Discover how milk futures signal stronger prices amid rising cheese demand and market volatility. Will this trend continue to benefit dairy producers and consumers?
The dairy markets have seen increased volatility, with Class III futures showing significant ups and downs. I mentioned this earlier, and it happened sooner than expected. Expect more volatility as summer progresses. Traders are reacting quickly to cash movements or perceived price changes. Milk futures suggest milk prices could be better than last year if spot prices remain steady. Prices will improve if demand rises and supplies tighten. Cheese inventory hasn’t exceeded last year’s levels, hinting at potential supply tightening if demand grows. Manufacturers say cheese demand is up but not enough to cut inventory.
| Month | Total Cheese Exports (Metric Tons) | Change from Previous Year | Butterfat Exports (Metric Tons) | Change from Previous Year |
|---|---|---|---|---|
| March 2023 | 50,022 | +20.5% | 2,350 | +15% |
| April 2023 | 46,271 | +27% | 2,881 | +23% |
International cheese demand has seen a remarkable improvement. In March, cheese exports surged to 50,022 metric tons, a 20.5% increase from the previous year and the highest recorded. April followed suit with a 27% rise over April 2023, reaching 46,271 metric tons, the second highest on record.
| Month | Class III Closing Price (per cwt) | Price Change (%) | Market Sentiment |
|---|---|---|---|
| January | $19.20 | +3.2% | Optimistic |
| February | $18.75 | -2.3% | Neutral |
| March | $20.10 | +7.2% | Strong |
| April | $21.00 | +4.5% | Bullish |
| May | $21.25 | +1.2% | Stable |
| June | $21.85 | +2.8% | Optimistic |
The outlook for cheese exports is bright, providing strong market support. Butterfat exports also jumped in April, reaching 2,881 metric tons—up 23% from last year and the first year-over-year increase since November 2022. This could lead to record-high butter prices, thanks to higher demand and the highest butter prices yet for this time of year. Increasing domestic demand and potential for rising international demand could push prices even higher.
- April income over feed price was $9.60 per cwt.
- Second month with no Dairy Margin Coverage program payments.
- Current grain prices and milk futures suggest no future payments under the program.
- Planting delays haven’t impacted grain prices.
- Initial crop condition for corn is 75% good/excellent.
- One of the highest initial ratings for a crop, possibly leading to a large supply and lower prices.
- This could improve income over feed significantly.
