Americans chewed through a lot of cheese in September, says USDA’s latest Dairy Supply and Utilization report. Total consumption hit 1.18 billion pounds, up 3.6 percent from September 2021, second consecutive month to top year ago levels and the strongest year over year gain since March, according to HighGround Dairy.

Domestic consumption hit 1.1 billion pounds, up 3.5 percent. Exports totaled 78.8 million, up 5.1 percent, and up 12.5 percent year to date (YTD), thanks to low U.S. prices.

Butter usage totaled 162 million pounds, 151.3 million of that in domestic use, down 18.4 percent from a year ago, lowest volume since June, due to the high prices no doubt. Exports totaled 10.7 million, up a whopping 48.6 percent and up 40.9 percent YTD.

Nonfat-skim milk powder totaled 219 million pounds, down 6.2 percent, with exports down 7.1 percent. Total utilization remained below prior year levels for the fourth consecutive month, says HGD, negatively impacted by both domestic and export demand.

Dry whey utilization totaled 79.5 million pounds, off 0.3 percent from 2021, and while domestic usage was down 23.8 percent, exports were up 22.4 percent, much of that thanks to China’s increased purchases for its rebounding hog herd.

It was powder that reversed the Nov. 8 Global Dairy Trade. The weighted average climbed 2.4 percent, biggest gain since Sept. 6, and followed a 3.9 percent decline on Nov. 1, 4.6 percent decline on Oct. 18, and 3.5 percent drop on Oct. 4. Traders brought 63.9 million pounds of product to market, up from 63.6 million on Nov. 1. The average metric ton price crept to $3,623.00 U.S., up from $3,537.00 last time.

Powders led the gains after leading the declines on Nov. 1. Skim milk and whole milk powder were both up 3.1 percent, following an 8.5 percent plunge on SMP and a 3.4 percent decline on WMP last time. Anhydrous milkfat was up 2.7 percent, after falling 1.7 percent, but butter was down 0.8 percent, following a 0.2 percent rise last time. GDT Cheddar was down 1.3 percent, after a 0.9 percent gain, and lactose was down 4.6 percent, after dropping 1.0 percent.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.1371 per pound U.S., down 1.7 cents after dropping 5.8 cents in the last event, and compares to CME butter which closed Friday at $2.81. GDT Cheddar, at $2.1527, was down 2.5 cents after losing 9 cents last time, and compares to Friday’s CME block Cheddar at $2.2325. GDT skim milk powder averaged $1.3864 per pound, up from $1.3479. Whole milk powder averaged $1.5410 per pound, up from $1.4875. CME Grade A nonfat dry milk closed Friday at $1.4275 per pound.

European purchases more than doubled from the last event, says analyst Dustin Winston, as buyers tripled their market share. North Asia purchases, which includes China, decreased from the last event and last year, says Winston.

Broker Dave Kurzawski stated in the Nov. 21 Dairy Radio Now broadcast that dairy demand is typically strong this time of the year, but the question becomes “Is it sustainable?” He said the economy appears strong and the labor market is tight, but the inflationary environment is yet to be slowed by the Fed increasing interest rates. Government spending needs to be cut, he said, but he warned that “Holiday demand will dry up, orders will drop off, and speculators will take their ball and go home.”

Regarding the GDT, Kurzawski said China will be back but it’s going to take time. Americans were “chomping at the bit to get out from under COVID,” he explained, but “People are more fearful in China. It’s a different culture, plus China seems to change its tune week to week on this matter.” He said the GDT was up because the prior three events were down; the lower prices attracted buyers. “Is that a sustainable change in trend? Not yet,” he concluded.

The Wall Street Journal reported, “China’s economy sank into a deeper funk last month as the weight of strict zero-COVID measures, a real-estate downturn and sinking export demand underscored the difficulties of rekindling growth.” I believe the take-away here is that the GDT won’t be bailed out by China any time soon.

ME prices were mixed the week before Thanksgiving. After jumping 19 cents the previous week, the Cheddar blocks closed Friday at $2.2325 per pound, up 3.25 cents on the week, highest since June 10, and 3.75 cents above a year ago.

The barrels finished at $1.9275, 13.50 cents lower on the week, 40.75 cents above a year ago, and a whopping 30.50 cents below the blocks. There were no sales of block on the week, the gains were on unfilled bids, with 8 sales of barrel.

Midwestern cheesemakers are running full or close to full production, according to Dairy Market News, alongside steady demand. Milk availability has stayed in a similar range to previous weeks, not straying far from Class in either direction. Some cheese producers already locked in milk pricing for Thanksgiving Week.

Demand for cheese is mixed in the West. Contacts reported strengthening food service demand while retail is softening. International purchasers continue to buy cheese, thanks to U.S. competitive prices. Milk production is trending higher in the region and cheesemakers are utilizing the milk to run busy schedules. Labor shortages and delayed deliveries of supplies however continues to prevent operating full schedules, according to DMN.

CME butter, with one exception, saw six consecutive sessions of gain until losing 1.25 cents Thursday and then suffered a 13-cent meltdown Friday, closing at $2.81 per pound, down 9.50 cents on the week. That’s still 76.25 cents above a year ago when it topped $2 per pound for the first time since June 4, 2020. There were 7 sales reported at the CME this week, 5 on Friday.

Butter producers say demand has not shifted much the past two weeks. Sales are meeting or beating expectations and on par with pre-COVID years. Churning is at the max and butter inventories are available, but are newer production. As cream access continues to grow, butter makers are taking more of it but expectations are that cream will tighten following the holiday.

Western cream volumes are available amid strengthening milk output and cream demand is steady. Butter makers ran busier schedules this week, though some are below capacity due to continued labor shortages. Retail butter demand is steady to higher as some grocers are looking past Thanksgiving to stock butter for end of year holidays.

Dairy margins strengthened the first half of November on a recovery in milk prices while feed costs moved lower, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

“Continued strong demand for cheese in both the U.S. domestic and export markets is helping to support Class III prices,” the MW stated, and detailed U.S. September dairy exports and dairy product production. The MW also expressed concern over the health of the Chinese economy and uncertainty about the extent to which the government will relax its zero-COVID policy.