About Face for Dairy Midweek

• Spot cheese rallied three days in a row to start the week, bringing optimism back into the dairy market. However, cheese sellers used the rally as a selling opportunity and brought the block/barrel average back down over 9c by week’s end.
• The GDT auction from this week saw anhydrous milk fat, butter, butter milk powder, and cheddar all move higher. Cheddar led the way, adding 7.40%.
• Several class III milk contracts hit new contract lows this week.
• US dairy cow culling for the week ending May 27th, up 14.3% from the same week last year, strong culling rates can likely be attributed to record high cattle prices at the time.

The beginning half of this week brought relief to the dairy markets with milk futures and spot markets enjoying gains and supported by a boost in GDT cheese prices on Tuesday.  Despite the positivity of the GDT and early momentum, the dairy markets fell to heavy selling pressure by weeks end to find most gains from earlier were wiped away.  Domestic cheese reports show strong availability of milk starting to outpace production at cheese plants as bottling plants no longer have school orders to fill.  Declining export demand might be the reason for a struggling cheese price despite domestic manufacturers stating continued interest and demand.  Lower prices cured retail inventories in Europe for cheese and milk availability remains strong while indications are sales are outpacing production.  Despite an optimistic GDT event on Tuesday, April export data was rough with overall dairy tonnage exports down 12% from this time last year.  Butter exports were particularly bearish with exports down 64% compared to last year and down 50% from March.