Checking dairy product prices, cheese is dropping. After hitting $2.10 per pound on March 24, the 40-pound Cheddar blocks closed the week and the month at $1.85, down 25 cents on the week, lowest CME price since March 13, 5 cents lower on the month, and 44.50 cents below this week a year ago.

The 500-pound Cheddar barrels, after peaking at $1.9625 on March 24, finished the following Friday at $1.8075, down 15.50 cents on the week, also the lowest CME price since March 13, but is up 25.50 cents on the month, 44.50 cents below a year ago, and 4.25 cents below the blocks.

Sales for the week totaled three loads of block and 41 for the month of March, up from 26 in February. Barrel sales totaled eight for the week and 138 for the month, up from 127 in February.

Cheese demand ranges across the spectrum, according to Dairy Market News. Some cheesemakers say ordering is active. Ohers are processing with expectations to store it, while some say orders are meeting weekly expectations. Milk remains readily accessible and spot prices ticked higher on the top end of the range, but mid-week reported prices remained below Class III. Milk availability depends on location. Cheese production is steadily active, with a number of cheesemakers saying production is six to seven days per week.

Retail and food service demand in the west for varietal cheeses is steady. Inventories remain reportedly close to sold out by some. Barrel inventories remain ahead of blocks. Strong to steady demand from Asian markets continued this week, though export demand elsewhere is moderate to light as domestic prices stayed uncompetitive with European and Oceania prices. Cheese output is strong with ample milk available, says DMN.

CME butter closed Friday at $2.3975 per pound, 5.25 cents higher on the week, 1.75 cents higher on the month, but 31.25 cents below a year ago. There were 18 sales on the week and 42 for the month, up 1 from February’s count.

Processors tell DMN that demand has softened following a more active run in late February early March due to spring holiday ordering. Butter supply continues to tick up, as active churning continues due to steadily available cream. There were expectations of ice cream and cream cheese processing taking more cream and pushing multiples higher, but plant managers say cream remains in a similar price point to previous weeks. Butter market tones are holding steady, despite some bearish indicators such as increasing national stores, says DMN.

Cream is reported to be heavy to ample in the West, compared to demand which is steady to light. Some cream cheese producers have cut back on demand, while some ice cream producers have increased demand. Butter production is strong to steady, with some reports of maxed out schedules, while others have decreased capacity due to uncompleted equipment repairs. Retail butter demand is strong to steady, though some say demand for the upcoming spring holiday has plateaued and they are seeing less active food service sales. Export demand is more active for Asian markets, compared to European markets, with more competitive prices.

Speaking in the April 3 Dairy Radio Now broadcast, StoneX broker, Dave Kurzawski said there’s a lot of milk out there, even though the last Milk Production report showed a lot of states with output below that of a year ago. That’s indicative of the economics on the farm, he said, and “will provide that undercurrent to the market.”

“Typically, we average $1.65 to $1.70 in March,” he said, “So cheese in the $1.90s is reflective of the inflationary forces at play as demand appears to be strong and export demand has been strong in the three months of 2023.”

Butter has seen a “stable sideways market that eventually will change and choose a direction,” he said. It came down from $3 in October to the $2.30s, because “Buyers in board rooms in the U.S. do not want to pay $3. That is a one-way ticket out the door. You have people who have set budgets at around $2.30, $2.40, even $2.50, the market has adjusted down to that price and everyone says we’re not going to outguess this. They’re doing what they should do. That’s what hedging is about,” he said. “You hedge, not because you know where the price is going, but because you don’t know where the price is going.” He concluded saying that butter “probably should be priced lower than it is right now, but as long as the buyers are there at the $2.30, that’s where we’re at.”

The March 30 StoneX ‘Early Morning Update’ added: “With California under water and a lot of snowmelt yet to come, there is a concern over how much butter will be available to come to market later in the year. California represents between 18-19 percent of U.S. milk production and there is a lot of butter and powder made there.”

Grade A nonfat dry milk fell to $1.1475 per pound Wednesday, lowest CME price since March 22, 2021, but closed Friday at $1.16, up a penny on the week,1.75 cents below its March 1 level, and 69 cents below a year ago. CME sales totaled 4 for the week and 28 for the month, down from 42 in February.

CME dry whey closed the week and month at 44.75 cents per pound, up 0.25 cents on the week, dead even with its March 1 perch, but 16.25 cents below that week a year ago.

Things are not improving much in California. HighGround Dairy reported in its ‘Monday Morning Huddle’ that “Tulare County’s sheriff ordered evacuation notices to dairies in Alpaugh, due to breaches in levees. Tens of thousands of acres in California’s Central Valley are underwater, and the flooding will remain a concern for some time as the snowpack from the Sierra Nevada’s melts.”

The week ending March 18 saw 65,100 head of dairy cattle go to slaughter, down 2,200 from the previous week but 1,000 more than a year ago. Year to date, 738,500 cows have been culled, up 25,000 head or 3.5 percent, from the same period in 2022.

Prices globally remain depressed. Tuesday’s Global Dairy Trade Pulse saw 2.2 million pounds of Fonterra whole milk powder sold, up 100,000 pounds from the March 14 Pulse, but at $3,135 per metric ton, down $60 from the March 21 GDT.

HighGround Dairy stated: “Global demand remains stunted resulting in a further decline in WMP price to record the lowest GDT Pulse settlement since the auction began Aug. 9, 2022.”