Cheese Production Climbs in July, but Outlook Said to Be Bullish
Published: Friday, September 20, 2024
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
You'll recall July milk production was down .4% from a year ago, but after adjusting for components and milk going into the bottle, the amount of solids available was estimated to be up 1.1% from last year, according to StoneX.
The July Dairy Products report shows total cheese production crept up to 1.191 billion pounds, up 2.7% from June and up 1.9% from July 2023. Output for the seven-month period amounted to 7.1 billion pounds, up just .2% from 2023.
Wisconsin produced 297.8 million pounds in July, up 1.1% from June, and 2.4% above a year ago. California output totaled 204.3 million pounds, down .4% from June, but 1.3% above a year ago. Idaho contributed 88.7 million pounds, off .1% from June but 1.1% above a year ago. New Mexico, with 76.2 million pounds, was up 11% from June, but down 3.3% from a year ago.
Italian cheese production totaled 495.2 million pounds, up 2% from June and 2.4% above a year ago. Year to date output hit 3.5 billion pounds, up 3.3%.
American output slipped to 474.2 million pounds, up 3.9% from June, but 1.6% below a year ago. YTD, at 3.3 billion pounds, was down 4.4% from 2023.
Mozzarella, at 398 million pounds, was up 3.6% from a year ago, with YTD output at 2.8 billion pounds, up 4.3%.
Cheddar output climbed to 314.3 million pounds, up 4.1 million pounds, or 1.3%, from June output, which was revised 1.8 million pounds lower, and was down 19.4 million pounds, or 5.8%, from a year ago. YTD Cheddar was at 2.3 billion pounds, down 7.7% from a year ago.
Butter production fell to 161.7 million pounds, down 6.3 million pounds, or 3.8%, from June output, which was revised 1.3 million pounds lower, and was down 19.4 million pounds, or 5.8%, from a year ago. YTD butter was at 1.4 billion pounds, up 4.1% from 2023.
Yogurt production totaled 400.4 million pounds, up 4% from a year ago, with YTD output at 2.8 billion, up 4%.
Hard ice cream, at 64.9 million pounds, was up 5% from 2023. YTD, 435.6 million pounds had been produced, up 2.1% from a year ago.
Dry whey output fell to 67.7 million pounds, down 5.3 million pounds, or 7.2%, from June, and was down 21.6 million, or 24.2%, from a year ago. YTD whey was at 528.3 million pounds, down 5.6%.
Whey stocks fell to 63.8 million pounds, down 4.2 million, or 6.1%, from June, and down 23.3 million pounds, or 26.7%, below those a year ago.
Nonfat dry milk output slipped to 121.9 million pounds, down 5.6 million, or 4.4%, from June, and was down 11.5 million pounds, or 8.6%, from a year ago. YTD NFDM was at 1.1 billion pounds, down 16%. Stocks fell to 269.7 million pounds, down 3.6 million, or 1.3%, from June but were up 900,000 pounds, or .4%, from 2023.
Skim milk powder production climbed to 62.4 million pounds, up 1.9 million pounds, or 3.2%, from June, but down 10 million pounds, or 13.8%, from a year ago. YTD SMP was at 322 million pounds, down 12.2% from 2023.
The Agriculture Department again lowered its 2024 and 2025 milk production forecasts in the latest World Agriculture Supply and Demand Estimates report, citing lower forecast cow inventories and a slower growth rate of milk per cow for the remainder of 2024, with the slower growth in milk per cow carried into 2025.
2024 production and marketings were projected at 225.9 and 224.9 billion pounds, respectively, down 400 million pounds on both from last month's estimate. If realized both would be down 500 million pounds, or .02%, from 2023.
2025 production and marketings were projected at 227.9 and 226.9 billion pounds, respectively, down 300 million pounds on both. If realized, both would be up 2 billion pounds, or .9%, from 2024.
Price forecasts for 2024 cheese, butter, nonfat dry milk (NDM) and whey were raised, based on strong recent prices and lower milk production. As a result, Class III and Class IV milk price forecasts were raised. Tighter milk supplies and firm demand are expected to carry the higher prices into 2025 on cheese, butter, NDM and whey. Class III and IV milk price forecasts were also raised.
Cheese is now expected to average $1.93 per pound for 2024, up 10.50 cents from last month's estimate, and compares to $1.7593 in 2023 and $2.1122 in 2022. The 2025 average was raised 8 cents to $1.94 per pound.
The 2024 butter price average was raised a penny, to $3 per pound, and compares to $2.6170 in 2023 and $2.8665 in 2022. The 2025 average was projected at $3.0050, up 2 cents from last month.
NFDM is expected to average $1.22 per pound in 2024, up 2.50 cents from a month ago, and compares to $1.1856 in 2023 and $1.6851 in 2022. The 2025 average was projected at $1.2350.
Dry whey was projected to average 47.50 cents per pound in 2024, up a half-cent from last month's estimate, and compares to 36.18 cents in 2023 and 60.57 cents in 2022. The 2025 average was estimated at 48.50 cents per pound.
The 2024 Class III milk price was projected to average $19.45 per hundredweight, up $1.05 from last month's estimate, and compares to $17.02 in 2023 and $21.96 in 2022. The 2025 average was estimated at $19.60, up 95 cents from a month ago.
The Class IV price average for 2024 was estimated at $21, up 20 cents from last month's estimate, and compares to $19.12 in 2023 and $24.47 in 2022. The 2025 average was projected at $21.20, up 25 cents from a month ago.
CME cheese prices climbed higher the second week of September. After gaining 23.25 cents the previous two weeks, the Cheddar blocks reached $2.3150 per pound last Wednesday, highest since May 24, 2022, but they closed last Friday the 13th at $2.2750, still up a half-cent on the week and 39.50 cents above a year ago. The highest block price ever was $3 per pound on July 13, 2020, with barrels topping out at $2.53 on Oct. 30, 2020.
The barrels saw daily gains and closed last Friday at $2.4850, 21 cents higher on the week, highest since Nov. 5, 2022, 67.50 cents above a year ago, and 21 cents above the blocks. There were nine sales of block on the week and three of barrel.
StoneX broker Dave Kurzawski credited the lack of milk and Cheddar for the soaring prices in the Sept. 16 "Dairy Radio Now" broadcast. "But, we're entering the good demand time of the year," he said, "and there's not an overhang of cheese in the market." There are fewer buyers with prices in this "rarified air," he warned, "so setbacks are expected but, even with, say a drop of 15 cents, the market is still quite bullish."
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