KANSAS CITY — As monthly milk production continues to steadily increase from a year ago, prices for most dry dairy products have sunk well below 2007 highs and cheese prices have dropped from recent highs, but butter prices have shown impressive strength.
The price for butter traded at the Chicago Mercantile Exchange ended the first week of August at $1.65 a lb, or about 10% above its year-ago price, and up nearly 40% from its low of the past year set in late February. Butter prices have gained 17c a lb since the first week of June and peaked at $1.67 two weeks ago, the highest price since September 2005.
Both domestic and export demand have held strong this year, while cream supplies have declined seasonally in recent weeks. Manufacturers consistently have withdrawn butter from inventory since May to fill orders, resulting in stocks in C.M.E. approved storage 38% below a year ago and the lowest in four years, according to the U.S. Department of Agriculture. Nationally, butter stocks in cold storage at the end of June totaled 256 million lbs, down 6% from a year earlier, the U.S.D.A. said.
While the U.S.D.A. expects the high prices will deter butter demand, it also notes some producers are concerned supplies may run short of domestic needs later in the year.
The price for cheddar cheese barrels at the C.M.E. ended the first week of August at $1.72 a lb, down nearly 25% from its late May high of $2.25 but down only 10% from a year ago. Buying interest eased in resistance to May highs and users then held off orders as prices continued to decline. Cheese production was declining seasonally, and the U.S.D.A. expects demand will improve as buyers order for fall at more attractive values.
Cheese supplies were much looser compared to butter, with June 30 stocks totaling 905 million lbs, up 2% from last year, according to the U.S.D.A.
Compared to butter, and even cheese, prices for most dry dairy products crumpled from year-ago values, when several were at record highs. As of the first week of August, lactose prices were down 76% from a year earlier, 34% whey protein concentrate was down 66%, dry whey was down 61%, buttermilk powder was down 44% and nonfat dry milk was down about 30%.
Stocks, meanwhile, were well above last year’s levels. June 30 manufacturers’ stocks of lactose were 86% above last year, whey protein concentrate was 58% above, dry whey was 23%, buttermilk powder was 30% and nonfat dry milk was 24%, according to the U.S.D.A.
Milk production through the first six months of 2008 was up 3% from the same period last year, the U.S.D.A. said.
This article can also be found in the digital edition of Dairy Business News, August 19, 2008, starting on Page 14. Click