Cheese/Powder Prices Softening but Dryer Still Bullish

March 28, 2014 —   Buyers are in hand-to-mouth mode,  according to Jerry Dryer, editor of the Dairy and Food Market Analyst. Speaking  in Friday’s DairyLine, Dryer said,  there’s push back as they contemplate the spring flush and the additional milk  that will becoming available. The Class III price is quite a bit higher than the  Class IV price, so that has moved some milk from powder to cheese, from  Mozzarella to Cheddar in the Upper Midwest. Cheese is coming to the market, he  said, in response to the higher prices.

Dryer believes commercial disappearance may be higher than USDA’s latest  data suggests, citing butter as an example. Dryer said USDA did not revise an  inventory number in their calculation and, while Dryer prefers three-month  rolling averages as opposed to monthly numbers, his data suggests January butter  disappearance was up  16.7 percent,  but more significantly, over the most recent three months, it was up 17.9  percent, he said.

American cheese wasn’t real strong  in January, according to Dryer, and was only up about 0.8 percent in the last  three months, but other-than-American cheese, like Mozzarella, Gouda, and some  of the cheese being exported, was strong, up more than 3 percent for the most  recent three months and for January.

“Cheese has continued to move  well,” Dryer said, “And disappearance was probably very good in February and  even in March as these prices haven’t pushed through to retail quite as fast as  they frequently do.”    While USDA data suggests nonfat dry milk disappearance was down in  January, Dryer reiterated that one month doesn’t make a trend. His data has it  up almost 4 percent during January and up 10 percent for the most recent three  months. Furthermore, USDA data doesn’t include skim milk powder, as Dryer’s  does, and “that’s the big mover in exports,” he said.

Dryer sees “relatively high  prices” for the next month or so. “We will come off those record highs on cheese  and powder, although butter appears to be moving higher at this point,” he  concluded,  “But, continued good  strength although not as high as we’ve seen in recent  weeks.”

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