Weekly forecast update – June 18, 2021

Forecast updates

  • Reduced the CME spot cheese markets for June and July – left other months alone.
    • It has also adjusted the Class I and III milk prices.
  • Reduced the CME butter price June due to current spot trading.
  • Reduced the June NDM price, as well as adjustments to prices through 2022.
    • Need to monitor China’s milk price, further declines could result in lower NDM/SMP prices.
    • The adjustments will impact the Class I, II and IV milk price projections.
  • Adjusted high-heat milk powder accordingly.

Fluid Milk Market

Heat is kicking in across the country, but milk is flowing. Components are starting to drop, but plants are still busy. Once again, bottling sales are slow, and that is sending more milk to manufacturing. That event is typical for this time of year, but it is a sizeable turnaround compared to last year. As a result, the shift in milk seems more significant by comparison. That seems to be weighing on milk prices for the moment. Milk prices are heavily discounted in Idaho and Texas, where output exceeds capacity. In some cases, milk was dumped due to lack of transportation.

As the weather warms, milk off the farm should abate. Triple-digit temperatures spread across the country with forecasts of 106F in California’s Central Valley. The weather was hot from one side of the country to the other. Higher evening temperatures could begin to take a toll on supply. Heat and lack of rain continue to lift corn and soybean futures prices. Futures dipped for a bit this week but started to increase again later in the week. The crop quality continues to decline – that could be an issue when farms begin to feed it this fall.


CME spot Cheddar blocks climbed back to the $150s early in the week before falling back into the upper 140s by the end of the week. Barrels rose to the low $160s before falling back to the $150s in heavy trading on Friday. Cheddar blocks averaged $1.5005/lb., up 2¢ compared to the previous week on 14 trades. Cheddar barrels averaged $1.6140/lb. up 0.6¢ vs. the prior week on 42 transactions. Anecdotal reports indicate there is still plenty of uncommitted cheese around and that much of that cheese is headed into cold storage. Current futures markets are providing good carry for those looking to store cheese for use later in the year. Still, futures retreated a bit this week compared to the prior week.

USDA’s Economic Research Service (ERS) released April domestic, commercial disappearance at 20% above last year’s levels. That was on food boxes, government removals, and more robust foodservice demand; at the same time, retail orders started to slow. Domestic demand combined with record exports helped keep markets balanced in April and a likely justification for higher prices in the spring. Since then, foodservice has normalized, government removals have slowed and retail remains lower. At the same time, the new incremental capacity in the system may be causing the current surplus.


While the weekly average price increased this week vs. last week, spot prices decline throughout the week. Prices continue to fluctuate between the upper 170s and low 180s. That said, cream sales picked up a bit, and less cream moved to churns in parts of the country. In the end, CME spot butter averaged $1.8045/lb., up 2.15¢ vs. the prior week. Seventeen loads traded this week, the same as the previous week.

With heat increasing, ice cream demand will likely pick up as consumers look for a cold treat. While prices are higher than earlier in the year, butterfat values remain well below the last few years – that will provide good marketing allowances for promotion this summer to encourage more consumption. As cream redeploys to ice cream and away from butter, stocks will peak, and the annual depletion will commence.

Domestic, commercial disappearance tumbled in April – down 7.2% compared to last year. The expectation is that it was on lower retail sales and foodservice that is still less than usual for this time of year. As states continue to reopen and restaurants see more traffic, that could mitigate some of the retail slowdowns.


CME NDM dropped to $1.25 on Thursday before picking back up to $1.265/lb. Prices averaged $1.2735/lb. down 2.35¢ from the previous week. With seasonally higher milk production and less milk heading to bottling, driers are picking up the slack. That seems to be resulting in a bit more spot product available to the market. A modestly lower GDT performance on Tuesday likely added to the negative sentiment. While typical for this time of year, there is still a slight imbalance causing prices to dip. The results of the latest ONIL (Algeria) tender will be out next week – that could provide some modest support to prices as it was a good-sized tender for shipments between July and October.

Domestic, commercial disappearance fell 20% behind last year’s pace. Stronger exports helped to offset domestic declines and worked to whittle back manufacturer-held stocks. The current rate for domestic demand puts removals at 754 million pounds – below the typical 850-925 million pounds. Given a modestly higher output, that puts greater reliance on exports this year.

Whey & Lactose Products

CME whey prices eased this week – but are still trading consistently with previous weeks. Prices averaged 60.35¢, down 1¢ compared to last week. Traded volumes were limited again. Domestic whey prices moved in opposition this week, with western prices lifting and central prices declining. Lactose prices are unchanged.

While there is good demand from overseas, ports continue to cause problems for exporters resulting in higher stockpiles. Domestically buyers are reluctant to lock in prices above 60-cents. There are more reports of sales in the 50s – that could weigh on prices in the coming weeks.