Dairy markets have continued to see an upward trend in the last month, and particularly over the last couple of weeks. Everything from fluid milk contracts to block cheddar to cheddar barrel have seen drastic upticks in late May and early June. This is certainly great news but one market adviser’s main concern is that these prices could not stick and give dairy farmers a false sense of security going forward.
“We’re getting to a spot where you gotta start asking yourself…do we get to a window where the retailers and the end users start saying ‘no we just don’t want to pay this,'” says John Heinberg, Market Adviser with Total Farm Marketing by Stewart-Peterson. Heinberg explains that consumers not wanting to pay higher prices could be a turning point in the market.”We saw block prices get up to 2.40 yesterday and that’s a very hefty level,” says. Last time block prices were at that level was 2014 when block clocked in at 2.43.
Heinberg explains that when it comes to fluid milk contracts, “we saw a positive reaction in milk yesterday (June 1st) but given that strength of cheese we should have been limit up.” He suggests that maybe this signals that we are “topping out and things could be starting to settle out a little bit here. “Typically we don’t spend a lot of time up in these windows.”
The current prices are reflecting the current demand, Heinberg explains, as domestic cheese demand ramps up due to businesses opening back up. