The Global Dairy Trade auction racked up another decline in its weighted average Tuesday, fifth session in a row, down 2.9%, following the 5% drop Aug. 2.
 Declines were led by anhydrous milkfat, down 9.8%, after falling 1.4% Aug. 2. Butter inched up 0.2%, after a 6.1% plunge, and whole milk powder was down 3.5%, following a 6.1% drop. Skim milk powder inched up 0.1%, after falling 5.3% last time, and GDT Cheddar was up 4.2%, following a 0.7% slip Aug. 2.
StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.3027 per pound U.S., up fractionally after losing 14.8 cents in the last event, and compares to CME butter which closed Friday at a pricy $2.94. GDT Cheddar, at $2.2703, was up 9.4 cents, and compares to CME block Cheddar at a bargain $1.82. GDT skim milk powder averaged $1.5984 per pound, virtually unchanged, and whole milk powder averaged $1.55 per pound, down 5.8 cents. CME Grade A nonfat dry milk closed Friday at $1.52 per pound.
North Asian market share, which includes China, picked up from the last event slightly, according to StoneX, but continued below year-ago levels and has been below a year ago since July 2021. Southeast Asia, Middle East and Europe picked up purchases, bringing their share higher than a year ago and the last event.  
Meanwhile, exports are moving out of Ukraine in a brokered deal with Russia, Turkey and the United Nations. But, Foodmarket News reports that Ukraine’s grain exports are down 46% year on the year, at 2.65 million tons so far.
The USDA’s World Markets and Trade report stated since the end of 2021, global milk supplies have tightened, propelling prices for manufactured dairy commodities higher. Among the major dairy exporters through May, only Argentina saw milk output grow year-over-year, up 1%, while Australia was down 6%, European Union down 1%, New Zealand down 6% and U.S. down 1%.
Global supplies will likely remain tight as hot, dry conditions in the EU increase cow discomfort and weigh on output per cow, according to the report. Diminishing producer profitability in Argentina will likely cause production growth to moderate. Tightening supplies in the EU and Argentina are expected to more than offset improving production in New Zealand, where pasture conditions have improved considerably since the start of 2022 and the short-term outlook is positive, according to the USDA.
Favorable conditions in Australia and strong prices are expected to improve production from the current year-to-date; however, producer caution is expected to keep expansion at a minimum short term and keep annual output below 2021.
Back home, the report said relatively stable cow inventories and slowly recovering milk per cow are expected to cause U.S. milk output to turn positive in the second half of the year. The 2022 and 2023 milk production forecasts were raised in the latest World Agricultural Supply and Demand Estimates.
 The 2022 cheese price average was lowered to $2.0750 per pound, down 11 cents from the July estimate, and compares to $1.6755 in 2021. The 2023 average is estimated at $1.9750, down 9.50 cents from last month’s projection.
Butter is expected to average $2.7850 in 2022, up a half-cent from last month’s estimate, and compares to $1.7325 in 2021. The 2023 average was projected at $2.3750, down 6.50 cents from a month ago.
Nonfat dry milk will average $1.6650, according to the WASDE, down 9 cents from a month ago, and compares to $1.2693 in 2021. The 2023 average was projected at $1.45 per pound, 19.50 cents lower than projected last month.
Dry whey is expected to average 61 cents per pound in 2022, down 3 cents from a month ago, and compares to 57.44 cents in 2021. The 2023 average is expected to slip to 48.50 cents per pound, 3 cents lower than a month ago.
The Aug. 18 Livestock, Dairy and Poultry Outlook mirrored milk price and production projections in the Aug. 12 WASDE. The Outlook also stated lower expected prices for dairy products should boost their demand; thus, domestic use for dairy products was adjusted higher for 2022 and 2023.
The Outlook added that there were fewer milk replacement heifers as of July 1 compared to July 1, 2021. The NASS Cattle report says replacement heifers numbered 3.75 million July 1, 50,000 head lower than July 1, 2021.
