Markets Have a Quiet Week: CME spot markets moved very little last week, perhaps due to the Thursday holiday. Only barrels traded more than ten times (14 loads exchanged hands). Blocks settled at the same price EVERY day ($1.90/lb), while barrels saw the most action of the commodities, rising $0.0225/lb from Friday to Friday. Blocks are inverted to barrels again by a quarter-cent, but that seems likely to reverse this week. Even butter’s price movement was minimal, settling at varying shades of $3.13/lb over the four-day week. Whey was parked Monday to Wednesday at $0.49/lb, but moved up a tiny quarter-cent on Friday.
More Mozzarella, Much Less Cheddar: USDA released May’s Dairy Products report before the Independence holiday. While more cheese was made in May 2024 than in May 2023 (+0.7% YoY), the larger total was due to big volumes of Italian cheese. With robust exports thus far in 2024, particularly with grated and fresh cheese shipments, manufacturers made what was in demand: Mozzarella. Mozzarella vats turned out 293 million pounds in May, rising 7.1% versus the prior year. Cheddar volumes, on the other hand, were down 9.7% year on year, helping to explain the big run-up in prices at the CME this spring. Through May, totals trail YTD 2023 by 8.2%, posting the smallest Jan to May total since 2020.
A LOT of butter was churned in May, 197.7 million pounds to be precise, an increase of 4% versus May 2023. US butter makers have made over a billion pounds of product through May, the first time that mark has been crossed before June. Still, with Cold Storage inventories not building as quickly from April to May, this would suggest that domestic demand was strong.
Nonfat dry milk (NFDM) and skim milk powder (SMP) production remained lackluster, logging a full year of year-over-year decreases. Despite the weak powder production, NFDM inventories rose from April to May, another sign of poor international demand for US product.
US Exports Less Dairy in May: Total US dairy exports summed to 228,990MT, DOWN 1.7% against May 2023, posting the lowest value for the month since 2020. Cheese remained a bright spot in the export data, UP 47% against May 2023 and logging the second-highest total ever. Further, shipments to Mexico set a record, as 18,333MT of cheese was exported across the southern border. Dry whey and NFDM/SMP sailings were weaker than the prior year, though. There was some hopefulness in the dry whey data, which was DOWN only 1.6% relative to May 2023, as sales to China grew (+18.9% YoY), exceeding 7,000MT for the first time since May 2023. NFDM/SMP exports were terrible, logging the lowest May total since 2017 and dropping 24% YoY.
USDA Issues Recommended Decision for FMMO Price Formulas: On Monday afternoon, USDA issued its recommendation for changes to the FMMO pricing formulas. Updates included increasing make allowance, Class I price differentials, and milk composition factors (specifically related to protein and nonfat solids.) Additionally, the agency proposed the return to the “higher-of” Class III or Class IV skim milk pricing factors in the base Class I skim milk pricing and eliminating the 500-pound barrel cheese price from the Dairy Products Mandatory Reporting Program. The USDA will accept comments for 60 days, followed by a 60-day review. After that, a Final Decision will be announced.
Bearish GDT: The GDT index plummeted by 6.9% in the first trading event of July, the steepest June-to-July decrease since 2010. Fats took a step back after setting a record at the previous event, moving from being the most expensive globally to the most affordable. Demand from North Asia (China) continued to be weak, and the Middle East’s market share dropped to its lowest point since Q1 2023.
Last Week’s Reports & Analysis
May 2024 Dairy Products Report Analysis
Total cheese production logged a second consecutive month of a YoY increase, but the story was in the line-item data. Mozzarella production was up for the third month in a row, while Cheddar…Full Report
May 2024 US Dairy Export & Import Volume Analysis
It was another big month for cheese exports, ranking second in the data set, with Mexico claiming 38% market share. The US notched its highest-ever cheese sales to its southern neighbor, as 18,333 MT…Full Report
Reports/Events This Week
- Crop Progress Report – Monday, July 8
- GDT Pulse Auction – Tuesday, July 9
- Weekly EU Dairy Commodity Prices – Wednesday, July 10
- National Dairy Products Sales Report (NDPSR) – Wednesday, July 10
- USDA Dairy Market News Weekly Midpoint Prices – Thursday, July 11
- USDA Upper Midwest Spot Milk Basis – Thursday, July 11
- USDA Weekly Dairy Cow Slaughter Report – Thursday, July 11
- Pre-GDT Fonterra Offer Volume Forecast – Thursday, July 11
- USDA World Ag Supply/Demand Estimates (WASDE) – Friday, July 12
- Crop Production Report – Friday, July 12
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