By Lee Mielke

 The Global Dairy Trade auction racked up another decline in its weighted average Tuesday, fifth session in a row, down 2.9 percent, following the 5.0 percent drop on Aug. 2.

Declines were led by anhydrous milkfat, down 9.8 percent, after falling 1.4 percent on Aug. 2. Butter inched up 0.2 percent, after a 6.1 percent plunge, and whole milk powder was down 3.5 percent, following a 6.1 percent drop. Skim milk powder inched up 0.1 percent, after falling 5.3 percent last time, and GDT Cheddar was up 4.2 percent, following a 0.7 percent slip on Aug. 2.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.3027 per pound U.S., up fractionally after losing 14.8 cents in the last event, and compares to CME butter which closed Friday at a pricy $2.94. GDT Cheddar, at $2.2703, was up 9.4 cents, and compares to Friday’s CME block Cheddar at a bargain $1.82. GDT skim milk powder averaged $1.5984 per pound, virtually unchanged, and whole milk powder averaged $1.55 per pound, down 5.8 cents. CME Grade A nonfat dry milk closed Friday at $1.52 per pound.

North Asian market share, which includes China, picked up from the last event slightly, according to StoneX, but continued below year-ago levels and has been below a year-ago since July 2021. SE Asia, Middle East, and Europe picked up purchases bringing their share higher than a year-ago and the last event.

Meanwhile, exports are moving out of Ukraine in a brokered deal with Russia, Turkey, and the United Nations. But, Foodmarket News reports that Ukraine’s grain exports are down 46 percent year on the year, at 2.65 million tons so far.

The USDA’s World Markets and Trade report stated, “Since the end of 2021, global milk supplies have tightened, propelling prices for manufactured dairy commodities higher. Among the major dairy exporters through May, only Argentina saw milk output grow year-over-year, up 1 percent, while Australia was down 6 percent, European Union (EU) down 1 percent, New Zealand down 6 percent, and U.S. down 1 percent.

Global supplies will likely remain tight as hot, dry conditions in the EU increase cow discomfort and weigh on output per cow, according to the report. Diminishing producer profitability in Argentina will likely cause production growth to moderate. Tightening supplies in the EU and Argentina are expected to more than offset improving production in New Zealand, where pasture conditions have improved considerably since the start of 2022 and the short-term outlook is positive, according to the USDA.

Favorable conditions in Australia and strong prices are expected improve production from the current year to date; however, producer caution is expected to keep expansion at a minimum short term and keep annual output below 2021.

Back home, the report said relatively stable cow inventories and slowly recovering milk per cow are expected to cause U.S. milk output to turn positive in the second half of the year. The 2022 and 2023 milk production forecasts were raised in the latest World Agricultural Supply and Demand Estimates (WASDE).

The 2022 cheese price average was lowered to $2.0750 per pound, down 11 cents from the July estimate, and compares to $1.6755 in 2021. The 2023 average is estimated at $1.9750, down 9.50 cents from last month’s projection.

Butter is expected to average $2.7850 in 2022, up a half-cent from last month’s estimate, and compares to $1.7325 in 2021. The 22023 average was projected at $2.3750, down 6.50 cents from a month ago.

Nonfat dry milk will average $1.6650, according to the WASDE, down 9 cents from a month ago, and compares to $1.2693 in 2021. The 2023 average was projected at $1.45 per pound, 19.50 cents lower than projected last month.

Dry whey is expected to average 61 cents per pound in 2022, down 3 cents from a month ago, and compares to 57.44 cents in 2021. The 2023 average is expected to slip to 48.50 cents per pound, 3 cents lower than a month ago.

The August 18 Livestock, Dairy, and Poultry Outlook mirrored milk price and production projections in the Aug. 12 WASDE. The Outlook also stated, “Lower expected prices for dairy products should boost their demand; thus, domestic use for dairy products was adjusted higher for 2022 and 2023.”

The Outlook added that there were fewer milk replacement heifers as of July 1, 2022, compared to July 1, 2021. The NASS Cattle report says replacement heifers numbered 3.75 million on July 1, 50,000 head lower than July 1, 2021.

Mid-August CME dairy prices were mixed as traders anticipated the July Milk Production and Cold Storage reports on Aug. 22. The Cheddar blocks climbed to $1.89 per pound Monday, highest since July 27, but closed Friday at $1.82, 2.50 cents lower on the week but 12.75 cents above a year ago.

The barrels jumped 6 cents Monday hitting $1.9475, also the highest since July 27, but finished at $1.8950, up 0.75 cents, 41.75 cents above a year ago, and 7.50 cents above the blocks. Sales totaled 3 cars of block and 8 of barrel.

Midwest cheesemakers tell Dairy Market News sales have improved as market prices continue to fluctuate, although the $2 plus may be a bit of a barrier for buyers. Spot milk remains available despite summer induced decreases. Plant downtime, both scheduled and due to unexpected line outages, has kept neighboring plants with more milk than expected at this point in the season.

Milk is also available for western cheese makers though labor shortages and delayed deliveries of production supplies are regulating output. Export demand is steady to higher as prices are favorable to international buyers. Domestic cheese demand saw a small uptick this week though retail and food service demand is below previously forecasted levels. Higher prices are causing shoppers to reduce purchases while food service and restauranteurs continue to reduce hours and menu offerings due to labor shortages, higher input costs, and reduced customer traffic, says DMN.

Butter plants have increased micro-fixing as cream supplies have tightened. Spot cream has moved out of the range for profitable returns, says DMN, as butter hovers around $3 per pound. Some suggest spot cream availability may not improve until Labor Day, if then.

Demand for cream is strong in the West and cream availability continues to tighten as high seasonal temperatures take a toll on milk output. Ice cream makers continue to purchase cream, though some of this demand is expected to melt away in the coming weeks. Butter makers are running busy schedules though some plants were having difficulty finding available tankers, thus delaying loads of cream and contributing to unplanned down time. Labor Day and back to school sales are contributing to a small uptick in retail and food service sales. Concern about availability in coming months are helping maintain butter prices.

Grade A nonfat dry milk climbed to $1.5350 Wednesday, highest since Aug. 4, but closed Friday at $1.52 per pound, up a quarter cent on the week and 27 cents above a year ago, buoyed by stronger than expected GDT prices. There were 13 sales reported for the week.