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  • ZISK


Like many commodities, milk futures fell sharply the last month. Some Class III milk futures contracts are down nearly $5.00 from their early June price highs. While technical indicators are in the oversold territory, there seems to be little fresh news at the moment to justify any sort of price spike higher. Yet, overall, $20.00 continues to be solid support on technical charts.

Dairy demand

Spot cash cheese prices and spot whey prices both remain in downtrends currently. Cheese demand is said to be softening in different parts of the country while production has been steady. The powder market is starting to drop also.

Spot butter remains up near the $3.00/lb. level as buyers have been steadily showing up to secure needs in spite of butter prices remaining near historic high levels. Yet, we take note that global butter prices have started to weaken.

Export demand is strong, though. United States Dairy Exports in May totaled 262,722 metric tons. This is up 12,082 metric tons from May of 2021 and is up 13,057 metric tons from the previous month. Cheese exports led the way higher on a year-over-year basis, up 31% from 2021.

For the first time since November 2020, butter exports were actually down year-over-year. The likely reason for this is that global butter levels have fallen quickly while US prices are still near multi-year highs.

Supply builds

The most recent milk production report showed that U.S. milk production in June totaled 18.975 billion pounds, up 0.20% from the same month last year. Up .20% may seem small, but take note, this was the first report this year to show a growth in year-over-year production.

Milk production per cow averaged 2,014 pounds, up 20 pounds from the same month last year. Total milk cows on farms in the U.S. came in at 9.423 million head which is 78,000 less than June of last year, but up 4,000 head from last month.

State-by-state growth rates compared to last year: California (+0.20%), Wisconsin (+1.50%), Michigan (-1.00%), Iowa (+3.00%), Minnesota (-1.00%), and Florida (-7.50%).

Monthly Cheese in Cold Storage at the end of June 2022 totaled 1.506 billion pounds. This is up 5% from the same month last year but is slightly below the May 2022 totals. By comparison, the amount of cheese in storage in June 2021 was 1.435 billion pounds.

Monthly Butter in Cold Storage at the end of June 2022 totaled 331.80 million pounds. This is down 20% from the same month last year but up 3% from May. By comparison, the amount of butter in storage in June 2021 was 414.65 million pounds.

The steady bullish tone for milk and the dairy complex is starting to get muted. The situation is not bearish by any means; however the lack of immediate fresh bullish news will likely keep prices in a sideways price manner for the short term. $20.00 continues to be strong support nearby contracts for now.

JUL 29, 2022

Damián Morais


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