Butter is in demand. The USDA’s latest Cold Storage report shows March 31 butter stocks totaled 292.7 million pounds, down 2.3 million pounds or 0.8% from the February level, but up 9.9 million pounds or 3.5% from March 2022. 

While March is the fourth month in a row stocks topped those of a year ago, the drop from February was the first time that’s happened since 2010, according to Matt Gould, editor of the ‘Weekly Wire’ in the May 1 ‘Dairy Radio Now’ broadcast. 

Typically, butter stocks grow in the first half of the year and decline in the second, he explained, “So to see stocks decline in March is price supportive,” though a year ago retailers were dealing with “sticker shock when they paid $5 a pound to make Christmas cookies.” As prices came down, retail sales shot higher, he said.

American cheese stocks grew to 832.3 million pounds, up 15.4 million pounds or 1.9% from February and up 3.9 million pounds or 0.5% above a year ago. 

The “other” cheese category inventory inched up to 605.7 million pounds, up 253,000 pounds or 0.04% from February, but were down 8.5 million or 1.4% from a year ago.

That put the total cheese inventory at 1.460 billion pounds, up 13.5 million pounds or 0.9% from February, but 6.1 million or 0.4% below a year ago, second month in a row total stocks were below a year ago. 

Gould said the report on cheese was “Nothing to be excited about in either direction. We’re not building inventories at an uncomfortable rate, and we’re not drawing them down to suggest prices will rocket.”

StoneX speculated that if cheese stocks are still down 6 million pounds in April, “That would argue for a CME block price around $1.80 per pound.”

The 2023 American Dairy Products and American Butter Institute’s annual conference was held recently in Chicago. Gould said it was well attended but short term sentiment was “very negative.” “Globally, dairy demand is not shooting off the charts,” he said, “and without great growth in demand, you get this widespread pessimism.” He also reported that there was large representation from New Zealand in attendance, indicating that Asian demand must not be that great if they’re making the many hour long flight to Chicago.

StoneX reported in its April 26 ‘Early Morning Update’ that “Conversations with buyers and suppliers leaned net bearish on dairy product prices,” and that “any significant recovery is pushed into fourth quarter instead of third quarter.”

Demand from Mexico was reported as being good, but Southeast Asia demand is still weak. “Many importers appear to be hand-to-mouth,” says StoneX, “ordering small quantities and needing it quickly.”

US domestic butter sales improved around Easter thanks to aggressive discounts, according to StoneX, but cheese is getting heavier. “The heavy 640 pound block market is weighing on the 40 pound blocks.” 

Milk production in California has been improving, according to attendees, but probably still below year ago though there’s plenty of milk in the Upper-Midwest. 

Cheddar block cheese fell to $1.6425 per pound Wednesday, lowest CME price since Nov. 5, 2021, but reversed gears Thursday and finished the week and the month at $1.6875, down 6.25 cents on the week, fifth successive week of decline, 11.15 cents below its April 3 perch, and 68.25 cents below a year ago

The barrels dropped to $1.47.50 Tuesday, lowest since Nov. 18, 2021, but closed Friday at $1.59, up 3.75 cents on the week, 21 cents below their April 3 price, 75 cents below a year ago, and 9.75 cents below the blocks.

Sales totaled 21 cars of block on the week and 76 for the month of April, up from 41 in March and 33 a year ago. Barrels totaled 42 for the week and 212 for the month, up from 138 in March and 75 a year ago.

A few Midwest cheesemakers reported scheduled downtime this week to Dairy Market News, as more than plentiful milk supplies continue to move into Class III channels leaving milk handlers with their hands full trying to find destinations for the milk. Mid-week spot prices remained $4 to $10 under Class. A year ago they were $2.50 to $1.00 under. Some manufacturers are busy and contracted cheese, particularly retail and cut/wrap options, are moving. Others say inflation is beginning to affect their bottom line, as pizza restaurants purchase less. 

Strong to steady demand is drawing on the plentiful cream in the West. Heavy to balanced cream supplies compared to Class IV production needs are reported. Cream multiplies were unchanged this week. Strong to steady butter production is keeping churns busy, with some at maximum capacity. Export demand is steady to lighter due to competitive prices from European markets. The exception is Canadian market demand upticks, according to DMN.

This week’s 2022 Milk Production, Disposition, and Income Summary shows milk production totaled 226 billion pounds, up just 0.1% from 2021. Output per cow, at 24,087 pounds, was up 138 pounds. The annual average number of milk cows on farms was 9.40 million head, down 47,000 from 2021. 

Cash receipts from milk marketings totaled $57.3 billion, up 37.1% from 2021. Producer returns averaged $25.39 per hundredweight, up 36.9%. Marketings totaled 225.5 billion pounds, up 0.1%, and included whole milk sold to plants and dealers and milk sold directly to consumers. An estimated 994 million pounds of milk were used on farms where produced, 3.6% less than in 2021. Calves were fed 92% of this milk, with the remainder consumed in producer households.

Meanwhile, the Dairy Products Summary showed cheese production totaled 14.1 billion pounds in 2022, up 2.2% from 2021. The month with the biggest production was, no surprise, December, at 483.9 million pounds. The smallest month was February, with 427.1 million pounds coming out of the vat.

Wisconsin was the lead producer with 3.52 billion pounds, 25% of the 2022 total. California was second, at 2.46 billion pounds. Idaho added 989.5 million pounds.

Butter output totaled 2.06 billion pounds, down 0.2% from 2021. California was the leading producer with 33.3%. The biggest butter month was March, at 199.6 million pounds. The smallest month was August, at 147.1 million pounds.

Nonfat dry milk for human consumption totaled 1.97 billion pounds, down 3.8% from 2021. Skim milk powder, at 658 million pounds, was down 5.7%. Whey products totaled 915 million pounds, up 2.6% from 2021.

The week ending April 15 saw 60,300 head of dairy cows head to slaughter, up 5,500 or 10% above a year ago. Year to date, 993,500 head have been retired from the dairy industry, up 38,900 or 4.1% from a year ago.

In politics, The Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) applauded the U.S. Trade Representative’s (USTR) prioritization of the protection of common names in this year’s Special 301 Report. The organizations urged USTR to swiftly move forward with more assertive steps to preserve export access for food producers relying on common food and beverage terms.

Published annually, the report outlines global challenges related to intellectual property, which includes continued and escalating efforts from the European Union to abuse and misuse geographical indications (GI) to confiscate generic terms, such as “parmesan” or “bologna,” for its own producers.

One final global footnote; this year, India will become the most populated country in the world, according to Wisconsin-based MTC Dairies. The April 26 ‘Compass’ newsletter stated; “Milk and dairy products are staples in India, especially ghee and yogurts, both common in daily diets.”

“India is also the world’s largest milk-producing country when buffalo and cow milk production are combined,” says MTC. “India’s milk production expanded more than 6% on a compound annual growth basis from 2000 through 2020, according to the Indian government. That’s been enough to fulfill expanding domestic demand for dairy products. Since 2010, India has largely been self-sufficient in dairy. India’s government protects its dairy industry by prohibiting most imports. Occasionally the country exports excess skim milk powder (SMP), which can compete with product from Oceania, the European Union, and the United States. Last season, from April 2022 through March 2023, India exported an estimated 120 million pounds of SMP. India’s government occasionally curtails exports when product is needed domestically. As a result of this self-sufficiency, India has a limited impact on the global market,” says MTC.