Market Reports

U.S. milk output was not as strong as anticipated in December. Perhaps more importantly, the dairy herd is smaller than previously thought, and it’s getting smaller by the month. And yet, there is more than enough milk.

The bears were out in force this week, pressuring the dairy markets to new lows as supplies accumulated and global demand prospects dimmed. Though risks and challenges persist, milk production has generally been strong across the U.S.

The cheese markets came charging out of the gates on Monday. The strong start left some market participants scratching their heads. Cheese exports are still strong but none of that gave the cheese markets the energy they needed to maintain their early week sprint.

The cheese markets got off to a particularly rough start, with big losses both Tuesday and Wednesday. But after a few nights of better rest and healthier habits, they recovered well. Cheese prices are near year-ago levels, suggesting that demand has kept pace with strong production.

The butter market began the year at a relatively lofty height, suffered a few spectacular setbacks, and then climbed anew. It spent an unprecedented 57 trading sessions at $3 or above and set a new all-time high of $3.2675 per pound in early October.

CME spot Cheddar blocks dropped and barrels fared even worse. Cheese output remains strong, and there are fears that demand will no longer keep pace.