Market Reports

There is an abundance of milk in both the United States and Europe, but momentum is slowing. The combination of summer temperatures and back-to-school demand has tightened milk supplies noticeably.

The spot Cheddar block market found the gas pedal this week, moving convincingly upward. Spot block prices closed higher than the previous session on four out of the week’s five trading days. Yet, as cheese prices moved up at the CME this week, dry whey prices moved down.

Even as cheese production has slowed, balancing operations continue to press forward at a steady clip. Dryers have also continued to run solidly, absorbing available condensed skim. As a result, supplies of nonfat dry milk (NDM) are plentiful but demand from both domestic and international sources has kept tension in the market. Milk production continues to dissipate seasonally but volumes remain plentiful overall.

Although this year’s losses have none of last year’s frenzy, the ink is just as red. But it may be a while before lower prices translate to less milk.

While US milk output is down from the peak volumes reported in April and May, it is still historically strong. USDA’s Dairy Market News cites strong demand for cheese across the nation but butter and powder orders begin to soften. Weather and Washington way heavy on demand of corn and soybean crops.

Manufacturers report that cheese demand is robust and that spot milk for manufacturing is available and affordable. While cheese manufacturers would be keen to capitalize on the available milk, a plethora of issues are complicating operations and preventing additional output.