July 17, 2020
Fran Howard
Dry whey prices will likely remain low for weeks to come due to large stocks of dry whey as the country’s whey stream was diverted away from high-protein whey products and into driers during the second-quarter of this year. Following a short climb to above 40 cents per pound, CME spot whey prices are now back in the low 30-cent range after dipping briefly to 28.75 cents in early July, the lowest price since last November.
Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra,says that ample production of dry whey in recent weeks contributed to the recent price decline. “Buyers of whey are indicating that inventories are sufficient to cover needs for now,” Ganley says. “And this scenario will likely persist in coming weeks.”
With Class III prices nearing or soon to exceed their 2014 record high of $24.60/cwt., cheese manufacturers have been making as much product as they can for the retail market. For the most part, the resulting whey stream has been made into dry whey vs. high-valued whey products, such as whey protein concentrate with at least 80% protein (WPC-80), Ganley says. As prices for WPC-80 fell in the second quarter, manufacturers with the capability moved liquid whey from high-end whey protein products to dry whey, she adds.
According to USDA’s latest Dairy Products report, in May, the latest figures available, whey production for human consumption jumped 9.1% over May 2019 levels as manufacturers avoided making whey protein concentrates and isolates and instead sent whey into driers.
“When gyms were closed and supplement stores were shuttered during Covid-19 lockdowns, sales of high-protein whey products, popular with the fitness industry, declined precipitously,” Ganley says. “Even as restrictions ease, many people will hesitate to return to the gym, either out of an abundance of caution or the need to justify the home fitness equipment they purchased during lockdown.”
By the end of May, stocks of dry whey had soared 29.3% above May 2019 levels, and the resulting low prices are now generating additional demand interest. “Current price levels are keeping U.S. products highly competitive in the international market and should support additional exports in coming months,” says Ganley. “U.S. dry whey has been carrying a more than 10-cent discount to European whey, which should give U.S. product an edge, especially in the competitive Chinese market.”
milkbusiness.com
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