You’ll recall that October milk production was down 0.5 percent from a year ago. The October Dairy Products report shows that milk was thus directed away from the churn and dryer and more to the cheese vat.

Cheese production totaled 1.194 billion pounds, up 3.9 percent from September, highest output since May, and 0.8 percent above October 2022, the second consecutive month to be above a year ago. Cheese output in the 10-month period totaled 11.7 billion pounds, up 0.3 percent from 2022.

Wisconsin produced 297.1 million pounds of October’s total, up 3.5 percent from September and 0.9 percent above a year ago. California, with 210.2 million pounds, was up 3.0 percent from September and 2.1 percent above a year ago. Idaho, with 87.3 million pounds, was unchanged from September and 2.5 percent above a year ago. New Mexico provided 85.2 million pounds, up 10.2 percent from September and 2.1 percent above a year ago.

Italian cheese totaled 506.4 million pounds, up 5.6 percent from September and 1.4 percent above a year ago. American output came in at 474.1 million pounds, up 2.5 percent from September, but 0.3 percent below a year ago. Mozzarella totaled 399.4 million pounds, up 2.3 percent from a year ago.

Cheddar, the cheese traded at the CME, totaled 331.8 million pounds, up 20.5 million or 6.6 percent from September’s output, which was revised down 3.3 million pounds, but was down 8.4 million pounds, or 2.5 percent, from a year ago. YTD Cheddar output was at 3.3 billion pounds, up 1.3 percent from 2022.

Butter output seasonally climbed to 160.6 million pounds, highest since June, up 17.9 million pounds or 12.5 percent from September’s level, which was revised 1.9 million pounds lower, but was down 1.5 million pounds or 0.9 percent from a year ago. YTD butter production stood at 1.7 billion pounds, up 3.0 percent from a year ago.

Dry whey production slipped to 75.6 million pounds, down 1.2 million pounds or 1.5 percent from September, but was up 300,000 pounds or 0.4 percent from year ago. YTD whey stands at 790.1 million pounds, up 2.8 percent. Manufacturer’s stocks fell to 76.4 million pounds, down 6.8 million pounds or 8.2 percent from September but up 8 million or 11.7 percent from a year ago.

Nonfat dry milk output jumped to 127.4 million pounds, up 26.7 million or 26.6 percent from September but was down 1.6 million or 1.2 percent from a year ago. Stocks dropped to 223.6 million pounds, down 17 million pounds, or 7.1 percent from September, and down 27.1 million pounds or 10.8 percent from a year ago.

Skim milk powder production fell to 42.5 million pounds, down 13.2 million pounds or 23.7 percent from September, and 22.8 million or 34.9 percent below a year ago.

CME Cheddar block cheese climbed to $1.6350 per pound Wednesday but finished Friday at $1.58, 6 cents higher on the week but 51.50 cents below a year ago.

The barrels got to $1.61 Wednesday but closed Friday at $1.5550, up 3.50 cents on the week, 39.50 cents below a year ago, and 2.50 cents below the blocks. Sales totaled 16 loads of block on the week and 12 of barrel.

StoneX stated in its Nov. 6 Early Morning Update: “While general conversations point to rather quiet cheese demand and ample availability of fresh cheese out there, spot market sellers have been less aggressive since last week. EU cheese prices are $1.90-$2. GDT Cheddar was up 9.7 percent to $1.80. U.S. cheese is rather cheap in the $1.50s, and likely in the $1.60s as well. We also made less Cheddar in October. Not that it matters much for immediate trading, the October Dairy Products report is old. But again, for a market to continue lower, you need to give it a reason to do that,” says StoneX.

Export activity has reportedly seen a boost, adds StoneX. “It’s no secret that U.S. cheese prices were some of the least expensive over the past month and there seems to be a bit of an uptick from otherwise sluggish export sales we’ve seen so far in fourth quarter, though October is the only data we have.”

Dairy Market News reports that milk availability for Midwest cheese processors shifted the last week of November and provided a brief rebound following Thanksgiving week pricing lows. While deals as low as $4-under Class were reported the last week of November, there were some $1-over prices. Cheddar and Italian style cheesemakers say demand is holding somewhat steady in relation to this time of year. “The nearing-culmination of football season typically bodes well for both Italian (pizza) cheese and some seasonal Cheddar varieties,” reports DMN.

Western retail cheese demand remains steady while food service remains steady to lighter. Cheesemakers relay comfortable inventories the last month of 2023.

Manufacturers indicate milk is readily available and demand for Class III milk is strong to steady. Production is mostly steady.

Central butter makers say cream remains “somewhat available,” but compared to the previous two weeks, loads are lightening. There’s been an onslaught of cream volumes since the holiday week but churning rates have been kept in check by plant managers, says DMN. They will likely pick up as the end-of-year holidays approach and cream loads are expected to increase.

Cream volumes and spot load availability have improved in the West as average butterfat levels in milk have increased. That contributed to stronger churning. Some reports indicate bulk butter availability is tight. Plants report strong to steady retail production and most manufacturers report comfortable inventory levels. Domestic butter demand is strong to steady. Export demand is moderate, with steady interest remaining from Canadian buyers, according to DMN.

“Dairy margins deteriorated over the second half of November as Class III Milk futures sold off sharply to more than offset the savings from lowered projected feed costs,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

The MW detailed the October Milk Production and Cold Storage reports, which I have previously reported. It stated, “Higher milk production in Upper Midwest states relative to the western U.S. has increased cheese production which is pressuring Class III Milk futures relative to Class IV. Like the U.S., milk production has been declining year-over-year in the EU as high costs and increasing environmental regulations have negatively impacted the industry. In the feed markets, recent beneficial rainfall is Brazil has lessened concerns over soybean planting which led to a large selloff in the meal market while corn recovered slightly at month end after recording fresh lows,” the MW concluded.

StoneX broker Dave Kurzawski said 2023 hasn’t been a normal year from a demand perspective in the Dec. 11 “Dairy Radio Now” broadcast. “Is it the economy slowing,” he asks. “Inflation? Hard to say.” The markets are relatively stable going into year end, but with milk prices close to or below breakeven for most farmers, he doesn’t foresee a surge of milk that typically comes in spring. He sees “pockets of demand juxtaposed to flat or lower milk production for several more months and, as that happens, you will have pops in price.”