USDA Dairy Market Report: Butter Hits $3.11/lb, Cheese and Nonfat Dry Milk See Mixed Trends

CME GROUP CASH MARKETS (8/2):

• Butter: Grade AA closed at $3.1050. The weekly average for Grade AA is $3.1100 (+0.0255).
• Cheese: Barrels closed at $1.9300 and 40# blocks at $1.8500. The weekly average for barrels is $1.9635 (+0.0035) and blocks $1.9125 (-0.0085).
• Nonfat Dry Milk: Grade A closed at $1.2400. The weekly average for Grade A is $1.2425 (+0.0195).
• Dry Whey: Extra grade dry whey closed at $0.6100. The weekly average for dry whey is $0.6090 (+0.0680).

BUTTER HIGHLIGHTS:
In the West, domestic butter demand varies from somewhat stronger to slightly weaker for both the retail and food service sectors. For the Central and East regions, domestic butter demand is steady from the retail sector, while demand from the food sector is lighter. Cream is tightening throughout the country. Butter manufacturers indicate mixed demand for cream. Stakeholders convey some Central region butter churns are utilizing cream sourced from the West. Butter production schedules are mixed. Some manufacturers indicate bulk production lines are especially light, but also within anticipated seasonal trends and comfortable. Bulk butter overages range from minus 3 to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS:
Cheese production schedules are trending steady to lighter throughout the U.S. Contacts in the East relay lighter cheese production schedules due to tightening milk availability. Retail and foodservice demands are steady. Cheesemakers in the Central region are running active production schedules. Cheese inventories are tighter in the Central region. Spot milk prices ranged from flat to $2-over Class III. Cheese manufacturing is seasonally weaker in the West. Spot milk availability is overall tighter in the region. Spot cheese loads are available for spot buyers, but contacts share some contractual commitments are behind lead times. The NASS Cold Storage report for June showed total natural cheese stocks were down 1 percent from May and down 6 percent from June 2023.

FLUID MILK:
Milk volumes are seasonally trending lower across most regions of the United States. Over most of the country, high temperatures and humidity are pressing milk volumes lower. Lower volumes stretch from the Northeast and down the Atlantic Coast. Some larger farms in Florida are seeing more steady volumes, while other parts of the state are seeing steep declines. Most of the West is dealing with lighter milk production with the Pacific Northwest conveying a slight increase. Demand for all Classes in the West has not changed and is steadily soaking up any multiples available. The Midwest is not immune to the doldrums of summer. Farm level milk continues to decline as the summer temperatures climb. Spot milk in the Midwest is scarce and becoming more difficult to find. Class I demand is ticking up as regions prepare for school to start in the coming weeks. The same can be said for cream and condensed skim milk. All regions of the country are experiencing strong demand and tight availability for cream and condensed skim milk. Some requests for condensed skim milk in the West could not be filled for lack of available stock. Class IV demand for cream is strong with butter makers as they keep busy production schedules. Class II and III demands are steady. Cream multiples for all Classes are 1.30 - 1.50 in the East, 1.22 - 1.39 in the Midwest, and 1.18 - 1.37 in the West.

DRY PRODUCTS:
Low/medium nonfat dry milk prices moved higher. Stakeholders indicate spot availability is much tighter in the southwest portion of the country. High heat nonfat dry milk prices also moved higher. Stakeholders note stocks are on the tight end. Dry buttermilk prices on the Central/East and West regions’ price ranges were mostly unchanged this week. Domestic demand is indicated as weak outside of contracted loads. Dry whole milk had slight upward price movement. Inventories continue to be tight. Dry whey prices climbed upward across all regions. Dry whey availability is tight. Whey protein concentrate (WPC) 34% prices are unchanged. Domestic demand for WPC 34% continues to be weak. Lactose prices were mostly steady. Lactose production is limited with seasonally lighter milk intakes. Acid and rennet casein prices held steady. Demands are mixed.