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The Latest: July - 2024
Dairy Markets Heat Up Amid Tight Supply
As befits the season, the dairy markets heated up this week. The trade is becoming increasingly concerned that milk will remain tight, as a hot summer, avian influenza, and the heifer shortage overpower market signals to make more milk. U.S. milk output totaled 18.8 billion pounds in June, down 1% from the year before. In the first half of the year, the U.S. dairy industry made 0.9% less milk than in the first six months of 2023 and marked its lowest first-half production since 2020. Of course, thanks to higher components, U.S. milk solids and butterfat output continues to outpace year-ago volumes, but not by enough to satisfy U.S. dairy processors.
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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.
View reportThe 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.
View reportU.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.
View reportOn 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.
View reportDespite 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.
View reportIndecision 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.
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