It was a shortened week with the markets being closed Wednesday for Christmas and there wasn’t a lot for the markets to feed on in the way of USDA reports. The main one this week was the November Cold Storage, which showed that butter and cheese stocks expectantly dropped. The total cheese inventory was down for the eighth month in a row.
November 30th butter holdings fell to 213.5 million pounds, down 54.2 million pounds or 20.2% from October, the largest decline for the two months since 2021, according to HighGround Dairy (HGD), and more than the five-year average of 47.5 million pounds. Butter stocks were up 747,000 pounds or 0.4% from Nov. 2023, but keep in mind, they were up 11.5% from a year ago in October.
StoneX suggests that weak milk production in California likely hurt butter production and butter demand must have stayed pretty good in November.
American type cheese stocks fell to 766.6 million pounds, down 7.8 million or 1.0% from October’s level, which was revised up 1.7 million pounds, and were down 63.4 million pounds or 7.6% from a year ago.
The “other” cheese category holdings, slipped to 544.4 million pounds, down 5.7 million pounds or 1.0% from the October level, which was revised up 3 million pounds, and were down 42.9 million pounds or 7.3% from a year ago.
The total Nov. 30 cheese inventory stood at 1.33 billion pounds, down 13.0 million pounds or 1.0% from October, and 103.6 million pounds or 7.2% below a year ago. October stocks were revised up 5.1 million pounds, taking them from an 8.0% decline to 7.6%. HGD says the report is bullish for butter and neutral on cheese.
CME dairy prices were mixed in the Christmas week. The cheddar blocks closed Friday at $1.8725 per pound, up 2 cents on the week, fourth consecutive week of gain, highest since Oct. 30, and 40.25 cents above a year ago.
The barrels saw their Friday finish at $1.7675, 0.75 cents higher, 36.75 cents above a year ago, and 10.50 cents below the blocks. There were 6 loads of block traded on the week at the CME and 8 of barrel.
Cheesemakers told Dairy Market News (DMN) that orders have been steady to quiet the final weeks of the year as they seek to trim end-of-year inventories. The trading focus is now on the first two weeks of 2025. Spot milk purchases in the shortened holiday weeks were generally on the same trend as expected.
A lot of holiday milk trading was done earlier in the month. Spot milk prices were as low as $7-under Class this week, although some were closer to the Class III baseline. Cheese production was expected to vary this week and next, but some lines will run to take advantage of the extra milk available, according to DMN.
Cheese production is mixed in the West, with some degree of downtime planned. Some manufacturers reported tighter inventories for spot buyers, but cheese is available. Domestic cheese demand is steady to stronger while international buying is steady to light. Sellers indicate that the competitive edge domestic prices have had, compared to European or New Zealand prices is shrinking.
Cash butter climbed to $2.58 per pound the day before Christmas, highest since Nov. 19, but it closed Friday at $2.5750, 2 cents higher on the week, and 9 cents below a year ago. There were 12 sales on the week.
Central region butter makers reportedly ran churns until the eleventh hour this Christmas week, as there was a lot of cream available. Last year during week 52, multiples for spot cream were as low as .5, while this year, at early week, they were hovering closer to the 1.00 mark. Plant managers say they have begun to lock in cream for first quarter 2025, according to DMN.
Plenty of cream is available in the West, with various degrees of downtime reported for the week. Sellers indicate butter inventories are healthy, and butter churning continued to keep up with or stay ahead of demand going into the holiday week. Butter demand is lighter to stronger, with buyers more heavily securing loads for first quarter next year, reports DMN.
Grade A nonfat dry milk closed Friday at $1.3875 per pound, down a nickel on the week but 21.75 cents above a year ago, with 10 sales put on the board.
Dry whey saw Friday’s close at 75 cents per pound, up a penny on the week and 36.50 cents above a year ago, with 2 sales for the week.
Dairy cow culling for the week ending Dec. 14 totaled 55,400 head, down 900 from the previous week, and 1,300 or 2.3% below a year ago. Year to date, 2,614,100 cows have been removed, down 363,400 or 12.2% from a year ago.
Chinese dairy imports strengthened in November, according to China Customs Statistics. Shipments from New Zealand were up significantly, according to HGD, and included fluid milk, whole milk powder and butter.
Milk protein concentrates greater than 70% were added to HGD’s watch list, as New Zealand is moving stronger volumes into China, totaling 7.3 million pounds in November, up 560.3% from a year ago.
Whey demand showed strength, totaling 133.6 million pounds, up 3.0%, with the U.S. continuing to dominate market share. Gains were also made from Turkey and Ireland, according to HGD.
