The “Mielke” Market Weekly

Western demand strong from retail cheese purchasers


Dairy product prices were mixed the week before Thanksgiving. CME cheddar block cheese closed Friday at $1.60 per pound, unchanged on the week but 63.25 cents below a year ago. The barrels climbed to $1.68 Tuesday, highest since Oct. 27, but plunged 11 cents Friday, closing at $1.56, 9 cents lower on the week, 36.75 cents below a year ago and a more normal 4 cents below the blocks. There were 14 sales of block on the week at the CME and nine of barrel.

Cheese prices are disappointing considering that we’re approaching the biggest selling season of the year. StoneX said on its Nov. 13 Early Morning Update, “In November, the seasonal tendency is for the block-barrel spread to widen, so it’s a bit odd that is inverting.” The Nov. 10 Weekly Wire said, “Too much milk isn’t the issue here. Too little demand is driving the narrative.”

Dairy Market News reported that spot milk availability remained similar to much of early fall this week, meaning tight and/or closer to balanced. Mid-week spot milk price highs were at $1 over Class III. A number of cheesemakers say milk offers have defied their expectations as they have not begun to come in ahead of the holiday week. Nonfat dry milk usage in cheese processing has increased as a result. Cheese demand in the Midwest is either unchanged or improving. Cheddar and Italian pizza-style cheesemakers say orders have picked up in recent weeks.

Western demand from retail cheese purchasers is strong, DMN said. Some contacts note that grocers have been utilizing retail ads to entice customers ahead of Thanksgiving. DMN’s Retail Report released Nov. 9 underscored that as the total number of ads for conventional and organic cheese increased from the prior week’s survey by over 60%. Food service cheese sales in the region are softening somewhat as consumers are, reportedly, foregoing dining out due to high menu prices. Contacts say cheese produced domestically is priced at a premium to that produced internationally and thus contributing to light export demand, DMN said.

After plunging almost 51 cents the previous week, CME butter regained a little ground and climbed to $2.69 per pound Tuesday but closed Friday at $2.49, down 11 cents on the week, 32 cents below a year ago and $1.0125 below its recent record high. Sales totaled 10 loads for the week.

Butter market tones started to brace after a precipitous drop the past few weeks, DMN said, but processors said demand has not been as negatively impacted as some would expect. Butter manufacturers continue to report upticks in cream availability, but some are still running micro-fixing schedules for retail demand. Churning rates are expected to increase near-term as cream tankers trade at lower multiples week to week. Mid-week spot multiples remained in the low 1.20s for high end, but the low end slipped to 1.15, DMN said.

Cream spinoff is increasing in the West because of seasonally rising butterfat in farm milk, and more loads are available. Butter manufacturers in the West are utilizing available spot cream to increase production. Others are shifting their focus from retail to bulk butter. The number of retail ads for conventional and retail butter also increased in DMN’s Retail Report.

Grade A nonfat dry milk climbed to $1.22 per pound Monday, highest since Oct. 23, as global prices have strengthened, but then gave it back Wednesday and closed Friday at $1.1925, down 0.75 cents on the week and 23.50 cents below a year ago. There were 13 sales reported for the week.

Dry whey climbed to 42 cents per pound Tuesday, highest since April 4, but it closed Friday at 41 cents, 1.25 cents higher on the week but 3 cents below a year ago, with 10 loads finding new homes on the week.

November’s Ag & Dairy Market Outlook from StoneX said, “While there are pockets of good demand, recent scanner data is pointing toward a slowdown at retail for butter and cheese, and shipments of nonfat dry milk to Mexico have slowed. The slower retail sales could be temporary blips from consumers who are a little long on product after some aggressive retail promotions over the summer, or they could be a signal that consumer spending is slowing/shifting. Mexico is also a tough read. Their imports were running well above trend and a slowdown makes some sense, but the pullback for August and September is bigger than expected.”

Inflation reportedly cooled in October, with the U.S. Department of Labor reporting an increase of 3.2% in the Consumer Price Index. However, the Nov. 10 Weekly Wire said, “Federal Reserve Bank of New York data showing massive increases in third quarter consumer credit card balances and rising delinquency rates don’t spark confidence in an immediate turnaround.”

