Market News

Cash butter holds steady on the CME

Cash cheese barrels increased another 6 cents on the Chicago Mercantile Exchange on Monday while blocks declined 5.25 cents.  Butter and nonfat dry milk held steady and Class III futures declined. There has been a lot of speculation that the dairy markets will crash at some point especially given the continuous decline in the global markets.  While most agree the prices will decline eventually, many analysts feel this will not be a crash like we saw in 2008.  Penn State Ag Economics professor James Dunn notes for starters the strong demand for butter with August stocks down 3 percent from July and at 37 percent below year-ago levels. Indicating butter stocks will remain low going into the holidays.

Dave Kurzawski with F.C, Stone tells Cheese Market News he doesn’t think butter will stay above $3 for more than a few weeks but also doesn’t see it falling below $2 at least through the first-half of 2015.  Usually over-quota butter imports are out of the question because of what amounts to a 70-cents-per-pound tariff but the big difference between the domestic and global price right now makes this imports quite feasible.  Combine that with a surplus of butter in Europe because Russia stopped buying and we can expect a significant increase in butter imports in the coming months.

Monthly Cold Storage Report from USDA shows that as of August 31^st there were 1.05 billion pounds of cheese in the nation’s warehouses.  That is unchanged from the end of July but 46 million pounds or 4 percent below August of 2013.  American-type cheese stocks were 662 million at the end of August, 2 million more than the end of July but 6 million less than a year ago.

Butter stocks at the end of August were 165 million pounds down 3 percent or 5 million pounds from July and 98 million pounds or 37 percent below August of last year.