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The butter market is strong; thanks in part to ‘butter boards’
 
Mielke Market Weekly
By Lee Mielke
 
 Hurricane Ian, for all intents and purposes, was a Category 5 that grabbed the headlines this week as well as the lives of the residents of Florida, Georgia, and the Carolinas. That was added to the frightening nuclear threats from Russia’s Putin as he annexed parts of Ukraine this week in a war that has no end in sight.
Cash dairy markets were mixed and had little to feed on this week in the way of USDA reports that we regularly monitor, adding to the uncertainty everyone feels. After dropping a dime the week before, the 40-pound Cheddar blocks closed the week and the month at $1.9675 per pound, up 0.75 cents on the week, 23.25 cents higher than they were on Sept. 1, and 11.75 cents above a year ago. 
The 500-pound Cheddar barrels climbed to $2.2450 per pound Thursday, highest since June 9, but closed Friday at $2.20, up 1.50 cents on the week, up 35 cents on the month, up 45.50 cents from a year ago, and 23.25 cents above the blocks. 
Sales totaled 3 cars of block for the week and 21 for the month of September, up from 19 in August. Barrel sales totaled 10 for the week and 35 for the month, down from 64 in August.
Midwest cheese makers tell Dairy Market News that milk volumes have fallen the past few weeks, as farmers wait for corn silage inventories to increase. Reported spot milk prices ranged this week from Class to $1 over. Cheese producers say the lighter milk has resulted in some plants shutting down for a day. Cheese interest remains healthy throughout the region and, for multiple weeks, contacts say cheese spots were unavailable. In particular, barrels are tight. CME barrel prices continue above the blocks and “exhibits the current firmness on process cheese markets,” says DMN, “but overall cheese market tones are somewhat hearty moving into the holiday demand season.”
Butter remains in the clouds, climbing to $3.1650 Wednesday, but closed Friday at $3.1450, 1.25 cents higher on the week, 5.25 cents above its Sept. 1 level, and $1.3975 above a year ago. Sales totaled 32 for the week, 23 on Tuesday alone, and 87 for the month, down from 144 in August.
Demand remains “hearty” for Midwestern butter producers, says DMN, and production lines are busy trying to fulfill orders even at near-record prices. Cream availability continues to vary from one report to the next. After a couple weeks of tightened cream supplies, this week had some plants clearing cream at multiples in the middle to upper $1.20s from regional suppliers. Still, fourth quarter holiday demand for cream from manufacturers of cream cheese and other fall and winter staples remains strong, according to DMN, so near term expectations are uncertain and butter market tones remain bullish.
Grade A nonfat dry milk saw its Friday finish at $1.57 per pound, down a penny on the week, 5 cents higher on the month, and 17.25 cents above a year ago. There were 5 cars sold on the week and 78 for the month, up from 70 in August.
StoneX dairy broker Dave Kurzawski analyzed the markets in the October 3 Dairy Radio Now broadcast, starting with the block and barrel price spread. He said the expectation was/is that the barrels would fall to a closer to normal alignment however “We’re in the peak demand time seasonally so we could be seeing $2 per pound cheese for several more weeks.”
When asked about butter remaining so long above $3 per pound, Kurzawski stated that butter demand is good because “We turned a corner on demand about 10 years ago,” referring to the perception that butter was not good for you.
Currently there are production issues, he explained, as butter output is not keeping up with demand and inventories are well below year ago, but he pointed to a new and growing use of butter as part of an appetizer on culinary “butter boards” promoted on Tik Tok. 
A butter board is covered in soft spread butter, many of them flavored, along with toasted bread, cheese, olives, fruits, nuts, or whatever you like. People love the taste of butter, he said. “People want dairy fat and we underestimate this in the industry to our peril.” 
He warned that $3 butter will not be here forever. It will come down, as cream multiples are not keeping pace with this bump in price, but $2 plus butter will most likely be the norm ahead, he concluded.
Dairy prices need to stay elevated to support milk prices and keep dairy producers in business. The Sept. 23 Dairy and Food Market Analyst estimates fourth quarter production costs at about $3.00 per hundredweight more than one year ago, with the national average cost of production around $21.15 per cwt.
Checking politics; the U.S. Food and Drug Administration issued a proposed rule pertaining to the definition of ‘healthy’ as a nutrient content claim. The International Dairy Foods Association’s (IDFA), Joseph Scimeca, PhD, senior vice president of regulatory and scientific affairs, stated “Today, according to the federal 2020-2025 Dietary Guidelines for Americans (DGAs), more than 90% of Americans do not consume enough dairy to meet daily nutritional requirements. Therefore, IDFA believes it is essential that the voluntary, proposed rule released today by the FDA must clearly establish criteria for dairy products that encourage the consumption of dairy foods while also helping consumers select the options that meet their health, taste, and lifestyle needs.” 
 “While the proposed rule takes some positive steps toward encouraging consumption of dairy products, it falls short in many other important areas by limiting how dairy labels communicate the full nutritional benefits of dairy to consumers.” Complete details are posted at the IDFA website.
10/4/2022