Dairy Trends: Milk Prices Soften, Butter Climbs

June 5, 2015 12:00 PM
 
Dairy Trends: Milk Prices Soften, Butter Climbs

Dairy producers should expect some counter-seasonal market movements heading into fall, says Mike North, Commodity Risk Management Group. That’s particularly true if cheese buyers move to take advantage of recent prices averaging $1.65 for blocks and barrels.

Power Hour Noon Logo“If that in fact happens, we expect the milk prices to get a little bit softer as we go into this fall timeframe, which is a little counter-seasonal,” explains North in an interview with Clinton Griffiths on the “AgDay” Agribusiness Update segment. “We ordinarily, as summer heat reduces milk and we get ready for the holidays, it usually goes up. We’re looking for a little softening in milk prices as we go into fall. We’re just hoping we can recover fast enough for 2016.”

Meanwhile, butter prices recently saw a big run-up. They eclipsed $2, peaked at $2.06 and melted back to $1.89, North points out.

“It was a function of two things,” he explains. “We came through the Easter period a little bit earlier in the calendar. There was some demand that was driving the market higher. Then we also had a little bit of activity around the world. Things got a little bit tight for a moment, so butter prices ran higher and got north of $2.

“To put it in context, we went to $3 last year in the summer and those were all-time highs, never seen before, they blew all the old records out of the water. So a move to $2 got everybody nervous on the buyers’ side of things. It took Class IV markets up and then, when they relaxed, Class IV markets went down.”

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