The U.S. domestic nonfat dry milk price (NDM) averaged $0.837 per pound in July, the lowest monthly level since May 2009. July international export prices for skim milk powder (SMP) were also very low, $0.79 per pound for Oceania and $0.85 per pound for Western Europe. The weighted average SMP price for the August 4th Global Dairy Trade auction was $0.64 per pound. Since the U.S. market for NDM is highly dependent upon exports, domestic prices track fairly closely with international prices. The domestic price for dry whey, which is also highly dependent upon exports, fell from 42.5 cents in June to 39.4 cents in July.
In contrast to NDM and dry whey prices, the U.S. domestic butter price rose slightly from June to July, and it was much higher than international export prices. The domestic cheese price fell slightly but remained substantially higher than the Oceania export price. U.S. prices for butter and cheese can remain above competitors’ export prices for two reasons: (1) U.S. butter and cheese markets are not highly dependent upon exports, and (2) the domestic market is somewhat insulated from imports by tariffs and transportation costs. Over-quota import tariffs1 for butter and cheddar cheese are about $0.70 and $0.56 per pound, respectively
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Source: USDA