Market Reports

The dairy markets got off to a strong start this week, led by a historic move in butter. CME spot butter traded thrice at $2.97 per pound on Monday, marking the highest spring butter price on record.

U.S. dairy exports have struggled for the past year as weak global demand and uncompetitive prices caused exports to trail prior year levels for a full year. But February data suggests that the tides may be changing.

On Monday, the USDA announced that it had identified the mystery disease affecting dairy cattle in Kansas and Texas as Highly Pathogenic Avian Influenza (HPAI). According to the agency, the virus has likely been spread by wild birds that had contact with affected farms. While any situation that negatively impacts herd health is a concern, it is encouraging to know that the virus is not transmitted between cattle and there is currently no evidence that the disease will spread to humans.

Despite signs of continued contraction, the dairy markets just keep dropping and CME spot Cheddar blocks led the retreat. Cheddar output has fallen below year-ago volumes since October and overall cheese production was lower than prior-year output in December and January.

Indecision continued to pervade the dairy markets this week as the price of most products waffled close to recent levels. While the market tone is not one of desperation, both supply and demand leave something to be desired with the two market forces going head-to-head to see which will exert more influence on prices.

Los mercados lácteos están buscando un fondo. Los futuros de Clase III de abril a julio marcaron mínimos en la vida del contrato esta semana. Estos son precios que seguirán impulsando la contracción en la industria, reduciendo la producción de leche y la producción de productos lácteos. De hecho, a pesar de las grandes inversiones en la capacidad de producción de queso en Estados Unidos, la producción de queso cayó un 1.2% por debajo de los volúmenes del año anterior en enero. La producción de cheddar, un factor importante para el precio en Chicago, cayó un 7.9% interanual en enero. Y el queso competitivo en precio de Estados Unidos.

The dairy markets are feeling around for a bottom. April through July Class III futures notched life-of-contract lows this week. But the bulls are not wallowing in despair.

It was a rough week on LaSalle Street. The trade had hoped that lower milk output and a smaller dairy herd would propel the markets upward. And they did, for a time.

The U.S. dairy industry continues to shrink. In the latest Milk Production report, USDA trimmed its estimates of 2023 milk production, and it cut its assessment of the milk cow herd for every month last year. According to the latest figures, the milk-cow herd contracted nearly 50,000 head in 2023 and declined another 23,000 head from December to January.

USDA released its 2022 Census of Agriculture earlier this week, providing the latest installment of the once-every-five-year report on the state of agriculture in the country. Unsurprisingly the report showed that farm numbers have fallen while expenses have risen, and the average American farmer has aged. But the report provided some encouraging information, as well. Total farm income rose by 39.8% compared to five years ago, while average farm income increased by 50.2%.