Market Reports

Most parts of the country report that milk production is improving, facilitated by mostly mild winter conditions. However, with more frigid temperatures forecast for the coming days and weeks, inclement weather could have a negative impact on the sector. Production in California continues to struggle under the weight of animal health issues though slower processing schedules during the holiday season have eased tensions in the state.

In November, as roughly one in four California dairies struggled with avian influenza, the state’s milk production plummeted 9.2% from a year ago, the largest-ever decline in a century of USDA records.

Class III futures bounced back bigtime this week, led by another strong performance in the whey market. CME spot whey powder rallied 8.25ȼ, notching a 12% increase in just five sessions. Whey protein concentrate prices continue to climb, evidence of nearly insatiable domestic demand for protein.

The dairy markets had a lot of data to digest along with their turkey. While Americans topped their mashed potatoes and slathered their rolls with butter, dairy analysts chewed on data showing October butter output and inventories well above year-ago levels.

Never doubt the power of the profit motive in a free market. In the face of a devastating virus and a systemic heifer shortage, American dairy producers nevertheless found a way to add cows and boost milk production.

Soaring temperatures, summer shortages, and sky-high prices are out of season as the cheese and butter markets hunker down for the winter. So far, pre-holiday demand has not impressed. Demand is simply not keeping pace with current production.