U.S. Milk Prices Hit Seasonal Highs Amid Robust Cheese Exports
Source: The DairyNews
In the dairy sector, U.S. milk prices have seen a notable improvement early this year, with June's Class III and Class IV milk prices reaching their highest levels since December 2022. Specifically, Class III milk was priced at $19.87, marking a significant increase since June of the previous year.
Similarly, Class IV milk escalated to $21.08, the highest June price since 2022.
The favorable pricing trend is underpinned by an improving income over feed cost, which in May stood at $10.52, the highest since November 2022. This improvement is timely as grain prices, a major component of feed, are currently under significant pressure.
On the production front, the May Dairy Products report indicated a dip in American cheese production, which was 5.7% lower than in May 2023, totaling 488.188 million pounds. This decrease has been consistent since January, despite overall U.S. milk production trailing year-ago levels only since July 2023.
While total cheese production has varied month-to-month, maintaining relatively low American cheese inventories could set the stage for higher prices if demand parallels last year's levels. However, demand has not risen sufficiently to spur aggressive buying in the spot markets, with prices showing a choppy trend.
A key positive for the market has been the robust performance of cheese exports, which reached record highs in March, April, and May. Despite higher domestic prices, international demand has not waned, indicating strong global market dynamics. Additionally, there is an optimistic outlook for international butter demand, which is expected to see a rebound in exports for the remainder of the year. While it may not set records, butter prices are anticipated to show continued strength in the coming months.
The favorable pricing trend is underpinned by an improving income over feed cost, which in May stood at $10.52, the highest since November 2022. This improvement is timely as grain prices, a major component of feed, are currently under significant pressure.
On the production front, the May Dairy Products report indicated a dip in American cheese production, which was 5.7% lower than in May 2023, totaling 488.188 million pounds. This decrease has been consistent since January, despite overall U.S. milk production trailing year-ago levels only since July 2023.
While total cheese production has varied month-to-month, maintaining relatively low American cheese inventories could set the stage for higher prices if demand parallels last year's levels. However, demand has not risen sufficiently to spur aggressive buying in the spot markets, with prices showing a choppy trend.
A key positive for the market has been the robust performance of cheese exports, which reached record highs in March, April, and May. Despite higher domestic prices, international demand has not waned, indicating strong global market dynamics. Additionally, there is an optimistic outlook for international butter demand, which is expected to see a rebound in exports for the remainder of the year. While it may not set records, butter prices are anticipated to show continued strength in the coming months.
