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Dairy Market News

It’s too hot for milk, but ice cream and cream cheese plants are demanding cream

Milk production has slowed, the butter market is tight and cheese production is trending lower.

July 19, 2014

Milk production has slowed, the butter market is tight and cheese production is trending lower. Read the USDA’s Dairy Market News for the week of July 14 to 18. The following are excerpts from the complete report:

Milk production has slowed across much of the country

Milk production has slowed across much of the country. The combination of hot weather and typical seasonal declines is slowing availability of manufacturing milk. In the Midwest, cooler weather is expected to keep milk volumes closer to steady. Spot loads of milk are available, but are becoming harder to source. Class I demand is sluggish, but negotiations for the new school year are beginning in various parts of the country. Cream demand remains good with ice cream, frozen novelties and cream cheese plants working steady to slower schedules. Some butter/powder plants continue to sell cream at favorable prices. Sales of condensed skim are being made to various Class III manufacturers and are helping to alleviate pressure on drying plants.

The butter market is tight in most regions

The butter market is tight in most regions, with some frozen butter being reworked to meet current interest. Butter demand is steady into food service accounts as summer travel spurs vacation related fast food and eat-in dining. Sales into industrial accounts are steady. Butter production is mostly lower as cream volumes clear into ice cream/frozen novelties production. Some butter/powder plant operators report the current returns on spot cream sales are too good to pass up. However, those operators also note they will have to retain cream volumes in the coming weeks to start rebuilding salted and unsalted bulk and retail inventories before holiday demand arrives. Bulk butter prices range from 3 cents under to 6 cents over market, with various time frames and averages used.

Cheese production is trending lower this week

Cheese production is trending lower this week. Hot weather in the West is reducing manufacturing milk volumes. Milk production in the Central and Eastern regions is past peak and reducing seasonally. Because cheese plants are hoping to run at capacity, many are looking for spot surplus milk to keep full production schedules. Some plants are looking to available condensed skim supplies to increase vat yields. Domestic demand from retail and processor/packager facilities is mostly steady as they try to acquire inventory. Export demand is softer with many of the deliveries from previously negotiated sales. Mozzarella sales have slowed. Stocks of cheese are tightening in the Midwest with barrels tighter than blocks. Western stocks are more readily available as exporting has slowed. Wholesale cheese prices are lower this week, but spot sales at the CME Group this week rallied higher. Barrels closed on Friday at $2.0700, up 8.25 cents from last Friday. Blocks closed at $2.0275, up 5.75 cents from last week’s close.
 

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