High-protein whey volumes were also impressive, says HGD, with the U.S. maintaining the top spot and up 24% from a year ago, though Germany is becoming a strong competitor, and saw a 312% increase from a year ago.
Butter imports totaled 23 million pounds, up 95.5%. Cheese totaled 30.9 million pounds, down 16.7%.
Whole milk powder totaled 61 million pounds, up 25.1% from November 2023, while skim milk powder, at 30.5 million pounds, was down 41.1%.
The Global Dairy Trade Pulse on Tuesday saw 4.96 million pounds of product sold, up from 4.86 million on Dec. 10. Prices on both skim milk powder and whole milk powder were down from the previous Pulse.
Meanwhile, CoBank says “U.S. dairy exports are approaching record levels as consumer demand for dairy products in Mexico continues to outpace the country’s production. Mexico faces an annual dairy product deficit ranging between 25-30%, and the U.S. supplies over 80% of that shortfall.”
Mexico is already the U.S. number one dairy customer, according to Lead Dairy Economist Corey Geiger in the Dec. 30 “Dairy Radio Now” broadcast. He adds that 84% of Mexico’s dairy imports are from the U.S. and Mexico’s per capita dairy consumption has grown 20% since 2011, to 50 pounds per person.
Nonfat and skim milk powder have been the main imports for many years, he said, and are used to enhance protein content in cheese and other dairy products made from domestic milk production. That will likely continue but cheese consumption has seen tremendous growth, Geiger said, with Mexico importing 327 billion pounds in 2023. He says they are on track to add another 25 billion to that and, through October, had purchased 37% of all U.S. exported cheese.
When asked if fluid milk exports might be a possibility, Geiger said the U.S. has $8 billion in new plant investment coming online and, while half of that is devoted to cheese, there’s also about a dozen plants adding “extended shelf life” products, which need no refrigeration. Such products are shipped out of Miami to Central American countries, he said, and while he hasn’t heard that Mexico is considering doing this, the option is there.
Tariffs that incoming President Trump has threatened could impact this situation. Geiger pointed out however that NAFTA was our first major trade agreement and it has worked well, as has the current USMCA agreement which Trump helped orchestrate, so “We’ll see what happens as the calendar turns.”
In other trade news, “The growing gap in global demand for different types of whey ingredients continued in 2024,” according to the USDA’s Foreign Agriculture Service’s Dairy, World Markets and Trade report issued Dec. 20.
“Exports of Whey Protein Concentrate containing 80% protein content (WPC80+) have outpaced lower protein dried whey categories, especially to Asian markets,” the report stated. “Specifically, WPC80+ exports grew 17% year over year in 2024, compared to 4% growth in all other whey products.”
“Over the past year, there has been a shift from volume-based toward value-driven purchasing of dairy ingredients, as buyers increasingly prioritize protein content. WPC80+ is becoming a leading ingredient option for manufacturers and consumers focused on nutrition, wellness and performance,” the report stated.
“The Agricultural Marketing Service Weekly Dairy Market News reports and the National Milk Producers Federation’s International Dairy Analysis report from October further underscore this development, as traders and brokers have consistently noted surging WPC80+ prices and steady overseas demand, signaling enduring enthusiasm for higher-value protein sources.”
“The U.S. remains the largest global supplier of high-protein whey, accounting for approximately 47% of the export market volume through the first ten months of 2024, up from 44% in 2023. U.S. processors are expected to increase WPC80+ output on new expected production capacity coming online. No other global supplier is poised to experience comparable production growth,” the report said.
“The increase in demand toward high protein whey in Asia is most prominently seen in China, where the volume of U.S. WPC80+ exports more than doubled year-over-year from Jan-Oct 2023 to 2024, compared to a 2% decline in export volumes of all other whey products,” according to the USDA.
In politics, lawmakers approved an extension of the current farm bill. The extension was part of a package to avoid a government shutdown.
The Food and Drug Administration’s final rule defining “healthy” got a thumbs down from Roberta Wagner, senior vice president of regulatory and scientific affairs at the International Dairy Foods Association (IDFA).
“With this rule, FDA missed an important opportunity to help shoppers at all income levels choose healthier food options for their families. Instead, the rule is so narrow that few foods, including many nutrient dense dairy products, will be able to bear the claim. FDA notes 79% of Americans are not eating enough dairy or getting dairy’s 13 essential nutrients, and yet this new rule puts nutritious dairy further out of reach for Americans of all backgrounds and income levels. We recommend FDA rethink their approach to ensure a wide variety of nutrient dense foods accessible to Americans from all backgrounds can bear the claim. We urge FDA reopen this rule for comment with the intent of creating practical policy that benefits all people and families,” the IDFA stated.
Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.
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