Market Reports

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.

The 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.

Early 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?

Now 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.

News that American and Mexican trade authorities reached a tentative agreement on an updated NAFTA was welcomed by the dairy industry with open arms. But it's far from a sure thing: If Canada doesn't also buy into the deal, a new NAFTA will be sunk.