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A very good week in the dairy markets

A pretty good close on the Chicago Mercantile Exchange dairy markets on Friday.  For the week cash cheese barrels are up 8.75 cents, blocks up 12 cents and butter is up 26 cents.  Nonfat dry milk is down 14.25 cents.  The September Class III contract increased $1.10, October gained 45 cents and February lost a penny.

The butter market is described as “firm”, some butter makers know inventory levels are not where they need to be to meet upcoming demand but at the same time, no one wants to be caught with a lot of extra inventory at these prices.  More milk is going into Class I as bottlers get ready for schools to reopen, that means more milk is being skimmed so cream supplies are picking up.

Domestic cheese demand remains strong and the increase in prices on the CME is pulling some milk from the dryers as the nonfat dry milk price declines.  Foreign Ag Service says U.S. cheese exports from January through June totaled 438.7 million pounds up 34 percent compared to the first half of 2013.  Exports have already slowed the last couple of months as global prices have declined.

The European dairy market is going through some adjustment as Russia cut-off imports from the E.U.  Last year Russia bought 33 percent of E.U. cheese exports, 25 percent of butter sales and 27 percent of the anhydrous milkfat exports.  USDA FAS estimates Russia accounted for 1.5 percent of total E.U. milk production.