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  • ZISK

Have Dairy Markets Turned the Corner?

Robin Schmahl

July 13, 2021

Class III milk futures had a brutal decline of prices from May 12th through June 24th. For example, the August contract fell from $20.04 to $16.60 over that period of time. Other contracts showed similar declined as underlying cash prices failed to find support.

However, that has recently changed as buyer interest in cheese has stepped up.

Block cheese prices has moved to the highest level it has been since May 14th. Price has increased 26.75 cents since the low was set one month ago. During the same period of time, dry whey price had declined 11.25 cents which has kept a lid on futures prices.

Each once cent decrease of dry whey price equates to a decreased of 6 cents in Class III futures. The decline of dry whey had erased 67.50 cents from the price calculation. This has offset the gains from increasing cheese prices. Increased cheese production has made more dry whey available to the market which has kept buyers somewhat complacent. However, dry whey is showing price strength recently. It is likely the market was overdone to the downside and buyers are now taking advantage of the lower price and are looking ahead to future demand.

The movement higher of cheese and dry whey prices is not the result of supply tightness, but seems to be tied more to seasonality and the desire of buyers to increase ownership for expected upcoming demand. The more prices increase, the higher they may move as buyers are now stepping up to purchase before price moves up too much. Even though supply is sufficient, buyer interest for product on the spot market will move the market.

It is interesting that dry whey price has been declining even though exports this year have been doing very well. During the month of May, dry whey exports totaled 56,621 metric tons, up 12,373 metric tons or 28% from May 2020. Lest you think that exports might be higher due to the effect of COVID last year, think again. Whey exports were actually higher in May 2020 compared to May 2019. In fact, that was common for most of the main exported dairy products for the month with the exception of cheese. Cheese exports actually has increased in 2020 over 2019, but declined 4,471 metric tons or 12.7% from May 2020. This is a bit troubling especially in light of continued strong milk production.

The other areas that has been impacted significantly has been nonfat dry milk. Price on the CME spot market had declined 13.25 cents from the high on May 5th until the low of $1.2250 last week. This has put pressure on Class IV futures. This has changed recently as well and is trending higher similar to dry whey.

For the time being, things are looking up and we can only hope they will remain that way for a period of time.

Robin Schmahl is a commodity broker and owner of AgDairy LLC, a full-service commodity brokerage firm located in Elkhart Lake, Wisconsin. He can be reached at 877-256-3253 or through their website at

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in commodity trading may not be suitable for recipients of this publication. This material has been prepared by an employee or agent of AgDairy LLC and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.


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