In this week's Dairy Market News, the USDA reports cheese market price gyrations are creating more uncertainty, a tightening of milk supplies in the East, and firming butter prices. Foodservice orders are at good levels as restaurants prepare for the summer vacation season.

Following is a summary. Read the full report online.

FLUID MILK. In the East, milk truckload weights are reported to be declining, leading to a tightening of the milk supplies in the region. Hotter temperatures are leading to milk output declines in Florida and fewer milk loads are leaving the state to find processing homes. In the Midwest, milk production patterns are sporadic with some areas seeing an increase in output following better weather conditions, yet other areas are seeing milk declines and lower component tests. Prices on spot milk loads range from flat Class to plus 50 cents. Milk output is mixed in the Southwest and weather is the contributing factor. Farm-level milk production is being affected by low milk prices and high feed cost as producers seek best returns. Processing plants are running on heavy schedules, but those levels are backing off from seasonal highs.

CHEESE HIGHLIGHTS. The cheese market price gyrations are creating more uncertainty. The trade is digesting the latest news on production trends of various cheese varieties, domestic pricing changes, and international news. Cheese production is steady to trending lower and is along expected, seasonal levels. Cheddar cheese inventory levels are adequate to higher and available for trade needs. Mozzarella holdings are often above the slowing, seasonal demand. Discounted milk offerings in the Midwest are very limited. The CME block prices gained 8 cents last week, then fell 7 cents on Monday and Tuesday, and then rebounded to regain 7 cents on Wednesday and Thursday. On Friday, blocks were down 3.5 cents to close at $1.6150. The barrel market price has been trending steady, creating a wide and trade described "unsustainable" spread between the barrel/block prices.

BUTTER HIGHLIGHTS. The AA cash butter price at the CME remains firm. The cash price firmed early in the week, eased slightly at midweek and finished the week firm at $1.4175. Churning schedules across the country remain seasonally active. Cream supplies are sufficient to maintain near capacity or capacity schedules, but the surplus volumes of recent weeks have declined. Class II operations, especially ice cream producers, are absorbing increasing volumes of available cream as ice cream and mix production attains summer levels. Current churning schedules are generating sufficient volumes of print and bulk butter for needs with some volumes clearing to inventory, but inventory clearances are lighter. Domestic butter demand is good, stimulated by scattered retail features as low as $0.99 per pound. Foodservice orders are steady at good levels as restaurants and foodservice outlets prepare for the summer vacation season.

Read the entire report.