Dairy Policy and Market Watch

Dr. Cameron Thraen, Milk Marketing Specialist, The Ohio State University 

No group watches the dairy markets more closely than the good folks at the USDA Dairy Market News.  Here is a synopsis of what they have to say about the current conditions in the dairy markets, domestic and international.  Visit my OhioDairyWeb for up-to-date price, futures/options and price forecast information.

OhioDairyWeb 2007 can be found at http://aede.osu.edu/programs/ohiodairy.

Domestic Markets

Butter: Butter markets across the country are generally firm.  Domestic demand is seasonally fair with international buyer interest building. Domestic butter demand is fair at best.  Stocks of butter in Europe are short and production is winding down seasonally. It would seem that the demand is there to buy more U.S. butter if pricing pencils out.

Cheese: The cheese market is firm, with blocks and natural varieties generally stronger than barrels.   High cheese prices kept many buyers delaying purchases and high milk prices kept cheese makers from making uncommitted loads of cheese. Cheese production is down between competition from butter/powder, increased milk demand by bottlers for school accounts, steady to lower milk receipts, and low cheese yields.

Fluid milk: Milk production throughout the US is generally steady.  Hot temperatures in the West and Southeast are very slowly deterring output in these regions.  Manufacturing milk demand exceeds supply at some locations in the Midwest.  A large number of loads of milk have been shipped into Florida and the Southeast for fluid use, totaling 1152 truckloads in just the past 2 weeks.

Dry products: Prices are trending steady to higher on buttermilk and non-fat dry milk, but whey-related product prices are lower.

US commercial disappearance: Commercial disappearance of dairy products during April through June of 2007 totaled 46.6 billion pounds, 1.8% above the same period in 2006.

International Dairy Market News 

Western and Eastern Europe: Milk production is declining slowly in most areas with a noticeable decline in the hot and dry areas. Even in the favorable production regions, production continues to trail market opportunities. Demand for milk for both drinking and manufacturing needs is tight and very competitive. Competition for milk, especially at this time of the season, is strong. Demand for milk powders remains strong. Skim milk powder markets are firm, with prices holding steady. Traders and handlers state that prices are holding steady due to lack of supply. Milk production is declining seasonally and milk volumes remain competitive as they have for much of the current season.

Oceania: In Australia, the new milk production season has not resumed to any noticeable extent. Winter moisture amounts have been good, although still below needed volumes and desired surplus levels. Annual milk production figures for the 2006 - 2007 season were recently released which indicated that output for the year trailed last season by 5.1%. Skim milk powder markets remain firm, although prices are fluctuating. The milk production season in Oceania is just getting underway and when possible, milk is being directed toward milk powders versus other manufactured products.