MRV BLOG: MRV Market Commentary August 11, 2024

Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market.  These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:

Domestic

Recently, the dairy market has been seemingly unsure. This year we have seen sky rocketing prices, low dairy margins trying to recover, the H5N1 Avian Flu and more. However, the future isn’t all gloom, with seasonality comes a shift in priorities. Most commodity prices are slowing their incline and as of the last sales report from the USDA both butter and cheese (block and barrel) are seemingly flat month-over-month. Both butter and block cheese remained relatively the same versus same period last month with barrel cheese actually decreasing 1 cent. However, both dry whey and NFDM did see slight increases of about 3 cents and 1.5 cents respectively.

Butter

Both consumption and production of butter display clear seasonal patterns. Given these trends it is appropriate to suggest the price of butter may continue to rise before peaking in October and working its way back down to start the new year. Last month we saw the production of butterfat increase 1.8% which resulted in a 4.6% year-over-year growth in butter output for January to May. This also supplied enough cream to support the output of Class II products.

Even with these strides, overall milk output was down YoY. USDA’s June 2024 Milk Production Report showcased a decline of 0.7%, while the revised May report reflected a decrease of 0.8% compared to May of last year. This decline was further than the preliminary estimates for May.

Report from USDA

Exports

On a milk solids equivalent basis, US dairy exports’ value was down 5% and its volume had a decline of 2%. US cheese and whey are still the star of the show, however, the increase in these items’ exports was not enough to offset the overall downward trend we are continuing to see this year. At best they created a relatively flat showing with overall volume decreasing 0.3% for the month.

Report fromUSDEC

Summary

Given the current market, MRV projects class I prices to increase about 1.5 cents with most class II prices also increasing marginally. MRV suggests the price of butter to peak in October before slowing and coming down for the new year. Milk output continues to be below last year’s levels with the most recent report showing a 0.7% decline. Exports are also down 5% and 2% for its value and volume respectively.

This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.

Statistical data referenced here is gleaned from reports by MRV Proprietary Data, Daily Dairy Report, USDEC, CME Group, Dairy Herd Management, and USDA.