Everyone has been wondering when the U.S. dairy markets would make a correction and pull more into line with the global market. A couple of sales made a significant notch in that difference on Friday. Cash cheese barrels dropped 19 cents and blocks fell 6 on the Chicago Mercantile Exchange. Butter slipped a penny while Class III futures for October lost 44 cents, November fell49 cents and December declined 27 cents.
For the week: cash cheese barrels down 13 cents, blocks lost 17 cents, butter down a penny and nonfat dry milk increased 2 cents. Class III futures for October lost 41 cents, November fell 60 cents, December dropped 45 cents but March gained 22 cents.
Domestic cheese and butter demand is strong but it seems buyers are doing a balancing-act: they need to fill holiday orders but do not want to have any high-priced inventory when the holiday demand is met. That is when everyone expects prices to drop.
European dairy interests seem to be breathing a little easier. More milk is making the switch from cheese to powder and butter, the European Commission is offering to pay storage on powders and butter while the market is in the tank. However, Dairy Market News says European dairy has become more competitive on the international market thanks to a declining EURO. On top of that, Algeria bought a bunch of European skim milk powder. Eastern European cream has been moving into Belarus.