Checking feed, the WASDE reported that the U.S. corn outlook is for lower supplies, reduced feed and residual use; slightly higher food, seed and industrial use; smaller exports; and lower ending stocks. Projected beginning stocks were 20 million bushels higher, based on a lower use forecast, where a reduction in corn used for ethanol is partially offset by greater use for glucose and dextrose.
Corn production for 2022-23 was forecast at 14.4 billion bushels, down 146 million from the July projection, and 5% below 2021. The season’s first survey-based corn yield forecast, at 175.4 bushels per acre, is 1.6 bushels below last month’s projection and a year ago. Area harvested was forecast at 81.8 million acres, down less than 1% from the June forecast, and down 4% from a year ago.
Total corn use was reduced 45 million bushels to 14.5 billion. Feed and residual use was lowered 25 million based on a smaller crop. Corn exports were cut 25 million bushels to 2.4 billion. Ending stocks were lowered 82 million bushels to 1.4 billion. The season-average corn price was unchanged at $6.65 per bushel.
 Beginning soybean stocks, production, exports and ending stocks were higher. Production was forecast at a record 4.53 billion bushels, up 26 million, or 2%, from a year ago, with higher yields more than offsetting lower harvested area, now forecast at 87.2 million acres, down 300 million from July but 1% more than a year ago. The soybean yield forecast was a record 51.9 bushels per acre, up 0.4 bushels from last month. Soybean supplies were projected at 4.8 billion bushels, up 36 million from last month. Exports were raised 20 million bushels to 2.16 billion. Ending stocks were forecast at 245 million bushels, up 15 million.
The season-average soybean price was forecast at $14.35 per bushel, down 5 cents from last month. Soybean meal and oil price forecasts were unchanged at $390 per short ton and 69 cents per pound, respectively.
Meanwhile, the latest Crop Progress report shows corn silking at 94%, as of the week ending Aug. 14, 4% behind a year ago and 3% behind the five-year average. 62% was at the dough stage, 9% behind a year ago and 3% behind the five-year average. 57% was rated good to excellent, 5% behind a year ago.
Soybean blooming was at 93%, 1% behind a year ago and dead even with the five-year average. 74% are setting pods, up 13% from the previous week, 6% behind a year ago and 3% behind the five-year average. 58% of the crop was rated good to excellent, 1% ahead of a year ago.
Mid-August CME dairy prices were mixed as traders anticipated the July Milk Production and Cold Storage reports Aug. 22. The Cheddar blocks climbed to $1.89 per pound Monday, highest since July 27, but closed Friday at $1.82, 2.50 cents lower on the week but 12.75 cents above a year ago.
The barrels jumped 6 cents Monday, hitting $1.9475, also the highest since July 27, but finished at $1.8950, up 0.75 cents, 41.75 cents above a year ago and 7.50 cents above the blocks. Sales totaled three cars of block and eight of barrel.
 Midwest cheesemakers tell Dairy Market News sales have improved as market prices continue to fluctuate, although the $2 plus may be a bit of a barrier for buyers. Spot milk remains available despite summer induced decreases. Plant downtime, both scheduled and due to unexpected line outages, have kept neighboring plants with more milk than expected at this point in the season.
 Milk is also available for western cheese makers though labor shortages and delayed deliveries of production supplies are regulating output. Export demand is steady to higher as prices are favorable to international buyers. Domestic cheese demand saw a small uptick this week though retail and food service demand is below previously forecasted levels. Higher prices are causing shoppers to reduce purchases while food service and restauranteurs continue to reduce hours and menu offerings due to labor shortages, higher input costs and reduced customer traffic, says DMN.
Butter made it to $2.99 per pound Wednesday but closed the week at $2.94, a half-cent higher and $1.2775 above a year ago, with 48 loads exchanging hands.
Butter plants have increased micro-fixing as cream supplies have tightened. Spot cream has moved out of the range for profitable returns, says DMN, as butter hovers around $3 per pound. Some suggest spot cream availability may not improve until Labor Day, if then.