Dairy margins were mixed over the first half of November as Class III Milk futures were steady while Class IV contracts firmed, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

“Corn prices were steady while soybean meal continued to advance sharply on concerns of growing drought conditions in key soybean production regions of Brazil,” MW said. “The U.S. Department of Agriculture reported total dairy export shipments of 460 million pounds during September, down 12% from last year with cumulative 2023 year-to-date shipments down 7.5% from a year ago. Cheese exports were the notable exception at a record 81.3 million pounds for the month of September, up 4.3% from last year led by strong sales to Mexico.”

“U.S. exports of nonfat dry milk at 117.4 million pounds were down 20.1% from a year ago and the lowest total for September since 2018,” MW said. “Butter exports of 4.4 million pounds fell 58.4% year-over-year while whey exports of 95 million pounds were down 26.7% from last year and the lowest September total since 2019. Poor hog margins in China and continued struggles with African swine fever have negatively impacted whey demand from Asia.”

MW also reported highlights from the latest Dairy Products report and said, “Our clients continue monitoring targets to extend margin coverage in deferred marketing periods with flexible strategies that will allow for further margin improvement over time.” For details, visit

September total cheese disappearance was up from August and a year ago, according to HighGround Dairy economist Betty Berning in the Nov. 20 Dairy Radio Now broadcast, based on the latest Dairy Supply and Utilization report.

Cheese disappearance, at 1.2 billion pounds, was up 0.9% from September 2022, and Berning mainly credited “rebounding domestic consumption of American-style cheese, which was up 6.2%, following a dismal August.” That plus impressive “other-cheese” exports, which marked the highest September volume on record with data back to 2011, did the job, she said.

Butter utilization totaled 170.7 million pounds, up 6.1%, thanks to domestic disappearance being up 10.6%. Exports were down a whopping 57%. Usage dropped from August to September, according to HGD, “going against the five-year average increase of 1.3%.”

Nonfat dry milk utilization, at 182.5 million pounds, was up 1.4% from August’s nearly five-year low, but down 20.7% from a year ago. HGD said, “Month-on-month, domestic consumption moved in opposition to exports. However, stateside nonfat dried milk demand remained well below the prior year, while exports tanked to the smallest volume since August 2019.”

Dry whey disappearance totaled 81.3 million pounds, up 6.8%, with domestic use up 78.4%, while exports, at 34.2 million, were down 31.2%. Exports to China and Southeast Asia were off, said HGD, keeping year-on-year and year-to-date volumes down. Berning credited increased demand for whey protein concentrate and whey protein isolates for the overall increase in whey product demand.

When asked why cheese prices aren’t better than they are, Berning cited HGD’s November Outlook and said, “There’s been a few different dynamics playing out.” She said they too are surprised prices are lingering around $1.60. However, she also said new processing capacity has come on line, and exports, while better than August, were not great, and they have seen changes in product mix. Demand isn’t that great, and the rally typically seen in the fall period just did not materialize. “We still have Christmas coming, Hanukkah, and all the holidays, plus the Super Bowl, so perhaps we’ll see some lift and demand will pick up,” Berning said.

This week’s GDT Pulse auction saw mixed sales on Fonterra skim milk powder and whole milk powder. 2,180 metric tons, or 96.9% of the total 2,250 MT on offer, was sold. HighGround Dairy’s analysis shows 440 MT more of Instant WMP was sold and 74 MT less of regular WMP was sold versus the last GDT Event. 100% of the 1,000 MT of SMP on offer was sold in this auction, according to HGD.

StoneX said, “Skim milk powder prices fell 3.9% relative to last week’s GDT Pulse while whole milk powder was up 1.7%. There is still some uncertainty as to how much weight GDT Pulse will have given the light volume in each pulse event. Also, given how GDT Pulse is still relatively new, there may be a few buyers/sellers still not participating in the Pulse events just yet.” 

Cooperatives Working Together member cooperatives accepted one offer of export assistance this week that helped capture sales contracts for 231,000 pounds of butter. The product is going to customers in Asia in December.

