ORLANDO FLA. – The dairy market is transitioning from being “protein short” to “butterfat deficient,” said Sara Dorland, managing partner, Ceres Dairy Risk Management, at the International Sweetener Colloquium in Orlando on Feb. 13.

Milk production is expanding due to strong prices for butter and cheese, Ms Dorland said, but the problem is the solids in milk are two-thirds protein and only one-third butterfat, so stocks of nonfat dry milk and skim milk solids continue to build.

Cheese has been the “big driver” in the milk market, and pizza has been the driver in the cheese market, she said.

“Cheese influences the milk check at the end of the day,” Ms Dorland said.

But as more cheese is produced, so is more whey, she said, and whey prices are at multi-year lows. Demand from China, the world’s largest whey importer, is a key factor in whey prices, Ms Dorland said. Infant formula and livestock feed are key users of whey.

“We need to get whey demand back,” she said.

Along with cheese, demand for butter also has soared since “studies deemed butter not so bad” a few years ago, she said.

“Higher butter prices mean lower nonfat dry milk and skim milk powder prices,” Ms Dorland said. She suggested that butter prices would continue to rise.