Let’s Chat Dairy is a weekly podcast, hosted by HighGround Dairy’s top analysts. At the end of every week, they sit down to recap the week in dairy markets and summarize recent reports and relevant news. The podcast can be found here on our dashboard, or wherever you listen to your podcasts. Subscribe so that you never miss an episode!
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Transcript:
(0:14) Cara Murphy:
Hello everyone and thank you so much for tuning in to Let’s Chat Dairy, your favorite weekly market podcast powered by HighGround Dairy. Today is Friday, May 31st and you’re hearing from Cara Murphy and Betty Burning. We are just three weeks away from HighGround’s Global Dairy Outlook Conference, June 18th through the 20th. If you are planning to attend, this is going to be a stellar event. But if you haven’t registered yet, get that done today. Registration is open until June 14th, but space is limited. So why wait? Guarantee your spot at this awesome conference now.
With that, let’s hop into the market for this week, shall we? Betty, what happened in the CME Spot market? Will we ever understand butter? Fill us in.
(0:58) Betty Berning:
Butter does feel like its own kind of cryptid, Cara, but there was some movement in the spot market this week after last Friday’s exciting April US Cold Storage Report. The current market price for butter is above $3 and that would indicate butter stocks are low. But once again, that was not the case. Inventories climbed handily from March to April, logging the most significant build for the month since 2020, albeit that was the pandemic year, making it a bit of an outlier. So excluding 2020, the month-to-month build was the largest since 2016. April stocks of 361 million pounds was 30 million more than April 2023 and 63 million more than April 2022. That’s a lot of butter. This result did see the spot butter price tank $0.12 when markets opened on Tuesday and another about $0.03 on Wednesday, but everything reversed course in the later part of the week and we settled at $3.09 per pound today. So there you have it.
(2:02)
Cold Storage report for cheese was pretty lackluster. The data was neutral to expectations overall. Inventories are not historically huge and are down against the prior year and two years ago. So the recent run up we’ve seen over April does make sense when you take into account the heavy and record-setting cheese exports we saw in March. This week though, spot cheese prices moved lower with blocks falling to $1.81 today and barrels at $1.94. A total of 14 and 8 trades occurred on the week respectively.
(2:40)
That leaves nonfat dry milk and dry whey, the powder complex. And these are two markets that have been relatively range-bound for a long time now. Dry whey has been bouncing within a one to two cent range above or below $0.40 per pound and saw 11 trades this week while Nonfat dry milk is still hovering around the $1.16 to $1.17 per pound mark with 9 trades in total.
Cara:
Great! What else happened this week? I saw we got some news out of the USDA regarding Highly Pathogenic Avian Influenza (HPAI) in dairy.
(3:14) Betty:
Yes, we did. The state of Michigan confirmed an additional case of a human contracting bird flu and this time the impacted person showed some respiratory symptoms as well. They’re recovered so that’s good. Then, the USDA announced another $824 million in new funding to directly support the response efforts and this includes a voluntary dairy herd status pilot program which provides alternative testing and movement options to the federal order to help mitigate the spread of disease. Last, there is not a ton of information here but the USDA Animal and Plant Health Inspection Service is working to develop HPAI vaccines for cattle, turkeys, pigs, and goats so some good news there.
(4:03)
And one last thing before we jump to international that really stood out this week was Dairy Cow Slaughter rates. They have plummeted to lows not seen since 2008. All major dairy-producing regions are recording significantly smaller slaughter volumes compared to previous years which highlights just how tight replacement heifer inventories really are. Producers are holding on to these cows for as long as they can which could pose some interesting results in components and milk per cow as time goes on since a larger portion of the total US dairy herd will be made up of older animals.
(4:41) Cara:
What a fascinating hypothesis. I have to hear more and if you do too, Betty will be speaking on this topic and much more at the Global Dairy Outlook Conference. Registration is still open and I’d say it’s just another reason why this conference is the place to be.
(4:58)
Well with that let’s set sail across the Atlantic and see what’s going down in Europe. Dairy farmers from over 15 countries joined together this week in Brussels in protest for fairness in the agriculture sector. Organized by the European Milk Board ahead of World Milk Day on June 1st—don’t forget that—and several European elections, farmers are demanding reform measures to ensure better livelihood across the bloc such as calling for EU-wide regulation that prohibits prices that do not cover production costs as well as specific EU contract clauses on volumes and cost-covering prices prior to milk deliveries amongst others. Farmer protests earlier this year successfully pushed the European Commission to walk back some of its green initiatives that were restrictive to farming operations which goes to show the true power that farmers have.
(5:48)
Dairy commodity prices in the region climbed this week as well. European butter prices remain below 2022 levels for this time of year but are rising fast with most of Europe at or past peak milk output for the year. The seasonally lower volumes of milk will weigh on dairy products production. There are reports that inventories of both butter and cheese were not accumulated this spring flush to the same extent as seen in previous years and when combined with healthy demand has prices moving in an upward trajectory.
(6:19)
Moving on over to the land down under and a bit to the right total dairy exports in April tanked 11% from a year ago after two months of strong volumes. Kiwi shipments to China slid 11.8% year-on-year due to steep declines and whole milk powder down 38% which were partially offset by higher fluid milk exports. Despite lower exports of butter, anhydrous milk fat and cheese, milk protein products marked notable gains. Casein exports to Malaysia rose. WPC 80 sailings to Egypt were impressive along with decent growth to other key markets and Caseinate shipments were on the rise as well particularly to China.
(7:01)
But let’s get into the big news of the week. Fonterra announced their Opening Milk Price Forecast for the 2024-2025 season with a midpoint price marked at $8 per kgMS with a $1.50 per kgMS range marking the outer bounds between $7.25 to $8.75 per kgMS. Fonterra has left their forecast for the current season mostly unchanged with a midpoint still at $7.80 per kgMS. The SGX and NZX milk price futures market has traded steadily over the past two weeks with the market unwilling to move far from the $8.50 per kgMS point post the announcement. But Fonterra is clearly not as bullish as the futures market noting that China’s demand remains their key concern for the future market volatility a major determinant of their forecast range for the season ahead.
Well, that’s all for this week. Thanks for tuning in. Have a happy World Milk Day and of course, June is National Dairy Month. The weather’s looking nice so get out and grab yourself some ice cream a cool glass of milk or even some fried cheese curds—my personal summertime favorite. We’ll see you next week on Let’s Chat Dairy. Cheers!
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