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Whey Prices Rise as Market Tightens

December 9, 2020

Whey markets have tightened considerably, propelling CME spot dry whey prices higher in recent weeks. After dipping below 30¢ in early July, the whey market has rallied, albeit in fits and starts. During yesterday’s spot session, the price rose another 0.25¢ to hit 46.5¢, where it remained today. That’s the highest price since January 2019, when prices were above 50¢. Futures markets have also felt the tension, with most nearby contracts rising modestly in recent days.

Market participants cite robust demand from both international and domestic markets as the main driver for the increase. Insatiable demand from China has pushed U.S. dry whey exports in October to levels not seen in nearly a decade and has contributed to a cumulative 39.1% increase in exports over the first 10 months of the year. China has been scrambling to procure enough whey to feed its growing pig herd, which the country has been racing to repopulate after the herd was decimated by African swine flu. At the same time, a pull for dry whey from both animal and human applications in the United States has amplified pressure on the market.

However, demand activity is not the only factor tightening the market. Even as milk production remains plentiful, cheese production is slowing, reducing the available whey stream. At 80.2 million pounds, October dry whey production is the lowest for any October since 2017. While inventories have shrunk nationally, the regional situation is more nuanced. Stocks in the western United States, where exports play a more central role, are reportedly very tight, while manufacturers in the Northeast indicate they have more flexibility. Most participants indicate that market conditions are firming, and without any major changes anticipated on either the supply or demand side, the upward price pressure could persist in coming weeks.

CME block cheese rose for the fourth consecutive day today, adding 0.25¢ to close at $1.645/lb. Barrel Cheddar remained unchanged at $1.42/lb.


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