U.S. butter stocks grew in March but remained well below a year ago. The USDA’s latest Cold Storage report shows the March 31 inventory at 283.1 million pounds, up 20.1 million pounds or 7.6 percent from February but a hefty 72.7 million pounds or 20.4 percent below those a year ago, the sixth consecutive month butter stocks were below the previous year.

American type cheese stocks fell to 822.2 million pounds, down 9 million pounds or 1.1 percent from the February level, which was revised down 2.3 million pounds, and were down 12.2 million or 1.5 percent below a year ago.

The “other” category inched up to 612.8 million pounds, up just 2.2 million or 0.4 percent from February, but were 900,000 pounds or 0.1% above a year ago. The total cheese inventory stood at 1.458 billion pounds, down 8.9 million pounds or 0.6 percent from February, but 10.9 million or 0.7 percent above a year ago.

Dairy prices were mixed the last week of April. The Cheddar blocks closed Friday at $2.37 per pound, down 2.25 cents on the week, ending five consecutive weeks of gain, but 7.50 cents above where they were on April 1, and 57 cents above a year ago.

The barrels finished the month at $2.34, 3 cents lower on the week but 8.75 cents above their April 1 perch, 50.50 cents above a year ago, and 3 cents below the blocks.

Sales totaled 3 cars of block for the week and 33 for the month of April, down from 38 in March. Barrel sales totaled 12 for the week and 75 for the month, down from 108 in March.

Milk is readily available for cheese production in the Midwest, according to Dairy Market News, but staffing shorthandedness is keeping a lid on output in some plants, which pushes more milk to others. Cheddar inventories are balanced to available, while other varietal cheesemakers say their stores are balanced to tight. Demand notes are and have been strong, said DMN.

Strong demand for cheese is present in both western domestic and international markets, though previously mentioned Asian buying slipped lower this week. Like a broken record, port congestion and the shortage of truck drivers continues to cause delays to cheese deliveries throughout the region. Inventories are growing. Milk is available, allowing plants to run busy schedules but ongoing labor shortages and delayed deliveries of supplies are keeping output below capacity.

Cash butter fell to $2.6150 per pound Wednesday, lowest CME price since Feb. 25, but reversed direction Thursday, first gain in six sessions, and closed Friday at $2.6750, up 7.50 cents on the week, 3.50 cents lower on the month, but still 92.25 cents above a year ago. There were 9 loads of butter sold on the week and 57 for the month, down from 99 in March.

Cream is reportedly available for butter producers both within the Central region and from the West, according to DMN. Bulk butter remains tight and at a premium. Contacts have mixed views regarding late summer and fall inventories. Domestic demand is steadily hearty week over week and global inquiries are not expected to ebb in the near-term so many expect butter stores to be short. And, while market prices have fallen, marketers do not view the big picture as bearish, said DMN. “Globally short milkfat, continued domestic food service strengths, and worker-supply chain shortages at the plant level are inimical to bears.”

Grade A nonfat dry milk fell to $1.7075 per pound Tuesday, lowest since Jan. 6, but it rallied Wednesday, first gain in eight sessions, and closed Friday at $1.7550, unchanged on the week, 9.50 cents lower on the month, but 43 cents above a year ago. There were 8 sales on the week and 55 for the month, down from 82 a month ago.

StoneX pointed out that Russia has suspended shipments of natural gas to Poland and Bulgaria as they are not being paid in Rubles. “This was a new requirement imposed by Russia to bolster their currency,” said StoneX, “but many countries have been unwilling or unable to pay this way. From a dairy perspective this is calling into question the ability to produce skim milk powder in certain parts of Europe.” The result of this development remains to be seen.

The whey fell to 57.50 cents per pound Tuesday, lowest since Sept. 27, 2021, but regained 3 cents Friday to close at 60.50 cents per pound, down 3 cents on the week, a half-cent below its April 1 post, and 5.50 cents below a year ago. There were 10 sales on the week and 33 for the month, up from 19 in March.

Sentiment was mixed at this week’s annual conference of the American Dairy Products Institute and American Butter Institute, according to StoneX Dairy staff, underscored by tremendous supply chain issues that have not abated.

“On the slightly bearish side there seems to be some evidence that buyers are willing to push out delivery times perhaps indicating they have built up enough extra inventory for now. On bullish side, milk is still snug. Normally this is the meeting we hear all about too much milk. We didn’t hear that this time. While processors seem to have enough milk, the lack of abundance here in mid-April has some concerned what fresh milk supplies will look like come July or August.”

Speaking in the May 2 Dairy Radio Now broadcast, Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter, said there was a lot of optimism about exports at the conference, with many deals being made there, but on the other hand, there was pessimism regarding China’s lockdowns.

He reported that there are about 500 ships anchored off the coast, waiting to unload in China, and those ships have about a fifth of the world’s shipping containers on them, which has worsened the container shortage in the rest of the globe. He said it will take two months to clear once China ends the lockdowns.

Meanwhile, Gould’s April 22 issue reported on the concern over $8 per bushel corn that dairy farmers face and stated, “At current feed prices, we estimate the average cost of production in the second quarter is above $23 per cwt. for farmers that are purchasing feed.”

When asked about it, Gould warned that a corn price that high means, “We can’t stomach much of a decrease in dairy product prices and resulting milk prices because it won’t take much to fall below that level. That’s a really high number.”

Gould believes Chinese dairy imports will continue to lag below year ago levels through second quarter, due to the COVID lockdowns, the biggest occurring in Shanghai, but new cases are being seen in Beijing.

The good news, according to the Analyst, is that “Chinese dairy consumption surged since the pandemic. Consumption of dairy set a new high and increased by 12 percent last year to 42.3 kilograms per person, according to the Ministry of Agriculture and Rural Affairs. That increase is massive. It works out to about 15 billion pounds of milk or the output of more than 600,000 cows,” wrote Gould.