Market Reports

Milk should be plentiful and cheap, but this is not a typical year for the dairy industry. USDA reports processors bought spot milk in the Midwest at prices ranging from $1.50 under to 50ȼ over Class III. Spring premiums are atypical, and the midpoint of the range is unusually high for this time of year.

Folks from across the dairy industry gathered this week in Chicago for the annual meeting of the American Dairy Products Institute. This event provides a setting for traders and other stakeholders to chew over market information and revise expectations for the months ahead. While every commodity gained ground at the CME this week, it remains clear that individual products each are confronting their own set of challenges, and that the markets remain shrouded in uncertainty from both supply and demand.

The dairy markets swung wildly back and forth this week as they digested a slew of data and headlines. Monday’s Milk Production report showed that milk output declined for a ninth straight month and while milk output was already slipping in the Southwest before avian influenza began to impact dairy herds there this spring, it seems likely that the illness exacerbated the decline.

Class III futures came roaring back this week, led by a sizable rally in the cheese markets. USDA’s Dairy Market News reports that domestic cheese demand is perking up. Grocery shoppers have embraced the advent of grilling season with shopping carts full of ground beef and all the fixings for cheeseburgers.

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.