Mid-May CME dairy prices were mostly higher though the Cheddar blocks back tracked from the previous week’s $1.98 per pound, ending seven weeks of gain and falling to $1.90 Thursday. They closed Friday at $1.9425, down 3.75 cents on the week but still 40.75 cents above a year ago.

The barrels saw almost daily gains and marched to $2.1250 Friday, up 21.25 cents on the week, highest since Oct. 20, 2022, 65.50 cents above a year ago, and 18.25 cents above the blocks. 34 cars of block were traded and 10 barrels.

Dairy Market News reported that there were multiple Midwest processing plants on either scheduled or unexpected downtime this week. The top of the spot milk price range was holding mid-week at 50 cents over Class III, while the bottom got as low as $4-under Class. Cheese plants able to run full schedules were busy and some added a weekend day to the schedule. Demand tones have shifted since mid-April. Cheddar and Italian style cheesemakers say they are turning down new orders. Barrel cheesemakers say that when a load is available on the spot market, customers are there. “Cheese market tones are clearly finding some bullish tailwinds,” says DMN, though the price split between blocks and barrels “tends to create a less-than-assured overtone.”

Cheese manufacturing is steady in the West, though some plants are bringing in additional milk to boost production. A few are running lighter schedules due to “less than stellar domestic demand,” says DMN. Class III spot milk loads are tightening slightly in some parts of the region. Domestic cheese demand over recent weeks has been stronger and exports steady however, with domestic prices shifting above international prices that may change. Market tones have been bullish, says DMN, but “Sentiments of industry participants are mostly neutral to somewhat bearish this week.”

Spot butter jumped 3.75 cents Monday, gave most of it back Tuesday, but rallied Wednesday and closed Friday at $3.07, per pound up 8 cents from the previous Friday, and 61 cents above a year ago. There were 20 CME sales for the week.

Central butter makers report a similar market environment to previous weeks. “Customers’ interests have picked up due to both seasonal trends and as a push to get ahead of continued bullish market prices,” says DMN. Food service demand is not noted as robust, but meeting expectations while retail orders are ahead of previous years’ numbers according to some contacts. Cream remains widely available, particularly in the southern area of the region, however cream handlers relay that Class III interests have begun to pull from the cream supply. Butter makers do not expect near-term cream tightness. Bulk butter is available but not abundant. The current sentiment is “How bullish and for how long?” says DMN.

Western butter manufacturers are running strong schedules, with a few saying they will continue to do so ahead of the upcoming downtime in June for churn maintenance. Milk volumes are slightly tighter in some parts of the region, but milkfat components are up and cream availability remains comfortable. Domestic butter demand is strong, with export interest moderate.

Grade A nonfat dry milk climbed to $1.1675 per pound Monday, highest CME price since Mar. 12, 2023. It closed Friday at $1.1650, 1.25 cents higher on the week and 1.25 cents above a year ago. There were 30 sales on the week, 26 on Tuesday alone, the most in a single day since Feb. 3, 2021, when 33 were sold.

StoneX points out that “With June Class III now more than $5 per cwt. above April, there may be growing incentive for U.S. buyers of fresh milk who can also use NFDM in the production of their products to buy NFDM more aggressively.”

While dairy prices look hopeful, Rabobank’s recent quarterly report warns “The initial surge in dairy prices seen in late 2023 and early 2024 was largely due to a period of restocking at lower prices rather than a robust uptick in consumer demand.” The report suggests that “The global dairy market may experience a slower recovery than previously anticipated, particularly as China’s dairy imports remain lackluster.”

Rabobank analyst Lucas Fuess said in the May 20 “Dairy Radio Now” broadcast that low Cheddar production and strong cheese exports tightened the U.S. market but globally, we saw “relative weakness in second quarter with a slight recovery into the second half of the year.” Some of that is due to “easy prior year comparable data,” he explained. “It will be easier for countries like the U.S. and Europe to make gains.”

He entitled the report “Searching for Equilibrium,” and said it follows a period of lower supply and weakened demand. “Things are looking a little bit better into the second half of the year,” but he does not see a huge resurgence in buying from China, although Southeast Asian nations and Mexico are stepping up purchases.

When asked about the impact of avian influenza, Fuess said Rabobank has not seen any huge impact. The cheese market gains were due more to other factors, he said, though there may be a slight impact on milk supply, particularly in Texas.

There isn’t a lot of data on the demand side of things yet, he said, however, “Anecdotally there has been limited impact from consumers because of the influenza though it remains a cautionary watch factor.”

As reported last week, the USDA raised its 2023 milk production forecast its latest World Agriculture Supply and Demand Estimates report and gave us a preview of what it expects in 2025. It also raised its estimate of the 2023 Class III milk price average and lowered the Class IV projection.

This month’s U.S. corn outlook is for larger supplies, greater domestic use and exports, and higher ending stocks. The corn crop was projected at 14.9 billion bushels, down 3 percent from last year’s record as a decline in area is partially offset by an increase in yield. The yield projection is 181.0 bushels per acre. Total corn supplies are forecast at 16.9 billion bushels, the highest since 2017/18. Total U.S. corn use was forecast to rise just under 1 percent. Food, seed, and industrial use is forecast at 6.9 billion bushels. Corn used for ethanol was unchanged.

The outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks. The soybean crop is projected at 4.45 billion bushels, up 6.8 percent or 285 million bushels on higher area and trend yield. Soybean supplies are forecast at 4.8 billion bushels, up 8 percent. The soybean crush was projected at 2.43 billion bushels, up 125 million.

Dairy cow slaughter for the week ending May 4 totaled 49,000 head, down 4,300 from the previous week and 8,100 or 14.2 percent below a year ago. Year to date, 1,171,000 have been culled, down 153,400 or 13.1 percent from 2023.

The May 16 “Daily Dairy Report” points out “With dairy heifer inventories at multi-decade lows, producers have fewer opportunities to cull low-producing milk cows and replace them with heifers that are ready to enter the milk parlor. Producers who don’t want to pay sky-high prices for replacements can keep more low-producing cows in the herd, effectively lowering cull rates, or milk fewer cows.”