Milk Market Push Lower

• June Class III milk futures finished the week lower for the fifth week in a row. Pressure stems from a sluggish spot whey and cheese market.
• Despite bouncing nearly 10c off the lows earlier in the week, the spot cheese market retreated back lower by week’s end. Sellers continue to be aggressive at these multi-year low price levels.
• The USDA reported this week that US April cheese in storage was down 1%, while butter inventories were up 9.8% from last year.
• The US spot whey price finished the week up a penny to $0.2750/lb despite hitting a new all-time low earlier in the week.
• Weekly dairy cow culling for the week ending 5/13 was up 3.1% YoY.

Heavy spot cheese trade remained for the second straight week, as buyers fill up inventories of lower-priced blocks and barrels. The premium of blocks over barrels eroded over the last six weeks, a change of nearly 30 cents as barrels are now at a slight premium of just over a penny per pound. Inventories of cheese being below last year’s level need to be looked at more closely as these levels are the third highest levels over the last eight years. Higher cheese inventories have forced spot prices on milk from $11 to $4 under class, a bearish tone considering this time last year basis on spot milk was closer to class pricing. Milk production remains strong in the Northeast and Europe while components have begun a seasonal push lower in the Midwest. It will be an extremely quiet week for dairy fundamentals during the shortened holiday week on the horizon, with no major reports scheduled for release and markets closed on Monday.