Cheddar Output Falls Short of Last Year
August milk output topped year-ago volumes by a robust 1.6%, raising expectations for broad growth in dairy product output. But production was surprisingly low for several key categories in today’s Dairy Products report. USDA reported August cheese output at just shy of 1.15 billion pounds, up 0.1% from the prior year. The agency also trimmed its estimate for July cheese production. It now shows July output up 0.5% from the prior year, down from the initial assessment of 1.1% growth. Cheesemakers focused on Italian-style cheeses and cheeses that can easily enter the export market. August Mozzarella output was 3.1% higher than the prior year. In contrast, Cheddar production fell 2.1% from year-ago levels and notched the smallest August tally since 2018. Lower Cheddar output helps to explain the steep rise in spot Cheddar barrel prices over the past month.
Robust growth in cottage cheese, sour cream, and ice cream output left less cream for butter makers, and butter output slipped to 144 million pounds, down 2% from a year ago. Lower production propelled the CME spot butter market to all-time highs last month, and butter prices have held remarkably firm. Production of nonfat dry milk (NDM) and skim milk powder (SMP) dropped below 190 million pounds, 2.1% lower than in August 2021. Manufacturers’ stocks of NDM declined seasonally but remained 9.5% above year- ago levels. The milk powder market remained under pressure as well amid a strong dollar and concerns about Chinese demand. Prices moved decisively lower at today’s Global Dairy Trade auction.
October 4, 2022