Mid-August CME dairy product prices were mostly higher, led by cheese priced well over $2 per pound, which in turn drove Class III futures higher.

After jumping almost 11 cents the previous week, the Cheddar blocks closed Friday at $2.10 per pound, up 14.25 cents on the week, a price not seen since March 27, 2023, and 7.25 cents above a year ago.

The barrels finished at $2.2550, 25 cents higher on the week and 44.75 cents above a year ago. Sales for the week totaled 21 loads of block and 8 of barrel.

The cheese was unchanged Monday. The blocks held Tuesday as well at $2.10, as traders anticipated Wednesday afternoon’s July Milk Production report.

The barrels gained a penny Tuesday, hitting $2.2650, highest since June 9, 2022, and 16.50 cents atop the blocks.

The Aug. 13 Daily Dairy Report warned that “new cheese capacity will be coming online later this year in the Southern Plains. Theoretically, cheese production will increase once the new plants are up and running, flipping the market balance back to heavy supplies and pushing prices lower.

“However, with low heifer and cow inventories, concerns about these plants having enough milk to run have been growing,” DDR stated.

Dairy Market News reports that Midwest cheesemakers continue to say milk is tight to tighter. Mid-week spot prices hovered in the same area as the previous week, but cheesemakers say milk availability is scarce for the most part.

As more schools reopen, a growing percentage of milk will go to Class I and expectations are that prices will be above Class III until Labor Day, at the earliest.

Western cheese production remains active. While most cheese makers are finding plenty of milk, supplies remain tight in parts of the West due to high temperatures. A few processors have adjusted their milk production caps to incentivize farms to ship more milk and keep cheese production full.

Butter jumped 4.25 cents last Monday, gave back 2 cents Tuesday, and closed Friday at $3.18 per pound, up 8.25 cents on the week, and 48 cents above a year ago. There were 103 sales on the week, 51 on Thursday alone, the highest single day total since Nov. 3, 2004, when butter only traded three days a week. This volume represents hundreds of thousands of pounds worth of butter moving through Chicago.

The butter was up a half-cent Monday, with 6 loads trading hands, and hit $3.1850, highest since Oct. 31, 2023. It gave back 1.50 cents Tuesday on 10 trades and slipped to $3.17.

Butter demand in the Central region is “starting to find its seasonal groove,” says DMN.

In recent weeks, demand has been somewhat hit-and-miss. Last week, however, butter producers said customers were more actively seeking product and working on deals for the latter months of the year.

Production is beginning to slide, says DMN, as cream availability has shifted noticeably downward in recent weeks.

Western butter makers report retail butter output continues at a healthy clip while bulk lines are running much slower. Butter demand is strong and steady, with some requests of 10 to 20 loads from buyers who want to assure coverage ahead of the late summer-early fall rush.

Grade A nonfat dry milk saw its Friday finish at $1.2550 per pound, up 5.50 cents on the week and 15 cents above a year ago, with 19 sales put on the board for the week.

Monday’s powder was up a penny on 3 trades and garnered another 1.75 cents Tuesday on 3 more sales, hitting $1.2825, highest CME price since Jan. 12, 2023.

The powder got some support from an Algerian tender announced last Tuesday and higher GDT Pulse prices, according to StoneX. “A large volume was cleared. Ramadan demand will start right about now as the holiday will start earlier next year (Feb. 27-March 29) so those buyers were looking to stock up.”

Dry whey closed Friday at 55 cents per pound, down 1.15 cents on the week but 28 cents above a year ago, with 3 sales for the week.

The whey was unchanged Monday but was bid up 0.75 cents Tuesday, to 55.75 cents per pound.

Demand versus supply

It’s the age-old question: Is supply driving the market, or demand? We got a look at the latest Dairy Product Supply and Utilization data and HighGround Dairy’s Betty Berning reported highlights on the Aug. 19 “Dairy Radio Now” broadcast.

Total cheese usage was up 0.9% from June 2023, she said, the fourth month in a row to top a year ago, and driven primarily by the “other” category, particularly due to exports.

Export numbers have been strong for cheese throughout 2024, according to Berning, and a lot of Mozzarella and Gouda was exported.

The other side of the story is supply, and “the smaller milk supply resulted in smaller cheese output in June and right now it’s summertime.”

Milk is very tight, and with schools reopening more milk will go to the bottle instead of the vat.

Berning reported that spot prices are running over Class, are the highest in a number of years, and have topped three-year averages.

The downside, however, is the higher cheese prices will hurt exports.

Butter utilization was down 1.1%, with domestic use down 2.0%, while exports were up 33.3%.

Nonfat/skim milk powder was down 15.1%, the lowest total for the month since 2014, according to HGD, which stated “Year-to-date usage finally passed the one-billion-pound mark in June, a month later than in the past five years.”

Dry whey usage was down 6.5%; however, HGD points out that “despite waning domestic demand, limited inventories and rising exports helped propel the CME spot dry whey price to 62.50 cents per pound on Aug. 1, the highest price since April 2022.”

Fluid sales down 2.9%

Fluid milk sales took a dip in June, after inching 0.3% higher in May. The USDA’s latest data shows packaged sales totaled 3.2 billion pounds, down 2.9% from June 2023.

Conventional product sales, at just under 3.0 billion pounds, were down 3.4% from a year ago. Organic products, at 234 million pounds, were up 4.4%, and represented 7.3% of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, down 2.4% from a year ago, but up 2.2% year to date, and represented 37.5% of total sales for the month.

Skim milk sales, at 141 million pounds, were down 13.9% from a year ago and down 12.9% YTD.

Packaged fluid sales in the six month period were up 0.6% from 2023, with conventional sales up 0.2% and organic products up 6.0%.

GDT up 5.5%

The climb continued in Tuesday’s Global Dairy Trade auction, which saw its weighted average unexpectedly jump 5.5%, the biggest gain since March 2, 2021, after creeping 0.5% higher on Aug. 6 and 0.4% higher on July 16.

Volume slipped to 77.0 million pounds, down from 79.3 million on Aug. 6. The average metric ton price climbed to $3,920 U.S., up from $3,680.

The gains were led by whole milk powder, up 7.2%, following a 2.4% advance on Aug. 6. Skim milk powder was up 4.0%, after falling 2.7%. Anhydrous milkfat was up 4.8%, following a 1.2% climb, and butter was up 3.7%, after falling 2.4%. Lactose was up 2.7%. The only decline was on Cheddar, down 0.2%, after a 1.3% gain last time, while GDT Mozzarella was up 5%.