Dairy market news at a glance (May 31 - June 4)

Click here for the complete USDA Dairy Market News for May 31-June 4

BUTTER: Grade AA closed at $1.7750. The weekly average for Grade AA is $1.7900 (-0.0190).

CHEESE: Barrels closed at $1.6150 and 40# blocks at $1.5000. The weekly average for barrels is $1.5931 (-0.0124) and blocks, $1.5050 (-0.0380).

NONFAT DRY MILK: Grade A closed at $1.2600. The weekly average for Grade A is $1.2775 (-0.0135).

DRY WHEY: Extra grade dry whey closed at $0.6025. The weekly average for dry whey is $0.6019 (-0.0376).

CHEESE HIGHLIGHTS: The cheese market tone remains strained this week. A month ago, barrel and block prices were at or above $1.80. Currently, prices are in the $1.50s and adding to contacts' concerns is the "inverted" price situation. Contacts view the current barrel-over-block price with some consternation, as historically block prices tend to maintain a few cents up to a dime above barrel prices. The potential of barrel prices sliding down to the more typical price arrangement looms. Cheese production is busy with the current availability of milk. Spot milk prices were $6 to $5 under Class in the Midwest. Cheese production and cheese supplies are ahead of demand, according to contacts.

BUTTER HIGHLIGHTS: Plenty of cream was available coming out of the holiday. Some contacts expect there may be increasing tightness in the coming weeks. Butter output varies across and within regions; some plant managers report seasonally decreased production while others are maintaining more active schedules to stock up now for fall orders. Inventories are available for current contract and spot needs. Retail demand remains soft. Food service orders are strong and continuing to grow. Some contacts have reported a decrease in export interest for 82% milkfat butter. This week, bulk butter prices range from 1.0 to 8.0 cents above market across the country.

FLUID MILK: U.S. milk production is seasonally waning. The cool end of Midwest temperature swings into the 20s have slowed the decline but the highs into the 90s portend milk production trending lower. There are concerns about continuing dry conditions, as those conditions relate to crop progress for feed and forage. Milk production is strong in the mountain states of Idaho, Utah, and Colorado, even long in Idaho, where milk is available at discounts of up to $6.00 under Class IV. Class I demand is shifting into a typical summer lull in much of the country. Western demand for Class II and III is growing. Spot milk prices ranged from $6.00 to $5.00 under Class III in the upper Midwest. The milk surpluses are not expected to last much longer. Condensed skim markets are stable with limited availability at flat class pricing in some regions. Cream markets loosened this week but that is not expected to remain for long as summer heat develops. Most butter plants report cream is available even with ice cream demand. Butter plant scheduled maintenance in coming weeks will help spread cream as overall supplies tighten. Cream multiples are 1.32 to 1.36 in the East, 1.20 to 1.36 in the Midwest, and 1.00 to 1.28 in the West.

DRY PRODUCTS: Low/medium and high heat nonfat dry milk (NDM) prices are mixed throughout U.S. regions this week. Lower interest in low/medium heat NDM results from more condensed skim availability and buyers who feel NDM pricing will weaken. High heat NDM supplies are tight in the Central region. Demand in the West is weak, keeping downward pressure on prices. The dry buttermilk price ranges are steady to higher while the mostly is lower. Buying activity is slow and dryer scheduling tends to prefer NDM. The dry whole milk price range contracted following mixed pricing. Dry whole milk markets are steadily focused on filling contracts. The Central and Northeast dry whey price ranges are steady to higher. The West price range is steady. Export demand is steady, but some domestic buyers are slowing purchases. Whey protein concentrate 34% prices are steady to higher. Production is steady with demand stronger for preferred brands. Lactose prices are unchanged. Inventories are in good balance. Prices for acid casein and rennet casein are higher. Supply tightness is supporting price strength.

ORGANIC DAIRY MARKET NEWS: Operators of a U.S. creamery that suffered major damages from a fire earlier this spring continue to work through challenges. The dairy operation previously took in 500,000 pounds of milk a day from nearby farms. The operators are working with regional processors. Reports indicate that most of the organic milk is being processed at other plants via conventional handling methods, as some operations do not have the operating capacity to isolate the organic milk while still taking in milk from their own conventional producers. Trading in the organic feed corn markets is moderate on good buying activity. Organic corn traded $1.38 cents higher FOB this reporting period. Current demands for organic feed soybeans are firm on solid trading activities. Organic feed soybeans traded $2.63 higher FOB. There is limited forward contracting in organic food soybean markets. Trading activities are limited in organic soybean meal and soybean oil, however, markets are generally steady. There are reports new crop forward contracting is a bit slow for organic feed wheat. Market trends and trading activities are inactive on all other organic grains at this time.

NATIONAL RETAIL REPORT (DMN): Conventional dairy ad numbers increased 13 percent this week. The most advertised conventional dairy item this week is 48 to 64-ounce containers of ice cream. Ad numbers increased 2 percent from last week. The national weighted average price is $3.08, up $0.02 from last week. Conventional 8 oz. cream cheese has an average price of $1.76, down $0.11 from last week. Conventional cream cheese ad numbers decreased 46 percent.

APRIL AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $18.40 in April, up $4.00 from April 2020. Milk Cows price was $1,310 in April, up $60.00 from April 2020. Alfalfa hay price was $187.00 in April, up $7.00 from April 2020. Corn price was $5.31 in April, up $2.02 from April 2020. Soybean price was $13.90 in April, up $5.55 from April 2020. The milk -feed price ratio was 1.75 in April, down 0.10 from April 2020. The index of prices received by farmers for dairy products during the month of April 2021 was up 4.9 to 91.5. Compared to April 2020, the index was up 19.9 points (27.8 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in April 2021 was up 0.9 to 112.6. Compared with April 2020, the index was up 4.5 points (4.2 percent).

MAY FINAL CLASS PRICES HIGHLIGHTS (FMMO): The following are the May 2021 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $16.22 ($+0.66), Class III: $18.96 ($+1.29), and Class IV: $16.16 ($+0.74). Under the Federal milk order pricing system, the butterfat price for May 2021 is $1.9851 per pound. Thus, the Class II butterfat price is $1.9921 per pound. The protein and other solids prices for May 2021 are $3.1307 and $0.4645 per pound, respectively. These component prices set the Class III skim milk price at $12.45 per cwt. The May 2021 Class IV skim milk price is $9.55, which is derived from the nonfat solids price of $1.0607 per pound. The product price averages for May 2021 are: butter $1.8107, nonfat dry milk $1.2392, cheese $1.8206, and dry whey $0.6501.