Whey Weighing Heavily on Class III Prices
On the cost side, dairy producers have been battling high prices that have squeezed margins to lows not seen since the height of the pandemic and Great Recession or lower. The May Dairy Margin Coverage margin dipped to $4.83 per hundredweight, the lowest on record and the first time either it or its predecessor the Margin Protection Program have ever been below $5 per hundredweight. Soon declining milk prices will negatively impact margins from the income side to unbearable levels, said Betty Berning, analyst with the Daily Dairy Report. While declining cheese prices have pressured Class III prices substantially lower, depressed whey prices have added to the impact.
“CME spot whey prices have been trading at historical lows,” Berning said. “On July 6, CME dry whey made a new all-time low of 23cents per pound.”
Looking at the market historically, she said, CME spot whey began trading on March 12, 2018. That day the market closed at 26 cents per pound. From there, prices never traded lower than opening day until May 22, 2023, when the market settled at 25.5 cents. Since May 22, markets have leveled off, trading as high as 28 cents on June 12 and 13.
July 7, 2023