Cheese Markets Up 25% Since Start of April: CME spot blocks and barrels climbed against last week, as the April rally persists. The higher prices are likely a function of near-term supply-side dynamics, i.e. tighter 4-30 day old Cheddar inventories and lower milk production.
Butter prices maintained their loftiness, and set another spring record in last week’s trading, settling at $3/lb. on Monday’s session, before backing off a bit the rest of the week. While the fundamentals indicate that there are not supply or demand concerns, the market does not seem to care, and prices are maintaining $2.90+.
Nonfat dry milk has been going the opposite way, though, making a nearby low of $1.1025/lb. on Wednesday, April 24, a price not seen since September 12th, 2023.
Ninth Month in a Row of Declining US Milk Production: USDA released March’s Milk Production data last week, as volumes fell 1% versus prior-year. Milk per cow was unchanged from March 2023, and it was the smaller herd, summing to 9.335 million head, that drove the decrease. Notably, Texas milk production dropped from February to March, moving counter seasonally. This was on both a smaller herd (DOWN 3,000 head MoM) and lower milk per cow. Since the onset of Highly Pathogenic Avian Influenza (HPAI) in the state, producers have reported diminished milk output, and there were reports of heavy culling early on. These two factors help to explain the drop in volumes in the Lone Star State.
Yawn of a Cold Storage: It was a ho-hum Cold Storage report. Total cheese stocks of 1.459 billion pounds built slightly month-on-month, UP by 0.1% or one million pounds, slightly smaller than the five-year average of 16.7 million pounds. Natural American cheese stocks were down on both a monthly (-0.6% or -4.9 million pounds) and yearly (-0.1%) basis. The Feb to Mar drawdown went against the typical build between the months but was neutral to our expectations. Given the recent price increases at the CME, lower milk production, and more expensive spot milk in 2024, it was not surprising to see inventories drop. Butter levels totaled 317 million pounds, rising by 6.4% from February (18.9 million pounds).
Happy ADPI! The HighGround team is at ADPI in Chicago this week. Please reach out if you would like to schedule a meeting.
Last Week’s Reports & Analysis
March 2024 US Milk Production Report Analysis
For the ninth month in a row, milk output in the US slowed from the previous year, DOWN 1% in March. The last time milk production decreased for this long was from Aug 2003 to Apr 2004…Full Report
March 2024 China Dairy Import Volume Analysis
WMP imports continue to face challenges, falling 5,615MT compared to the previous year. Specifically, volume supplied by New Zealand dropped by 18.7% year-on-year, or 6,640MT. Notably, Italy, the Netherlands and Australia increased their market share last month…Full Report
Reports This Week
- Crop Progress Report – Monday, April 29
- GDT Pulse – Tuesday, April 30
- Apr ’24 USDA Agricultural Prices Report – Tuesday, April 30
- Weekly EU Dairy Commodity Prices – Wednesday, May 1
- National Dairy Products Sales Report (NDPSR) – Wednesday, May 1
- Apr ’24 USDA Announced Class & Component Prices – Wednesday, May 1
- USDA Dairy Market News Weekly Midpoint Prices – Thursday, May 2
- USDA Upper Midwest Spot Milk Basis – Thursday, May 2
- US Weekly Dairy Cow Slaughter Report – Thursday, May 2
- Mar ’24 US Trade Data – Thursday, May 2
- Pre-GDT Fonterra Forecast Offer Volume – Thursday, May 2
