As spring brings warmer weather and grass starts growing, dairy yield and production goes into high gear across the country. Yield is already setting new all-time records this year, and the herd got an unexpected lift in USDA’s latest milk production report.

Imports of dairy products, especially those containing butterfat, have had a rip-roaring start in 2023. This will likely displace domestic production, which will struggle to find a home outside of producers wishing to avoid carrying expensive inventory. This past week, the flood of milk hitting the market appeared to weigh heavily on the psyche of dairy markets. By the middle of the week, most dairy product futures were hit by waves of selling, sending prices to recent lows.

Butter and cheese appear to be holding up the best amongst the various dairy products, however, with the herd still very healthy and spring flush arriving, even these categories seem vulnerable.

Perhaps climbing inventories, cold storage costs, and interest rates may motivate producers to sell more aggressively in the coming months.

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Posted by: Information Services
Our Information Services team assists our clients with understanding commodity and ingredient market dynamics. Using our extensive database of intelligence, we also produce regular commodity and commercial market publications covering supply and demand fundamentals, news alerts on events that shape the markets, and resource guides to give you a complete picture of the industries we monitor.