Global Prices Strengthen, But Not In Chicago

August 23, 2013 — Prices for most products in Tuesday’s Global Dairy Trade (GDT) auction may have strengthened but that’s not the case in Chicago. U.S. cheese and butter prices lag world prices

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy Market Analyst

significantly, according to Jerry Dryer, editor of the Dairy and Food Market Analyst. He reports in tomorrow’s DairyLine broadcast that Dairy Market News shows Europe and Oceania cheese is in the $2/lb. range and has edged a little higher the last couple months. Butter prices are $1.80-$1.90/lb. in Oceania and $2.50/lb. in Europe, according to Dryer.

When asked why the difference, particularly on butter, Dryer explained that U.S. manufacturers are reluctant to serve the international market because buyers demand 82% butterfat versus 80% in the U.S. and it’s usually unsalted for the world market “so it’s a little more difficult to make.” “They are starting to make it,” he concludes, “So we may see some reconciliation of prices but we need to be making that product day in and day out so we know how to do it and do it well and have it in inventory when the order comes.”

Product inventory indeed hangs over the markets. USDA’s latest Cold Storage data released this afternoon shows July 31butter stocks at 295.8 million lbs., down 23.1 million lbs. or 7% from June but 61.4 million lbs. or 26% above those a year ago.

American type cheese, at 704.5 million lbs., was down 1% from June but 5% above a year ago. The total cheese inventory stood at 1.152 billion lbs., unchanged from June but 5% above July 2012.

Looking to next week, USDA issues its August Ag Prices report on Friday August 30th which will include the latest milk feed price ratio.

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