Weekly forecast update July 16, 2021

Forecast updates

  • Adjusted this week’s cheese forecast lower through the end of the year for most products.
    • While 640# blocks are in short supply, 40# blocks and barrels are readily available to the market. Fewer USDA orders may be causing the imbalance.
    • Still expect prices to increase until the end of the year as demand increases and production slows.
    • US cheese prices are still competitive – prices could depend on exports to Mexico, Japan, and South Korea. Should exports increase, that could lift prices.
  • Lowered Q3 butter prices. Markets remain unsettled.
    • In the Northeast, while Class II butterfat use increased in June, so did Class IV use compared to last year – suggesting a lot more cream in that market. There was less butterfat moving to Class I – over 1MM pounds – that accounts for a portion of the increased churning. The same thing could be said for FMMO 5 – less Class I turned into Class IV products in June vs. last year.
    • More butterfat in the Mideast moved to cheese vs. butterfat this year.
  • Maintained milk and whey powder markets with some adjustments for spot prices.
    • Reduced whey prices through the end of the year by a few cents/month.
  • In turn, these adjustments lowered the Class I and Class III price outlooks through year-end.

Fluid Milk Market

Reports indicate that milk off the farm is abating, and that is relieving some pressure from plants. Still, some reports of dumped milk on occasion seem to be more related to the inability to get drivers. Milk will begin its annual trek to the Southeast as milk supplies decline seasonally. The challenge this year could be available drivers. While milk still needs to move around the country – drivers are harder to come by this year – that could create challenges.

Last week, Federal Milk Marketing Orders released June utilization. Class I is down on the East Coast, the most significant users of fluid milk. That seems to be pushing milk back to manufacturing and may account for why spot prices are slow to increase this summer as more milk heads to manufacturing.


After lifting last week, CME spot prices peaked on Tuesday and began falling through Friday, with barrels dropping faster than blocks opening up the block barrel spread again. CME blocks averaged $1.6970/lb and 0.51¢ more than the previous week. Barrel trading remained elevated with 27 loads trading this week, with prices averaging $1.5645, 0.95¢ higher than the last week.  The block-barrel spread was 13.25¢ this week. While the average prices were higher than the prior week, next week’s prices could be much lower without recovery. Barrels ended the week back in the $140s.

Although reports indicate that 640# blocks are in limited supply, due to packaging and labor constraints, 40# blocks and 500# barrels appear readily available to the market. That may have caused some of the collapse mid-week. While there is some ability to substitute 40# blocks for 640# blocks, the uses are somewhat limited. In addition, some reports that the packaging issues could linger into Q4 this year could continue to drive volatility.


CME spot butter prices recovered and then started to move lower again this week. The up and down trading caused prices to average $1.6960/lb, 1.15¢ less than the previous week on similar trade volumes. This week western cream multipliers were higher than the past two years – other regions were compatible with 2019 but still less than last year.

Looking at market administrators’ reports, Class I demand dropped along with butterfat headed to bottling. That occurred in all eastern federal orders. That could account for why cream multipliers remain lower than last year and why there seems to be comparatively more butter in the system. Although Class II butterfat uses are higher than a year ago, there is more butterfat off the farm and less product headed into a bottle, and that seems to be winning out. As a result, there is seasonally more cream and butter available to the market.


CME NDM increased this week with more loads traded compared to the prior week. As a result, the CME averaged $1.251/lb – 1.41¢ more than the previous week. Prices ranged from $1.235 to $1.26 throughout the week. Prices picked up on Friday after news of widespread flooding in Germany and Belgium. The flooding was near the German northern dairy region. Until more is known about the impact on the dairying region, prices could remain temperamental.

Less milk headed to bottling this year may mean more milk powder production throughout the country. That, combined with more milk off the farm, may help explain the recent weakness in markets. In addition, overseas prices retreated somewhat as reports suggest that next week’s Global Dairy Trade (GDT) auction could be lower.

Whey & Lactose Products

CME whey prices recovered throughout the week. Reports remain mixed about whey powders. Whey averaged 53¢ – that was 2.44¢ more than the previous week. Dairy Market News whey prices continue to track lower. At the same time, lactose is lifting a bit. The same could be said for overseas whey prices also. Generally, WPC80 prices remain strong, and demand is higher than expected for right now.