Market Reports

Prices for dairy commodities moved lower both at home and abroad as the markets sort through supply and demand dynamics. Concerns about economic cooling, inflation, and the resulting impact on dairy demand seems to have been sufficient to push back on pricing.

CME spot butter leapt 9.5ȼ to $3.01 per pound. That’s the highest spot butter price since 2015. The other spot products also climbed, however milk futures struggled.

Red ink flowed on LaSalle Street this week as the trade reckoned with the fact that, although milk production continues to shrink, cheese abounds. Ongoing concerns about demand also pressured the markets.

Concerns about demand have been simmering near the surface for several months. This week, rising interest rates and a plummeting stock market brought the anxiety up to a full boil.

The butter market illustrates the conundrum that besets much of the dairy complex. Stocks are relatively low and production is falling seasonally. Milk and butter output are not rising anywhere that matters. U.S. butter is much cheaper than foreign product, so trade is further eroding supplies.

In Europe the high costs of physical expansions, additional labor, replacement heifers, and feed costs, when coupled with market uncertainty, creates a risk level that prevents widespread expansion. The same factors are hampering milk output on this side of the Atlantic as well.