The Latest: April - 2024
Butter Makes a Historic Move in Dairy Markets
The 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.
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These milk prices will not pay the bills, and dairy producers are likely cutting milk production accordingly. In some regions, co-op penalties will accelerate contraction. These incentives were largely absent in March when the spring flush arrived and explains why so much milk was dumped in late March and early April as the industry struggled to adjust to the impacts of Covid-19.
View reportWe are in the darkest days of this crisis. Consumers are hunkered down and demand has cratered. Processors are piling up product, milk is gushing, and the spring flush is likely to overwhelm the market for another two months.
View reportThe novel coronavirus has strangled foodservice and export channels, and the industry simply has more milk than it can handle. With so much lost demand, the dairy industry must cut production. The market is laboring ruthlessly to make that happen.
View reportThe retail surge has petered out. Consumers are still standing in the grocery checkout line with more dairy in their cart but the industry cannot make up for lost foodservice demand and throttled exports.
View reportThose numbers clearly won’t pay the bills, and after four painful years (and a couple good months) dairy producers are in no shape to weather this storm.
View reportStrong fluid milk consumption will benefit the whole industry by reducing dairy product output at a time when overall demand is likely taking a sizable hit.
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