Market Reports

Dairy commodity prices continue to flounder under the pressure of plentiful supplies and, in turn, are weighing on milk prices.

Despite falling milk prices and tightening margins, milk supplies remain ample in most parts of the country. Elevated summer temperatures and humidity are starting to weigh on cow comfort and negatively impact output, but only in parts of the nation.

The Midwest region has been overwhelmed with excess milk since December, and producers are paying for it in the form of steep discounts on spot milk, bigger freight deductions, and – in the worst instances – dumped milk.

The long-awaited rains have disappointed so far. A weekend drizzle and sporadic showers over the past few days have not added up to much, and soils are parched in the Corn Belt. USDA estimates that 57% of U.S. corn production is currently struggling through drought.

The Midwest is awash in milk, and many dairy producers have been forced to dump milk that could not find a home. Cheesemakers say they are taking all they can, but the spot milk market is still “sloppy,” with more loads trading at steeper discounts.

There is simply too much cheese. USDA’s Dairy Market News reports that cheese production schedules are “steady to stronger” and, for some cheesemakers, “limited warehouse space is becoming a concern.” Meanwhile, there is plenty of milk, especially now that bottlers are slowing down intakes for summer break.