Archive for the ‘Jerry Dryer’ Category

China is Sitting on the Sidelines

December 5, 2014 — Jerry Dryer, editor of the Dairy& Food Market Analyst joined us on today’s DairyLine to discuss the latest market activity and why China is sitting on the sidelines.


Chicken Little is Right

November 21, 2014 — Cash block cheese, as of Thursday, has dropped almost 17 cents this week in addition to the 25 3/4-cents lost last week. The barrels plunged 20 1/2-cents

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy Market Analyst

last week and dropped 16 1/2 cents Thursday. I had scheduled “Chicken Little” for our Friday DairyLine interview but chose Jerry Dryer, editor of the Dairy and Food Market Analyst,  instead hoping he’d  have a different message. He didn’t.

Dryer sees product prices continuing to dip because prices around the world are significantly lower than here.  U.S. exports are slowing, he said, as other cheese is available. He pointed to the Russian blockade of European cheese, for example, which is “pushing product in this direction so there’s going to continue to be pressure on the market.”

He added the caveat; “My version of Chicken Little, however does have a safety net and that’s the futures market which is higher than I think prices are going to be as we progress into 2015. It’s an opportunity to do some hedging.”

Dryer predicts that milk prices will hit “sub $15 (per hundredweight), maybe sub $14 for a few months next year and there’s still some $17 futures protection that could be bought.”

I ask if China will re-enter the market any time soon and turn things around. He quickly answered, “Things are not looking that way.” He reported that China has a significant volume of product in storage and Dryer’s sources in China state that milk production there has “more than recovered from last year’s downfall so domestically they have a little more milk available and the huge irrational surge of imports in the early part of this year have them backed up.” Sources tell Dryer that China may not be back in the market until Third Quarter 2015, he concluded.

Price Tag Fever Took Hold

November 7, 2014 — Dairy product commercial disappearance took a hit in August, according to USDA data, and reversed 13 months of increases from year ago levels. Matt Gould, market analyst with the Dairy and Food Market Analyst Newsletter, reported the decline at 1.4 percent in Friday’s DairyLine, blaming, what he called “price tag fever.”

“Higher prices domestically caused consumers to back away,” Gould explained, “And, with the USA premium over world markets, exports eroded.” He added that prices for cheese and butter were higher in August and were even higher in September, “So, if there was a slowdown in August, then it would be right to expect a slowdown in September,” Gould said, and his and Jerry Dryer’s analysis of production, inventory, and import-export data found just that.

They estimate that Third Quarter commercial disappearance was down a whopping 9 percent for butter, up 1.5 percent for American cheese, which had been running 2 percent above year ago levels, and commercial disappearance for nonfat dry milk, was up 6.7 percent, with exports up 5.3 percent, far from the 19 percent increase seen in First Quarter.    If there was a star in the September data, Gould said it was other-than American cheese, which was up 4.1 percent, powered by strong food service sales, both internationally and domestically.

Gould also reported that the September Dairy Products report indicated that “manufacturers are responding to this environment.” Mozzarella cheese production was up 9 percent than a year ago, which falls into the “other-than-American cheese category, and nonfat dry milk output was up 54 percent. However, skim milk production was down 25 percent, and “indicates the difficulties manufacturers are having in the export market.”

Butter production was down 2 percent as manufacturers sent cream elsewhere, he said. “Cream multiples were running in the 140s, so bottom line, my take,” he concluded, “Is that demand looked sluggish in August and September but I think lower prices that we’re experiencing now will unlock more demand in the coming months, however increases in supply will outpace this demand growth.”


The Hourglass is Just About Out of Sand

October 24, 2014 — While dairy traders anticipated yesterday afternoon’s Livestock Slaughter report, they had to weigh whether Monday’s bearish September Milk Production report was overshadowed by Wednesday’s somewhat bullish Cold Storage report.

They made their decision loud and clear yesterday morning as one trade plunged the blocks down 21.25¢, to $2.1575/lb. and the barrels were down 8 cents to $1.99, first time below $2 since July 31, but still an abnormal 16.75¢ below the blocks.

Matt Gould, dairy analyst with the Dairy and Food Market Analyst, warned in Friday’s DairyLine that “The hourglass is just about out of sand for the demand season.”    He reported that milk production has picked up in key cheese making regions, up 4.1 percent in September, after increasing 2.6 percent in August, and 4 percent in July. Output was actually up everywhere, according to Gould, who put the data into 60,000 pound tanker loads to give some perspective.

California led the way, he reported, producing 52 additional tanker loads per day in September, up 2.9 percent. Texas was up 9.6 percent and Wisconsin was up 3.2 percent, together increasing output by 50 tanker loads per day. Add those together and Gould said U.S. dairy farmers produced 600 million more pounds of milk in September and processors had to balance another 336 more truckloads per day than last year.    The Cold Storage report showed that September was in the middle of the demand season, according to Gould. Total cheese stocks were drawn down 28 million pounds in September, compared to the five year average drawdown of 17 million pounds. American cheese stocks were down 17 million pounds compared to the five year average of 7 million pounds, so demand was “very strong,” he said.

