Things look a little better globally. The second Global Dairy Trade event of 2023 saw its weighted average slip just 0.1 percent following a 2.8 percent drop on Jan. 3 and 3.8 percent on Dec. 20. Traders brought 70.3 million pounds of product to market, down from the 73.8 million on Dec. 20. The average metric ton price inched up to $3,393 U.S., up from $3,365.00 on Jan. 3.

Cheddar buoyed the market, up 4.0 percent, after falling 2.7 percent on Jan. 3. Whole milk powder inched 0.1 percent higher, after falling 1.4 percent last time. Skim milk powder was down 0.3 percent, after dropping 4.3 percent. Anhydrous milkfat led the declines, down 0.9 percent, following a 5.1 percent drop, and butter was off 0.6 percent, after dropping 2.8 percent.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $1.9687 per pound U.S., down 1.4 cents, after losing 5.5 cents last time, and compares to CME butter which closed Friday at $2.3225. GDT Cheddar, at $2.2097, was up 8.2 cents, and compares to Friday’s CME block Cheddar at $1.8350. GDT skim milk powder averaged $1.2891 per pound, up from $1.2874, and whole milk powder averaged $1.4598 per pound, up from $1.4552. CME Grade A nonfat dry milk closed Friday at $1.1750 per pound.

Buyers in North Asia, which includes China, were a lot less engaged in this event, according to Dustin Winston, as volume purchased fell from both the last event and last year. Southeast Asia, the Middle East and South/Central America were the only regions whose purchases exceeded year-ago levels.

HighGround Dairy says, “Unless there’s massive buying from China post-Lunar New Year, it believes that whole milk powder remains in a quiet state with little volatility ahead. The current freight differential between the U.S. and E.U. makes European-sourced skim milk powder more attractive, and buyers of U.S. product remain in wait-and-see mode. China’s butter volume dropped to its lowest levels in three months and the contract 2 price is at lows not seen since July 2021.”

StoneX points out: “For now the expected rebound in demand from China is somewhat more satisfied by strong domestic production rather than their usual thirst for external sourced product. It is still largely cheaper to import dairy, but it doesn’t advance their agenda. While domestic milk production is strong in China, domestic demand still suffers from COVID. And profit margins are weaker heading into 2023.”

Chinese imports in December were actually much better than expected, according to StoneX, up 14.5 percent from last year. “Exports out of the major exporters to China were down 30 percent during November. Since most of that product lands in China during December, we were expecting Chinese imports to be down at least 20 percent. But comparing this December-January to previous December-January periods is tricky.

“China has a free trade agreement with New Zealand that allows a limited amount of dairy products into China at a reduced tariff rate on a first-come basis. So, in the past we’ve seen New Zealand shipments to China surge in November and December, but then sit in customs and not clear through until January to take advantage of the reduced tariff. However, the volume of product eligible for this reduced tariff is reportedly zero in 2023, which means there is no incentive to clear the product through customs in January versus December,” says StoneX.

“Chinese importers didn’t sit on product in December like they have in the past, they just pulled it all through customs. That is how we end up with exports to China down 30 percent and official Chinese imports up 14.5 percent, or at least we think that is what is going on here. If we’re right, January imports could be down 30-40 percent from last year (since a lot of product cleared in December and wasn’t held over into January,” StoneX concludes.

CME dairy prices headed lower in the shortened Martin Luther King Day holiday week. The Cheddar blocks closed Friday at $1.8350 per pound, down 16.50 cents on the week, lowest since Sept. 6, 2022, but 2.75 cents above a year ago.

The barrels finished at $1.58, 12.75 cents lower on the week, lowest since Nov. 29, 2021, 23.25 cents below a year ago, and 25.50 cents below the blocks, which may be reflecting actual supply and demand. Sales totaled five cars of block and 12 of barrel on the week, as the annual IDFA Dairy Forum kicked off in Orlando.

“The cheese demand spectrum has widened from week two,” says Dairy Market News. Some processors continue to say demand remains quiet, while others, namely retail Cheddar and Italian pizza style cheesemakers, say orders have picked up some. Milk availability has not changed and spot prices were as low as $10 under Class again this week, fourth week in a row. Cheese output is therefore plentiful though some plants say upcoming scheduled maintenance could keep even more downward pressure on available milk. Market tones are a little uncertain, says DMN, but there is plenty of processing going on.

Demand for cheese is unchanged in western retail markets, though some report strengthening food service sales. Football playoffs are contributing to increased demand for mozzarella from pizza makers in the region. Export demand remains steady, though lower international prices may lighten that demand going forward. Sales to Asian markets are strong. Milk is plentiful in the region and cheesemakers are busy, though labor shortages and continued delayed deliveries of supplies is keeping some plants from operating full schedules.

Butter fell to a Friday finish at $2.3225 per pound, lowest since Dec. 27, 2021, down 10.25 cents on the week, and 61.25 cents below a year ago when it jumped 21 cents. There was only one sale on the week at the CME.

Cream is still readily available, reports DMN, though cream prices rose somewhat midweek. Churning has been busy. Butter demand is “meeting seasonal expectations.” Plant management is focused on spring holiday inventory readiness, says DMN. Market tones are holding somewhat firm.

The West continues to see plenty of cream which was outpacing demand in some cases. Butter production remains strong. Unsalted butter stocks remain tighter than salted as availability continues to work towards balancing with demand. Butter demand is unchanged. Some contacts report first quarter sales being covered, but a lagging start to second, third, and fourth quarter sales, as hesitation remains for booking into the remaining quarters of 2023, says DMN.

Grade A nonfat dry milk fell to the lowest level it has seen since March 26, 2021, closing Friday at $1.1750 per pound, down 8 cents on the week and 64 cents below a year ago. There were 20 loads that exchanged hands on the week.

Powder prices in Europe have also been under a tremendous amount of pressure, according to StoneX, as they deal with increasing production and weak demand which has caused concerns over inventory levels.

Dry whey closed Friday at 32.50 cents per pound, 0.75 cents lower on the week, lowest CME price since Aug. 13, 2020, and 47.50 cents below a year ago. There were 16 sales reported for the week at the CME.