“We believe these provisions should be fundamental for all dairy farmers,” Trotter said.
Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.
