CME GROUP CASH MARKETS (4/8) BUTTER: Grade AA closed at $2.7825. The weekly average for Grade AA is $2.7545 (+0.0390). CHEESE: Barrels closed at $2.3675 and 40# blocks at $2.3200. The weekly average for barrels is $2.3015 (+0.0905), and for blocks, $2.2930 (+0.0620). NONFAT DRY MILK: Grade A closed at $1.8225. The weekly average for Grade A is $1.8290 (-0.0125). DRY WHEY: Extra grade dry whey closed at $0.6350. The weekly average for dry whey is $0.6135 (-0.0580).
CHEESE HIGHLIGHTS: Domestic cheese demand is steady throughout the country. Contacts report that export demand for cheese is vital, as loads produced domestically are priced favourably compared to cheese produced internationally. Port congestion is causing delays to some export loads departing from the West coast, and purchasers in Asia are looking to lock in loads for shipment in early 2023. Spot cheese inventories are available throughout all regions, and milk is available for cheesemakers to run busy schedules. Labour shortages impact cheese production in all regions, but producers in the Northeast and West are reporting strong output. Some Midwestern cheese plants have reported that labour shortages contribute to some unplanned downtime, but other nearby cheese plants are processing loads of milk intended for these plants.
BUTTER HIGHLIGHTS: Cream inventories are mixed, with contacts in the Northeast reporting tighter cream availability. Butter makers in the Central region are sourcing supplies of cream locally and from the West. Domestic demand for butter is steady to higher across the country. Contacts report that internationally produced loads are being sold at a premium to domestically-produced butter. This contributes to solid export demand, though some sellers in the West say that port congestion prevents them from moving more butter to international markets. Butter production is mixed; contacts in the Northeast report lighter output, while butter production is steady in the Central and West regions. Across all regions, bulk butter overages range from 5 to 15 cents above the market.
FLUID MILK: Farm-level milk production continues along an upward trajectory. In Texas, spring flush-like output is reported. Upper Midwestern flows are demonstrating a slighter increase as some wintery weather lingers. Bottling sales are pretty firm. In the East and Midwest, healthy milk volumes are clearing to Class III to maintain active cheese production. Staffing shortages persist. Some dairy processing facilities run under capacity or use downtime due to labour constraints. Contracted condensed skim steady in the West. In other regions, hauling shortages continue to hamper the ability to move condensed skim. Cream access is tighter for some Eastern producers, but availability is reportedly looser in the Central and West. Demand is seasonally strong across regions. F.O.B. cream multiples for all classes are 1.32-1.40 in the East, 1.25 -1.34 in the Midwest, and 1.10-1.30 in the West.
DRY PRODUCTS: The prices of low/medium heat nonfat dry milk (NDM) are mixed. Supplies are more available in the West than in other regions; Central and East inventories range from tight to tighter. Due to lean and shrinking inventories, high heat NDM prices are mixed, and trading is muted. Dry buttermilk prices are steady to higher. Spot availability is snug, and domestic and international demand is steadily more robust. Dry whole milk prices are unchanged. Production is sporadic. Minimal off-contract availability has been indicated. Dry whey prices are mostly lower. Steadier production schedules and softer export demand are helping to increase domestic availability. Whey protein concentrate (WPC) 34% prices are higher. Production is steady, but output falls short of current end-user demands. Lactose prices are unchanged. Export demand is healthy, but port congestion and equipment shortages complicate timely shipping. Acid casein prices are steady. The bottom of the rennet casein price range increased.
ORGANIC DAIRY MARKET NEWS: The U.S. Department of Agriculture's Agricultural Marketing Service (USDA AMS) has announced the finalisation of livestock requirements for dairy animals under the USDA organic regulations. The rule specifies that organic milk and milk products must be from animals under continuous organic management from the last third of gestation onward, except for newly certified organic livestock operations. A partnership to support the New York and New England organic dairy industry through the redevelopment of a former manufacturing facility into a state-of-the-art dairy processing facility has been announced. The strategically located facility will produce and market milk sourced from family dairy farms that recently had their supply agreements terminated. Meanwhile, a cheese maker in California recently completed its transition to 100% organic. Last year, the cheesemaker constructed a new 50,000 square foot packaging plant.
