Where did the demand go?
In recent months, Class III markets have been in a free fall as June Class III milk prices are tracking to the lowest levels since 2020. As this situation has unfolded, prices for cheese and dry whey on the CME have fallen to levels that are comparable to the early days of the pandemic. The sentiment in the broader industry has turned almost equally as negative.
Overall, dairy product prices have dropped to levels that, when we started the year, were supposedly untouchable. In an environment with inflatioxnary pressures and historically elevated feed costs, some analysts had claimed dairy markets had undergone a “structural change” and reached a “new normal” of higher prices.
This prediction is not standing the test of time. Instead, many farmers — including those who stored the most expensive feed ever in their bunks — are now pulling aggressively on operating lines. As this is taking place, they are asking us, “What has sunk markets?”
Matt Gould June 7, 2023