Butter stocks were more of a wash, according to Gould, in line with the historical five year average, down 19 million pounds. Stocks are still below historical levels, he said, 37 percent below a year ago, and 14 percent below two years ago.   “Looking to the future, with milk production at these levels and the demand season about to pass, we’re (prices are) headed lower,” he concluded.

Russian Ban Impacting Dairy Trade

October 10, 2014 — Cash dairy markets appeared to be stabilized Thursday and “we’ll see that for a few days at a time,” says Matt Gould, of the Dairy and Food Market Analyst. Speaking in Friday’s DairyLine, Gould reported that “Inventories ran real low so people are more comfortable at these price levels. The pipeline is filling and once that gets filled we’re going to move lower still, but it will take time.”

Dairy product prices have plunged from their newly established record high levels a couple weeks ago and, when asked if those high prices hurt commercial disappearance, Gould answered, “Yes, they did, and we’re seeing it in the data.”

He explained that, like Jerry Dryer, he prefers to analyze the data over a three month span rather than a single month like USDA does.

He reported that American cheese disappearance, in the three months ending August 31, was down 1.2 percent, noting that this is the first trip below year earlier levels in over 12 months. Contrast that to the three months ending in July, where American cheese disappearance was up 3.9 percent, he said.

Other cheese was up 2.7 percent at the end of August, following a 4.2 percent increase in the previous three months. Total cheese disappearance was up 1.7 percent at the end of August after being up 3 percent or more all year long.

Cheese exports in the three months ending in August were up a respectable 11 percent from a year ago, Gould said, but “That pales in comparison to earlier levels which were up 18 percent in July and over 30 percent January through June.”    Gould pointed to the Russian import ban announced in early August for the downfall in dairy exports.

Butter commercial disappearance was down 6.1 percent in the three months ending in August, he said, after being down just a half-percent in July, and up 14.8 percent in June.  Butter exports were down a whopping 60 percent at the end of August, he said.

Nonfat dry milk, skim milk powder disappearance was off 2.2 percent after having been up 7 percent in the three months ending in July. Powder exports were down 10 percent from a year ago, according to Gould.

$3 Butter a 50/50 Chance

September 12, 2014 — $3 Butter is a 50/50 Chanceaccording to Jerry Dryer, editor of the Dairy and Food Market Analyst, in Friday’s DairyLine. Dryer laughed when asked about Penn State’s Jim Dunn referencing the dairy market as “schizophrenic” in the last month. Dryer said “It’s more a case of indecision, as things haven’t solidly registered yet and we’re starting to get resistance at these price levels.”    Dryer reported that commercial butter disappearance in the three months ending July 31 was down for the first time in a very long time “as these prices are starting to take a little toll.” Retail sales are down from a year ago, as well, he said, and exports would be off if it weren’t for the CWT program.

Cheese has some similarities, according to Dryer, although cheese consumption has been very strong in the U.S., up almost 4 percent in that May, June, July period. Exports were up about 20 percent, he said, but earlier in the year they were running 50-70 percent above a year ago, “so we’re getting pushback on exports and there’s more of that on the way.” The Russian ban has resulted in the Europeans “shopping for other homes for their cheese,” he said, “And the USA happens to be in their sights.”

When asked if China will bail out the world dairy market, Dryer answered, “No, but they’re going to make a really good effort.” His just released long range forecast predicts demand will remain very strong and, as prices weaken, demand will pick up even more but milk production is just simply going to overwhelm demand for the next several months.”

The Sky is NOT Falling……Yet

August 22, 2014 — The sky is not falling, yet. That’s the takeaway from my discussion in Friday’s DairyLine with Jerry Dryer, editor of the Dairy and Food Market Analyst. I asked if “Chicken little” was right.

He admitted that U.S. dairy cows certainly did make a lot more milk in July due to ideal weather and an improved feed supply but he’s not convinced the sky is falling just yet.

He pointed to trading at the Chicago Mercantile Exchange since the Milk Production report came out and, as of Thursday morning when we recorded our chat, he reported that all of the Class III futures were “green, the cheese price keeps ticking up, the butter price keeps ticking up so, given the demand situation and the inventory situation, the sky isn’t going to fall immediately.”

Prices will fall, Dryer admits, but he doesn’t “see the sky falling.” He predicts that the fall will come in early Fourth Quarter, “simply because inventories are as low as they are, particularly on the butter side, and we’re even pulling pretty hard on cheese right now, the holiday season is coming at us, and the rubber doesn’t really hit the road until everything shakes out relative to this Russian ban and European cheese starts seriously seeking a home in world markets.”

When asked about his stand in the past that the U.S. had not necessarily priced itself out of the world market, he qualified that because he said the U.S. was “the only game in town. We were the only really good source of cheese as the Europeans committed huge volumes to Russia, which effectively took it out of play in many of the markets where we compete, like the Pacific Rim countries, Mexico, even the Middle East and North Africa. But, now with that Russian kickback, we’re going to have to compete with the Europeans. That will change the scene a little bit but we can still be competitive,” he concluded.

