CME cheese prices continued to fall the third week of May as traders anticipated the April Milk Production report Friday afternoon. Cheddar block fell to $1.47 per pound Monday, lowest price since June 9, 2021, climbed back to $1.54 on Wednesday, but closed Friday at $1.5350, up a half-cent on the week, ending seven weeks of decline, but is 84.50 cents below a year ago.

The barrels fell to $1.4425 Thursday, lowest since Sept. 7, 2021, but rallied to a Friday finish at $1.47, 2 cents lower on the week, 87.75 cents below a year ago, and 6.50 cents below the blocks. Sales totaled 35 cars of block and 54 of barrel.

Cheese demand varies and the type of customer is part in the equation, says Dairy Market News. Cheesemakers who supply regional chain and individually owned restauranteurs say inflation has put pressure on those businesses. Retail cheesemakers are reporting generally steady demand, in some cases year-over-year improvements. Milk availability is a growing concern, particularly for handlers. Spot milk prices remain at previous levels, as low as $11 under Class at mid-week, compared to $2.50 under Class to 75 cents over a year ago.

Retail and food service cheese demand remains strong to steady in the West. Export demand is mixed. Some contacts indicate good demand from Asia, Mexico and South America, while others indicate lighter demand. Plentiful milk is keeping cheese production strong to steady, says DMN.

Cash butter closed Friday at $2.46 per pound, up 6 cents on the week but 39 cents below a year ago, with 9 sales put on the board this week.

Butter plants report atypical demand upticks as year-over-year reports are showing improvements in retail. Food service orders are seasonally in line to quieter. Cream is available for churning and multiples are at similar levels to previous weeks. Some are turning cream away, as they are at or near capacity.

Western cream is plentiful but cream multiples moved higher this week. Planned equipment maintenance in June caused a few butter plants to reduce their cream intake. Some report output is limited due to personnel shortages. Retail and food service butter demand is strong to steady and export demand is steady.

Grade A nonfat dry milk fell to $1.1525 per pound Thursday and stayed there Friday, lowest since April 18, 1.75 cents lower on the week, and 64.75 cents below a year ago, with 9 sales reported.

Dry whey closed 3.75 cents lower on the week, at 26.50 cents per pound, lowest price since March 13, 2018, the second day that whey started trading at the CME, and is 24.25 cents below a year ago. 75 loads were sold on the week, highest weekly total since the week of Sept. 30, 2019.

The Agriculture Department lowered its 2023 milk production estimate in its latest World Agricultural Supply and Demand Estimates report, citing a larger expected cow inventory but slower output per cow. The report also gave a look at 2024.

2023 production and marketings were estimated at 228.6 and 227.6 billion pounds respectively, down 100 million pounds on production from a month ago, but unchanged on marketings. If realized, 2023 production would be up 2.1 billion pounds or 0.93 percent from 2022.

2024 production and marketings were estimated at 230.8 and 229.8 billion pounds respectively, up 2.2 billion pounds on both from 2023. If realized, 2024 production would be up 0.96 percent from 2023 and marketings would be up 0.97 percent.

Based on expected changes in component prices, 2023 Class III milk prices were lowered while Class IV prices were raised. The Class III average was projected at $17.75 per hundredweight, down 50 cents from last month’s estimate, and compares to $21.96 in 2022 and $17.08 in 2021. The 2024 average was projected at $17.50.

The 2023 Class IV average was estimated at $18.30, up 20 cents from a month ago, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 average is projected at $17.35.

The 2024 milk estimate was driven by gains in milk per cow and an additional milking day, according to the WASDE. The Class III price was forecast lower on weaker whey prices. The Class IV was forecast lower as well, with prices for butter and non-fat dry milk projected lower.

The week ending May 6 saw 57,100 dairy cows head to slaughter, down 1,700 from the previous week but 800 head or 1.4 percent more than a year ago. Year to date, 1.17 million head have been culled, up 51,300 or 4.5 percent above a year ago.

Checking demand, March butter disappearance totaled 219.5 million pounds, up 19.4 percent from February and 15.2 percent above March 2022. HighGround Dairy credits “substantial domestic demand, possibly due to an earlier Easter in 2023.” The butter was a “beacon of hope,” said HGD contributing dairy economist Betty Berning in the May 22 ‘Dairy Radio Now’ broadcast.

Cheese totaled 1.23 billion pounds, down 1.7 percent from February and down 2.2 percent from a year ago. Both domestic use and exports were lower, falling 2.4 percent domestically and 0.4 percent on exports. American cheese exports plummeted 12 percent annually, and year-to-date were at a deficit of 4.3 percent to the same period in 2022.