You’ll recall that preliminary USDA data showed May milk production was down 0.7% from May 2021. The May Dairy Products report shows which products got shorted and it wasn’t cheese.

May cheese output totaled 1.188 billion pounds, up 2.5 percent from April and 2.1 percent above May 2021. It was the 19th consecutive monthly gain. Remember that cheese stocks hit a record high in May, up 3.7 percent from a year ago. Cheese output year to date (YTD) stands at 5.8 billion pounds, up 2.5 percent from a year ago.

Wisconsin produced 289.5 million pounds of the May total, up 1.8 percent from April but 1.8 percent below a year ago. California vats provided 211.8 million pounds, up 3.1 percent from April and 2.0 percent above a year ago. Idaho contributed 77.2 million pounds, down 10.6 percent from April and 3.5 percent below a year ago.

Italian cheese totaled 486.3 million pounds, down 0.6 percent from April but 2.9 percent above a year ago. YTD Italian stands at 2.5 billion pounds, up 3.3 percent.

American type cheese, at 482.8 million pounds, was up 3.3 percent from April and 0.3 percent above a year ago. YTD output, at 2.3 billion pounds is down 0.3 percent.

Mozzarella totaled 388 million pounds, up 4.6 percent from a year ago, with YTD at 1.9 billion pounds, up 4.0 percent.

Cheddar output climbed to 335.4 million pounds, up 15.4 million pounds or 4.8 percent from April, but was 13 million pounds or 3.7 percent below May 2021, the third consecutive month it was below a year ago. YTD Cheddar is at 1.6 billion pounds, down 3.2 percent from a year ago, which has firmed CME prices.

May butter output totaled 181.7 million pounds, up 500,000 pounds from April but 1.3 million or 0.7 percent below a year ago. California output was down 3.2 percent. YTD butter production is at 942.3 million pounds, down 3.5 percent from a year ago. Butter stocks, you’ll recall, were down 22.3 percent from May 2021.

Yogurt output totaled 400.5 million pounds, up 1.7 percent from a year ago, with YTD output at 1.96 billion pounds, down 3.1 percent.

The extra cheese production meant higher whey product output. Dry whey output climbed to 84.6 million pounds, up 1.8 million pounds or 2.2 percent from April, and 7.3 million or 9.5 percent above a year ago. YTD is at 401.2 million pounds, up 2.3 percent.

Dry whey stocks totaled 73.5 million pounds, up 300,000 pounds or 0.3 percent from April and 5.7 million pounds or 8.1 percent above a year ago.

Nonfat dry milk output slipped to 192.7 million pounds, down 3 million pounds or 1.6 percent from April, and 12.8 million or 6.2 percent below a year ago. YTD powder was at 920.8 million pounds, down 7.0 percent.

Stocks jumped to 316.2 million pounds, up 17.1 million pounds or 5.7 percent from April but 32.3 million or 9.3 percent below a year ago.

Skim milk powder output climbed to 38.7 million pounds, up 3.3 million pounds or 9.3 percent from April, but down 9.8 million or 20.3 percent below a year ago. YTD SMP was at 180.2 million pounds, down 27.6 percent from 2021. Combined nonfat and skim milk powder output was below a year ago for the sixth month in a row.

The Dairy Products report looked relatively bearish, according to StoneX Dairy Group. “Nonfat dry milk in particular stands out as a bear with stock levels 42 million pounds over forecast. The fact that production leaned heavily toward NFDM and not SMP also would seem to weigh upon that market.”

Cheese looked bullish, adds StoneX. “American cheese production was some 6 million pounds less than forecast as we continue to see very strong mozzarella production. Expect cheese exports to remain strong moving forward given the production levels.”

Butter looked a bit bearish with heavier than expected production, according to StoneX, while the whey breakdown appeared bullish. “Stock levels were 6 million pounds under expectations. It looks like demand was very strong which makes sense with slightly lower prices we’ve seen of late.”

Dairy product prices entered July weaker. The markets were closed for the 4th of July holiday Monday and Tuesday was not a great reopening. The Global Dairy Trade dropped and most CME prices fell soon after.

Demand is weaker than most people expected, explained Matt Gould, editor and analyst with the Dairy and Food Market Analyst newsletter in the July 11 Dairy Radio Now broadcast. He also pointed to the Fed raising interest rates, the slowing economy, and the loosening of our tight supply chains.

When asked if exports will bail dairy out, Gould said “That’s the almighty question.” U.S. dairy prices have moved below the rest of the world, he said, “If you’re an international dairy buyer, you look at the U.S. and say, their dairy products are on sale.” So, while dairy prices have fallen, Gould says “It will not be a total plunge and we will see a floor put in here, if for no other reason than milk supplies globally remain tight.”

Milk supplies also remain constrained in most areas of the U.S., he said, especially in the West where drought is a factor and elevated feed costs, “but this is true globally where we don’t have a wall of milk anywhere,” he concluded.

Speaking of exports, the U.S. sent 89 million pounds of cheese sailing in May. While down slightly from March and April, volume was up 31 percent from May 2021, highest May on record, according to HighGround Dairy. Cheddar exports were up 135.1 percent. Mexico remained the top cheese destination, with volume up 14 percent.

Butter totaled 8.9 million pounds, down 8.4 percent. Year to date exports are up 17.7 percent.

Nonfat dry milk/skim milk powder exports totaled 177.3 million pounds, down 9.4 percent, sixth consecutive month to be below the previous year but still the second highest May on record, according to HGD. Mexico’s imports were down 2.3 percent.

Meanwhile, troubles remain in the Global Dairy Trade which saw the weighted average drop 4.1 percent this week, following the 1.3 percent decline on June 21. Traders brought 51.7 million pounds of product to market, up from 45.8 million on June 21. The average metric ton price fell to $4,360 U.S., down from $4,600.

Butter led the declines, plunging 9.1 percent, after gaining 2.4 percent on June 21. Anhydrous milkfat was down 3.1 percent, following a 4.7 percent drop. Skim milk powder was down 5.2 percent, after inching up 1.0 percent last time, and whole milk powder was down 3.3 percent, following a 0.6 percent slip.

StoneX says the GDT 80 percent butterfat butter price equates to $2.4992 per pound U.S., down 25 cents, after gaining 6.5 cents in the last event, and compares to CME butter which closed Friday at $2.97. GDT Cheddar, at $2.2263, was up 1.5 cents, after losing 22.2 cents last time, and compares to Friday’s CME block Cheddar at $2.11. GDT skim milk powder averaged $1.8428 per pound, down from $1.9397. Whole milk powder averaged $1.7966 per pound, down from $1.8713. CME Grade A nonfat dry milk closed Friday at $1.7475 per pound.