Dairy Products Report Revision is NOT Bearish

August 8, 2014 — The additional cheese in USDA’s revised June Dairy Products report this week did impact dairy product commercial disappearance data generated by Jerry Dryer, Editor of the Dairy and Food Market Analyst, but it not necessarily a negative factor. He talked about it on Friday’s DairyLine.

A little over 37 million pounds of cheese had to be factored in, in a rare correction, which resulted in USDA republishing its report on Monday. The data was inaccurately reported to

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy Market Analyst

USDA, Dryer pointed out, and he praised the Agriculture Department for its prompt revision.

Given the original report, Dryer reported that commercial disappearance of American type cheese was virtually unchanged from a year ago. The revision resulted in commercial disappearance being up 2.2 percent during the most recent three months, in other words, Second Quarter of this year, and “a nice bump,” he said.

Other cheese disappearance was up 3.1 percent in the Second Quarter, “another strong number,” according to Dryer, butter disappearance was up almost 15 percent and skim milk powder/nonfat dry milk was up 5.3 percent, “so good solid commercial disappearance across the board during the Second Quarter of this year.”

Dryer does not see the added cheese as a bearish signal. “The cheese was produced and it was consumed,” Dryer argued. “The inventory numbers at the end of June didn’t change. They didn’t go up because cheese production went up, they actually in general went down, signaling to us stronger consumption.”

I asked him about this week’s continued drop in the Global Dairy Trade weighted average and the uncompetitiveness of U.S. dairy product prices on the world market.    “Uncompetitive?” Dryer responded. “Cheese exports in June were up 30 percent versus a year ago, I think we’re still competitive in the cheese market for sure and nonfat dry milk shipments were up 25% versus a year ago.” “U.S. prices are higher than anyone else’s,” he concluded, “But we also have the product to deliver and they don’t necessarily have it to deliver from other locations.”

Commercial Demand Still Pretty Good

July 11, 2014 — Jerry Dryer, editor of the Dairy and Food Market Analyst, was back on Friday’s DairyLine to report his commercial disappearance data after factoring in USDA’s

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy Market Analyst

latest Dairy Products report last Friday. Dryer prefers to examine the data in three month averages rather than monthly data. He reported that demand was still pretty good through May, adding the caveat that it may have since hit the wall in some respects or at least slowed down.

March, April, May American cheese sales were up about 2 percent, other cheese was up almost 3 percent so the cheese category was holding despite the higher prices at retail.    Butter disappearance was up almost 8 percent, although a lot of that was driven by exports, which have now softened because of the high prices. The other side of that, according to Dryer, is that butter stocks are very low, due to that strong demand.

“Typically at the end of May, we have 51 days worth of butter in the cooler, getting ready for the holiday season,” Dryer warned, “And this year we have 35 and a half days worth of product in the cooler so it’s bullish on the butter side of the business.”

The milk powder business, which includes milk protein concentrate, skim milk powder and nonfat dry milk, has slowed down and is below a year ago, he said, by about 0.3 percent for that three month period, but that’s actually a recovery from early in the year.

The whey business “stays in the dumper,” according to Dryer, down 10 percent in that three month period.    “The key products driving milk prices, cheese and butter have good sales, good disappearance through the end of May,” he concluded, but “They’re slowing some now as the import orders back off a little bit because of prices and retail sales back off because of higher prices.”

How Low Will The Cheese Price Go?

July 4, 2014 — Cash cheese prices falling below $2 per pound and butter slipping is “the market trying to figure out what it wants to do,” according to Jerry Dryer, editor of the Dairy and Food Market Analyst. Speaking in Friday’s DairyLine, Dryer reported that there was “a wall of milk in June and through the Memorial Day holiday weekend and a lot of milk got sold to cheese makers at distressed prices, $3, $4, and $5 below Class, so obviously you can make less expensive cheese out of that and some of that cheese is being shopped around and there’s a little bubble of cheese working its way through the system.”

Commercial sales and exports, based on May data, remain very strong, he said, and “The market will work through this and digest this product.”

People are telling him that by the time the cheese price gets to $1.90 per pound, “buyers will more than likely be climbing all over the top of one another to get some cheese because inventories remain low and demand remains strong.”

I asked about reports that butter is still be exported from the U.S. but the high U.S. price is attracting butter imports, “two ships meeting in the night sorta speak.” He replied, “There is no butter to come in right now,” and referenced a spike in the Global Dairy Trade butter price from Dairy America. But, he warned that the rubber will meet the road in a couple of months on butter as imports will” crunch the butter price.”

When asked about the reported crash in GDT butter this week, Dryer said that some did fall but cautioned to not look at the index GDT publishes but “look at the real live prices.”

“Dairy America butter, for delivery in August, was actually higher than the previous trading session, two weeks ago,” he said, “When they were selling butter for delivery in July. The prices for September, October and product coming out of New Zealand, those prices were sharply lower.” “There’s going to be more butter later on, he concluded, but it’s not around yet, it’s not impacting the market yet.”