Cheese and Class III milk prices rallied to start the week. John Heinberg, market advisor with Total Farm Marketing in West Bend, says multiple factors were at play.
Heinberg explains the big rally had to do with heightened cheese demand, the stats in the latest milk production report, and lower cow numbers.
“We’re basically 71,000 head down from last year at 8.8 million head, so that combination of things has tightened up the supply chain here,” he says. “The milk market is extremely volatile and I think we’re trying to find a middle point here… it’s an opportunity for producers to get some prices locked in here.”
In the latest milk production report from USDA’s National Agricultural Statistic Service, only seven of the 24 major dairy-producing states saw production rise. Milk production in those 24 states during March totaled 18.8 billion pounds, down 0.9 percent from March 2023. The number of milk cows on those farms was 8.88 million head, 71,000 head less than March 2023, and 7,000 head less than February 2024. Production per cow averaged 2,115 pounds, 3 pounds below March 2023.
Heinberg says the story behind the cheese rally starts before the latest milk production report. He says the news that dairy cattle are contracting the Highly Pathogenic Avian Influenza brought the market down “cheaper than it needed to go” and when the price was right, demand picked up.
“Low prices cure low prices sometimes,” he says. “We saw a nice 30-cent rally in the cheese side of the equation and that’s just helped pull this milk price right back up.”
The Class III milk prices have not held on to the higher moves into mid-week. Cheese is holding steady so far.