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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After dragging their feet for months, the Class III markets finally have a little spring in their step. Firm demand, slowing global milk output, and tightening stocks suggest that the worst of the dairy downturn is finally in the rear-view mirror. Near-term milk prices are far from exciting, but they are much better than where they were.
View reportAfter a long winter, the cheese-market bulls were finally allowed to leave the barn, stretch their legs, and feast on tender green shoots. They were particularly frisky in the CME spot Cheddar barrel market, where prices surged to six-month highs. In addition, markets had two perplexing reports to digest last week.
View reportThe spot dairy markets took a step back this week, but – for the most part – they remain noticeably higher than where they began the year. The cheese market was hardest hit. CME spot Cheddar blocks fell 7.5ȼ to $1.535 per pound. Barrels slipped 4.5ȼ to $1.365. As the spring flush boosts fresh cheese supplies, the bulls have given back some of last month’s significant gains.
View reportThe dairy markets spun their wheels this week. Traders seem a bit lost as they seek to navigate the shifting landscape. In the distance, highlighted by the third consecutive decline in USDA’s annual dairy heifer estimates, is the promise of a smaller milk cow herd, and perhaps lower milk output. Closer to the fore, the spring flush looms large.
View reportEarly this year, we highlighted the combination of too much milk on the market and mysteriously low demand. Now, demand is stronger. So why haven't prices improved?
View reportNow that an updated trilateral free trade agreement among the U.S., Mexico and Canada is tentatively in place, dairy industry players are combing through the details to get a sense of what will happen once the terms of the deal become effective in 2020.
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