Butter pricing is firming this week for national and regional pricing points. Demand has been fair for the current time of year. Butter feature activity has been light to moderate, but expected to increase as more co-featuring is occurring with sweet corn and the unofficial start of barbecue season at the Memorial Day holiday weekend.

That's the analysis in this week's Dairy Market News, by the U.S. Department of Agriculture.

Lower retail butter prices are also helping sales. Cream demand has increased this week, surprising many ahead of a holiday weekend. Multiples and overages are also higher. Cream supplies are declining due to less standardized cream available as school milk needs decline, lower milk output in some areas, and declining milkfat levels in milk. Butter production remains moderate to heavy at seasonal levels.

Cheese production nationally remains heavy. Increased milk supplies have been moving to manufacturing facilities with cheese plants taking much of the increase. This has increased stocks in cold storage, but manufacturers are reported to be comfortable with current inventories.

Export sales are being assisted by the Cooperatives Working Together (CWT) program. American cheese stocks are above year ago and last month’s levels. “Other” natural cheese stocks are below year ago levels, but increasing from last month. A recent earthquake in Italy is reported to have damaged over 300,000 wheels of aged cheese worth hundreds of millions of dollars.

Northeast milk production is widely believed to have reached a plateau a “couple” of weeks ago. Nevertheless, production remains heavy and drying at some plants remains at full capacity. That is now projected to be scaled back next week. 

Milk production in the Southeast is declining overall except in the mid- Atlantic region. This has kept manufacturing capacity in the Southeast at about 60%-70% of capacity but that is expected to increase over the weekend.

Midwest farm milk intakes and component contents are gradually receding from seasonal highs in the Central region. Various marketing representatives and dairy cooperative managers indicate the competition for farm milk is increasing steadily in some areas of the Central region where cheese and butter/powder plants are numerous.

California milk output is mostly steady and remains at or near the seasonal peak. Weather conditions have been warm during the daytime, but are cooler at night. Arizona milk production is trending lower on a week-to-week basis. Hotter temperatures are a main cause, along with time in milk and feeding changes made because of high feed costs.

Milk production in the Pacific Northwest has slowed from the heavy levels a few weeks ago, but remains heavy across the region. Milk handlers are expecting some additional loads to move to manufacturing plants during the holiday weekend as some Class I and II plants are closed for the long weekend. Butter/powder and cheese plants in Utah and Idaho will be busy over the holiday weekend with local supplies and some outside milk from the Northwest. Favorable weather for milk production is helping to keep milk supplies above year ago levels.

Read the entire report from Dairy Market News.