Dairy Market Update from World Dairy Expo

Dairy markets are searching for momentum. Jenny Wackershauser of, speaking at World Dairy Expo in Madison, Wisconsin, explains.

“We are sitting in what we like to call the epidemy of we need export to market. So, traditionally in the U.S. marketplace over the last few years, exports have really driven when we’ve had a successful dairy market versus a struggle market. And as we sit right now, the European Union has grown their milk production similarly after COVID as the U.S. has, so we are competing with them every day for cheese. So, as we need to entice those international buyers to come into the U.S. market, we tend to need to correct our price on cheese down to the European Union levels, which has been 1.50 to 1.75 cheese. So, in recent weeks as we rallied up towards 1.90-$2.00 cheese, that was great for the domestic market, but it took us out of competitive spot there on getting more exports to come in.” 

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That trend, she says, is likely to continue for a while, but there’s also a tale of two markets.

“Butter has been on a tear and we said historic high on the CME last week. We broke through 3.30, we’re now pushing 3.40 butter, which has been kind of a seasonality play here going into holiday season. They’re getting their buys in for going into holiday buying. It sets the price for kind of that holiday price for going into retail, so it’s seasonality. This is normally a strong time of year for butter. This is an exceptionally strong run that comes a lot off the heat that the South and Western dairies had the summer.” 

She says export markets are impacted by the strong value of the U.S. dollar as well.

“So, every time we see our cheese prices fall to a level that’s attractive to our trading partners, that is another thing that’s hampering that. So, we’ve also seen strength in the last two to three weeks in the U.S. dollar, which makes us need to correct that price even more to entice that buyer to come in. The other good things we see on the export side, though, are Saudi Arabia, some of those trading partners, we have as crude oil prices increase, they tend to come as a stronger buying partner on the dairy specific side. There are some things that go into this, but we’re also moving into that seasonality time of year. We tend to put in our rallies this time of year and have a much softer market going into late December, January and February.” 

And domestically, demand appears a bit stagnant.

“As we talk with our clients on managing their risk here on these mountain markets, it’s with an eye on where does our risk lie going into 2024 we are struggling right now to see this cheese market justify a $2 price to it. There’s the consumer pushback, they’re cutting back on that. So, that’s when we talked about that domestic demand is hard to get to increase right now, a lot of that is the outside market pressure. They’re seeing student loan payments come back in, they’re seeing maybe some more layoffs, the macro economic things are pressuring that, we’re not seeing a big increase in both either retail or restaurant traffic.”