Government dairy donation purchases, along with the differing dynamics of retail vs. food-service sales, continue to be the main movers of domestic demand and prices for dairy products as the end of 2020 draws near.
Cheese prices rose again in October, capping the second major cheese price run-up of the pandemic, as a second round of government purchases stoked demand. This ended at the beginning of November, when daily cash market prices of both blocks and barrels dropped sharply for more than a week as markets anticipated federal purchases winding down.
Bright spots for dairy in the year’s first three quarters of data include increases in total sales of fluid milk, yogurt and butter, which have been buttressed by strong retail demand. Cheese, meanwhile, has seen mixed progress in commercial use year-to-date, with use that’s been higher for American-type cheese but slightly lower for other types. Export growth has also been strong for dry skim milk, whey products and other than American-type cheese, which has offset the drop in its domestic use. The DMC margin dipped a toe below $9.50 per cwt in September, due to strengthening corn and soybean meal prices that followed modest, but steady declines for the year to that point.