Market Reports

Concerns are growing among nonfat dry milk (NDM) buyers that milk powder prices could reach into the $1.15 range if not higher later this year. The market sentiment now is that the longer prices remain in the high 90¢ range this spring, the higher prices could move up later this year. If the higher NDM price levels materialize, they could result in some of the highest-Class IV milk prices in a long time for western dairy producers, which would be much needed good news.

The U.S. dairy cow herd has been contracting for more than a year, and foreign milk production has fallen flat. At long last, that is translating into higher milk pricing. Dairy producers across the country will be seeing much better milk checks than those they have cashed in recent months.

For once, barrels demonstrated the discipline of a seasoned runner, setting a steady, sustainable pace. It’s often difficult to rally the cheese markets at the height of the spring flush, but things are different this year. Slow growth in cheese production and steady increases in demand are helping to buoy the once-beleaguered cheese markets. Still, traders seem to have some doubts about the magnitude of the recent rally.

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.

After 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.

The 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.