Demand for cream is strong in the West, and cream availability continues to tighten as high seasonal temperatures take a toll on milk output. Ice cream makers continue to purchase cream, though some of this demand is expected to melt away in the coming weeks. Butter makers are running busy schedules though some plants were having difficulty finding available tankers, thus delaying loads of cream and contributing to unplanned down time. Labor Day and back to school sales are contributing to a small uptick in retail and food service sales. Concern about availability in coming months are helping maintain butter prices.
Grade A nonfat dry milk climbed to $1.5350 Wednesday, highest since Aug. 4, but closed Friday at $1.52 per pound, up a quarter cent on the week and 27 cents above a year ago, buoyed by stronger than expected GDT prices. There were 13 sales were reported for the week.
Dry whey saw its Friday finish at 45 cents per pound, up a half-cent on the week but 8 cents below a year ago, with two sales for the week at the CME.
The Aug. 15 Daily Dairy Report points out that in just six months, CME spot dry whey prices tumbled from an all-time high of 84.25 cents per pound to a nearly two-year low, warning that every penny drop in the whey price shaves 6 cents off Class III values. Based on today’s spot market whey price of 44.50 cents, Class III milk is worth roughly $2.50 per cwt less than it would have been had whey prices held their February peak.
 A big part of the reason for the lower prices is China. The DDR says hog growers operated in the red for most of the first half of 2022 and cut back on expensive feeds including whey. That and a major infant formula maker in the U.S. curtailed orders for dairy ingredients, including whey powder, after one of its five plants was shut down from February to early June, according to the DDR.
The September Federal Order Class I base milk price was announced at $23.62 cwt, down $1.51 from August but $7.03 above September 2021. It’s the lowest Class I since March and equates to $2.03 per gallon, down from $2.16 in August and compares to $1.43 a year ago. The nine-month Class I average stands at $23.84, up from $16.41 a year ago, $16.65 in 2020 and $16.51 in 2019.
Farm finances are getting tough, especially in the West, according to the Aug. 12 Dairy and Food Market Analyst. The Analyst estimates current break-evens in California are just shy of $23.50 cwt and $22.50 in Idaho. Nearby Class III futures are several dollars below those levels, the Analyst warned.
Dairy margins strengthened the first half of August as increasing milk prices more than offset a similar rise in projected feed costs, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.
Strong domestic and export demand continues to support cheese production at the expense of churning and drying milk for butter and powder, the MW stated. June U.S. dairy exports set records for both volume and value, with $886 million shipped out, besting the previous record in May after adjusting for the shorter month. While milk powder exports declined, cheese, butter and whey all topped year-ago levels by sizeable margins with cheese exports setting a record high and whey exports posting the second highest level ever, according to the MW.
Not helping matters, fluid milk sales continue to falter. The USDA’s latest data shows sales of U.S. packaged fluid products totaled 3.3 billion pounds in June, down 1.7% from June 2021. Conventional product sales totaled 3.1 billion pounds, down 1.8% from a year ago. Organic products, at 234 million pounds, were off 0.5% and represented 7% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, up 2.3% from a year ago, up 1.2% year to date and represented 33.8% of total sales in the six months.
Skim milk sales, at 177 million pounds, were down 9.5% from 2021 and down 7.7% YTD.
Total packaged fluid sales for the first half of 2022 amounted to 21.6 billion pounds, down 2.3% from 2021. Conventional product sales totaled 20.2 billion pounds, down 2.3%. Organic products, at 1.4 billion, were down 2.3%, and represented 6.7% of total milk sales for the period.
In the week ending Aug. 6, 57,400 dairy cows were sent to slaughter, up 1,400 head from the previous week but 2,200 head, or 3.7%, below a year ago.
Cooperatives Working Together members accepted four offers of export assistance this week to capture sales of 1.6 million pounds of American-type cheese and 37,000 pounds of cream cheese. The product is going to customers in Asia, Middle East-North Africa and Oceania, and delivered through February.