That put CWT’s 2023 exports at 41.7 million pounds of American-type cheeses, 1.1 million pounds of butter, 26,000 pounds of anhydrous milkfat, 39 million pounds of whole milk powder and 7.8 million pounds of cream cheese. The products are going to 25 countries and are the equivalent of 756.8 million pounds of milk on a milkfat basis.

The 2023 U.S. harvest is winding down. The latest Crop Progress report shows corn was 88% complete, as of the week ending Nov. 12, up from 81% the previous week, 4% behind a year ago and 2% ahead of the five-year average. Soybeans were 95% harvested, up from 91% the previous week, 1% behind a year ago but 4% ahead of the five-year average.

Culling continues to slow. The week ending Nov. 4 saw 55,800 dairy cows go to slaughter, up 300 from the previous week, but 4,200, or 7%, below a year ago. YTD 2,656,800 have been culled, up 75,800, or 2.9%, from a year ago.

The annual meeting of the National Milk Producers Federation, National Dairy Promotion and Research Board, and United Dairy Industry Association took place this week in Orlando. NMPF’s incoming president and CEO, Gregg Doud, told attendees, “The future of U.S. dairy farming is bright as global growth and American capacity for innovation and production combine to create a powerhouse. In terms of the world of protein, dairy is a huge part of the future.”

Doud, who takes over NMPF’s reins Jan. 1, 2024, is a former chief agricultural trade negotiator for the Office of the U.S. Trade Representative. He said, “Opportunities are there for U.S. dairy’s taking with robust outreach and appeals to consumers worldwide. My message to you today is very simple. Let’s go. Let’s get it in gear.”

A NMPF press release said, “Dairy producers in the past year have faced operating margins at their lowest since the federal dairy safety net was adopted in its current structure in 2014 as prices plummeted from record highs.” In a panel of NMPF economists, forecasts showed an improving price outlook next year, even as inflation continues to pose challenges for consumers. 

“We see a road to recovery in 2024,” said Will Loux, head of the joint economics unit serving NMPF and the U.S. Dairy Export Council. “Things aren’t all roses, we still have really significant headwinds on the demand side both here at home and abroad, but we look at the world with a lot of optimism, especially in the long run.”

Meanwhile, Congress passed a continuing resolution this week to keep the government open. NMPF praised the measure and said, “Along with continuing critical programs for dairy farmers, the legislation allows the Dairy Margin Coverage program to continue operating without the uncertainty of a potential disruption. DMC is an important and effective safety net for dairy farmers nationwide. This legislation includes the 2019 production history update as part of the program, and we look forward to 2024 DMC signup in the coming weeks.”

Michael Dykes, DVM, president and CEO of the International Dairy Foods Association said, “The resolution includes an extension of the 2018 farm bill that will allow important dairy-related programs to continue to operate until Sept. 30, 2024. The Healthy Fluid Milk Incentives Projects, a dairy nutrition incentive program for SNAP participants, will be eligible to receive additional appropriations to continue its significant expansion to reach more communities across the country in 2024.”

“In addition, the farm bill extension permits USDA to restart the Dairy Forward Pricing Program as soon as the legislation is signed into law by the president of the U.S., avoiding the need for a time-consuming rulemaking process similar to the one that was required to ‘restart’ the program after it lapsed in 2018,” Dykes said.

“While the bill gives Congress another year to pass a strong farm bill, it only keeps the lights on at USDA and FDA for another two months,” Dykes said. “IDFA urges Congress to pass a FY2024 funding bill that fully funds Healthy Fluid Milk Incentives projects, retains milk and dairy benefit levels for WIC moms and children, and maintains dairy’s central role in the federal school meals program.”

The IDFA also announced its annual Dairy Forum will take place Jan. 21-24, 2024, at the JW Marriott Phoenix Desert Ridge Resort in Phoenix, Arizona. The forum attracts dairy farmers, processors and dairy business executives from around the world.

Speakers and sessions will focus on leadership, labor, artificial intelligence and supply chain digitization, food as medicine, carbon insetting, consumer trends, the global dairy market and dairy policy.


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