Market Reports

Over the holiday shortened week, every commodity lost ground at the CME spot market. Price declines were not limited only to the United States, however. At Tuesday’s Global Dairy Trade (GDT) event the GDT Index fell by 4.7%, weighed down by losses across every product except Cheddar cheese.

Last Friday, the spot Cheddar block market closed at $2.10/lb., the highest price in over two months. This week, however, the trajectory shifted dramatically. It appears that fundamentals may have caught up with the Cheddar market and ushered in the decline.

Despite significant challenges, milk production continues to grow in the United States. USDA published its monthly Milk Production report on Monday, indicating that national output rose to 17.675 million pounds in February.

The official start of spring is right around the corner and milk volumes are responding accordingly. Output is steady to higher in most parts of the country as the spring flush rolls in.

Rapid expansion, slower pull from bottlers ahead of spring break, and unplanned plant shutdowns have all contributed to the excess in the Central region. Some plants are not running as hard as they might have in the past. But the less aggressive increase does have one upside; according to USDA, “cheese stores are not getting ahead of processors.”

Cull rates are high, and there is a long list of dairies for sale at the major auction houses. But it will take some time – perhaps six months or more – before this pain on the farm translates to less milk. For now, there is milk aplenty.