Weekly forecast – Mar. 17, 2023

Forecast updates

Adjusted 2023 forecast based on spot modifications

  • Increased the March block and barrel average – but kept April to June unchanged.
    • Raised 2H 2023 prices as it appears the market expects new cheese capacity, but it may be slow to materialize.
    • Demand prospects remain positive – absent new cheese that could cause markets to lift.
    • Given recent increases – it seems reasonable that second-half prices could have less resistance to moving up.
    • Increased the barrel forecast for March, but reduced Q2 prices given availability.
  • Increased the butter price for March, but maintained lower output for Q2 prices.
  • No change to 2H butter prices.
  • Raised whey prices through Q3 as prices continue to lift.
  • Reduced lactose and buttermilk prices.
  • No significant changes to NDM.

Milk Market

Nothing has changed in the world of milk – most are still reporting that milk is widely available to plants with deep discounts persisting. Severe winter weather spread throughout the country, causing disruptions, but most plants maintained normal operations with little issue. California’s Central Valley is due for another onslaught of rain that should last through mid-week. Some reports that flooding may have disrupted some farming operations for a time. Spring is days away, but winter weather has not yet relaxed its grip on the United States. There are some reports that China’s milk could be slowing down – but a few more reports will be needed to verify the speculation.

Cheese Market

CME Cheddar blocks and barrels continued to push prices toward the $2/lb mark on rumors and little fundamental data. Recent reports suggest that Cheddar prices above $1.90/lb result in reduced overseas demand. While futures markets are rising, they are still discounted to current spot prices. CME blocks averaged $1.929/lb this week, up 9.65¢ compared to the previous week. Barrels averaged $1.874/lb, up 17.25¢. The meteoric barrel risk closed the spread to 5.5¢ – one of the lowest this year. Anecdotal reports suggest that demand is okay and that production is rising to send more cheese to warehouses. That seems to stand in stark contrast to this week’s markets. That said, buyers are looking for sizeable quantities of cheese, and sellers are reluctant to part with current stocks.

ERS announced January 2023 domestic, commercial disappearance totaled 1.12 billion pounds, 0.1% less than the previous year. A strong performance, but still less than last year. That is consistent with anecdotal reports that demand was consistent. That, combined with exports, may support the recent Cold Storage report; still, there are concerns that stocks built quickly last month. A strong start for demand could continue to support prices and may be needed once new production capacity comes online. Recent economic concerns about bank failures – could still stall demand.

.Butter Market

After a down week in early March trading, the butter market reversed course and turned higher this week. CME butter averaged $2.388/lb, up 5.1¢ from the previous week. Butter trading remains somewhat limited. This year New Crop Butter day landed on March 1, and it was a dud, with prices falling rather than rising. This year’s price decline suggests plenty of new crop butter to satisfy spot demand. That is rare. From 2010 to the present new crop, butter trading has only declined twice and been unchanged once. This year’s 7¢ decline was the largest over that span. The last time this happened was in 2016 –when prices averaged $2.0811/lb that year. But as quickly as the new crop prices faded, last week March prices were back at $2.38. There are reports that cream demand is picking up ahead of Easter – but that cream multipliers are low, and cream is still widely available. Once Easter passes, it will be interesting to see if butter prices come under some pressure as ice cream season is still months away.

January domestic butter commercial disappearance at 148.9 million pounds – 13.6% less than the prior year. That was the slowest start since 2020. Lower commercial disappearance, higher production, and trade reversal explain how stocks are rebuilding quickly, suggesting that stocks should continue to mount through the spring unless something changes. That makes persistently high spot prices unusual.


CME NDM prices have remained in a 2-cent trading range this month, dropping as low as $1.165/lb. and rising to a max of $1.185. The market averaged $1.1805/lb this week, up 0.9¢ compared to the previous week. Dairy Market News (DMN) NDM prices are trending lower this week. At the same time, NDPSR prices moved up. Some reports indicate good interest for powder in the mid-teens, but that interest slows as prices return to the $1.20s. Futures expect prices to drop into the teens by next month. Overall, news continues to compete, with some suggesting that spring prices could remain under pressure but that expectations for China remain optimistic, resulting in minimal market movement in recent weeks.

January 2023, domestic NDM commercial disappearance was 48.7 million pounds. That was 35.8% behind the previous year and the slowest start since 2020. That is concerning as production continues to expand with lower bottling in recent weeks and rising milk production. If domestic sales do not pick up, that will burden export sales more this spring. The good news is that demand from Mexico was strong in January, but it is now spotty. As prices dip into the teen’s reports indicate Southeast Asian buyers have expressed interest.

Whey & Lactose Products

US and EU whey prices tend to trend together. While there can be sizeable price disparity, the markets tend to move in the same direction. That has not been the case for most of this year as US prices are increasing and EU prices are trending lower, resulting in a 10-cent gap between the two regions. That is the widest gap since last year at this time. After that time, US prices began to trend lower to catch European prices. That is what the CME futures are forecasting. But, so far spot prices continue to trend higher. CME spot prices averaged 45.1¢, up 1¢ from the previous week. Dairy Market News (DMN) prices were higher. The central mostly price was increased 1¢ to 43¢; western mostly prices were increased 1¢ to 44¢ this week. NDPSR whey prices moved up 1.6¢ this week to 42.46¢. European whey prices were up at 31¢.

January 2023, domestic whey commercial disappearance was 52 million pounds. That was 4% behind the previous year. That was a good showing when combined with exports. January 2023, domestic WPC commercial disappearance was 25.3 million pounds. That was 25% behind the previous year. While whey powder continues to move, slower movement for higher valued WPC/WPI and lactose could begin to take a toll on whey.