The following is excerpted from USDA’s Dairy Market News for the week of July 17 to 21. Read the full report here.

Domestic and international demand for butter is good

Butter Highlights. United States butter sales activities are strong as retail ads increased in some areas this week. In addition, butter sales have been active internationally as some buyers feel U.S. butter prices are more attractive than prices overseas. 

The domestic butter demand is steady and international demand is good as many international markets' milk fats are in tight supply and prices are above U.S. prices. Cream availability is readily available to limited. Butter manufacturing is at high levels to halted. Some butter makers report production is operating on routine schedules. 

On the other hand, a number of processors have shut off their churns to sell their cream to Class II and IV manufacturers and end users. Inventories are manageable to building overall, in good shape for impending fall needs. Bulk butter prices range 2 cents below to 7 cents over the market. A few contacts report overages as high as 10 cents above for limited quantities. The market undertone is in good balance. Friday’s CME Group cash trading saw Grade AA butter closed at $2.5850, down $0.0150 from last Friday. 

West, Midwest cheese plants at full capacity

Cheese Highlights. Cheese production is steady in the Northeast. In the West and Midwest, cheese is being processed at or near full manufacturing capacity. Milk supplies are adequate for cheese processing in all the regions. 

Cheese stocks are building up in the nation. In the West, block cheese supplies are firmer compared to barrel cheese inventories. Domestic sales are flat in the Northeast and West. International sales are active in the Northeast and West, and are helping to clear some of the cheese supplies. Cheese demand from food service is stable to declining in the Midwest. 

The spread between barrel cheese and block cheese is causing uncertainty in the market. CME Group trading Friday, barrels closed at $1.4100, down $0.0650 from last Friday. Blocks closed at $1.7075, up $0.0325 from last Friday.