Dairy Trends - June 14, 2019
All dairy pricing trends are based on USDA and CME data as of 6/12/2019.
Production levels are starting to stagnate, due to the increased cream demand from seasonal Class ll manufacturers. Inventories are still considered to be steady to increasing, given the slowing demand from retail and wholesale customers following their holiday stockpiling. Pricing has broken out of the tight range it has traded in for months, and we’re seeing CME butter remain above the $2.30 level.
Block cheese markets have quietly increased nearly 30% from the start of the year. Prices are now at the highest level since 2016. The barrel market is trading at a very steep discount to the block market. Typically, a spread this large doesn’t last long-term, so block prices will either need to come down or barrel prices will need to catch up.
Demand patterns across the retail segment remained firm. Bids are starting to outpace posted offers, as the improved demand has absorbed a good amount of the stock situation. With the increased molt and slaughter activity by producers, it appears the flock size reductions, in tandem with the increased purchases, have put the market back into a more aligned position. This should be supportive to prices, along with the increased feed costs from the stronger grain markets. Prices are still below break-even for producers, but the market has made a significant rally in the past week.
MILK & CREAM
Milk production across the US is seen as stable to increasing, but is considered to be below seasonal levels in the West and Central regions. Cream is still available, but is tightening the further east you go, as ice cream season continues to ramp up.