DAIRY TRENDS

Farmer's Report

Dairy Trends - May 29, 2020

All dairy pricing trends are based on USDA and CME data as of May 27, 2020.

BUTTER

After seeing sizable increases over the last 4 weeks, the butter market is starting to show stability. In general, butter sales into foodservice are gradually recovering as some restaurants slowly reopen across the country. Even with the slightly more optimistic demand outlook, butter inventories in the U.S. continue to expand with cream being utilized for ice cream production as we enter the summer months. Inventories are ample.

CHEESE

The market has found support from increased foodservice demand as more restaurants open back up and need to refill their pipelines, as well as a tightening up of discounted spot loads of milk. However, production rates are still running at very strong levels to match this increased demand and American cheese cold storage inventories at the end of April were up sharply from March. According to analysts, this rally is being fueled and supported by the nearby surge in demand, but once that buying starts to slow, prices are looking overvalued given the sizeable stocks and uncertainty around forward demand in the current environment. While analysts note production and supply is strong, the reality is block cheese is not plentiful and certainly not available in quantities to meet the current demand. Ultimately, suppliers cannot get raw materials from producers (640 lb. blocks and 40 lb. blocks) quick enough to meet foodservice needs. Vendors are stating this challenge could persist for a few more weeks.

SHELL EGGS

Typically, this time of year signals increases in demand, but some retailers are already noting 40% increases from last year. With foodservice demand picking up, prices are holding flat and testing current levels following the sharp declines from the record high prices in April. Analysts note one consideration now is the overall carton demand and if supplies are adequate for another uptick in retail sales. Right now, promotional activity is extremely limited because of this.

MILK & CREAM

Milk production across the country ranges from lower to steady, conditional to the locality in the United States. Many farms are on the downside of peak production, bringing closure to the flush. Prices are weak, according to analysts, adding to the overall dairy market declines.

The data contained in the Farmer’s Report is provided for informational purposes only, is not tailored to your specific purchasing needs, and is not intended as a substitute for any other publicly-available market data or information. The Farmer’s Report is compiled from the last-received market data provided by the United States Department of Agriculture (USDA) and/or other market sources, and is subject to change without notice. Nothing herein is the opinion of US Foods®. US Foods neither assumes any legal liability nor makes any warranty or guaranty, either express or implied, regarding the completeness, accuracy or usefulness of this information.