Demand for fluid milk, cheese and nonfat dry milk was strong last week, reports the USDA

Demand remains good for cheese into retail sales with some added featuring this week. Food service demand is also showing some added interest with most schools back in session.

FLUID MILK. Class I demand is strong after the holiday weekend across much of the nation. Eastern supplies are tight with Florida importing 72 loads this week. Hurricane Isaac caused some temporary transportation problems with milk handlers in the Southeast. Eastern cream multiples were lower this week. Midwest manufacturing milk supplies were aided by the long holiday weekend as some plants took the weekend off and others worked extra shifts to increase inventories. California milk production is trending slightly higher as temperatures have moderated.

CHEESE HIGHLIGHTS. Demand remains good for cheese into retail sales with some added featuring this week. Food service demand is also showing some added interest with most schools back in session. While domestic demand is good, export interest is weaker as U.S. prices are above international prices in many cases. Export sales are being assisted by the CWT program. Manufacturers reported adequate inventories for current demand. NASS reported total cheese production in July totaled 874.4 million pounds, 2.3% more than last year, but 2.3% less than last month.

DRY PRODUCTS. Nonfat dry milk prices are mostly higher on a firm market. Strong Class I demand has reduced supplies of milk for NDM production. Buyers are entering the market to obtain 4Q supplies and finding a tight supply situation. Manufacturers are filling contracted needs with little available product for the spot market. High heat supplies are also strained as production schedules are balanced to the low heat market. Spot loads are available through resellers at above contracted prices. Dry buttermilk prices are higher on a firm market. Increased churning schedules over the holiday weekend helped to increase buttermilk production, but inventories remain tight above contracted needs. Dry whole milk prices are higher as the traditional stronger demand season is approaching. Dry whey prices are firm to higher following various contract indices.

Download the complete Dairy Market News report for the week of Sept. 3 to 7, 2012.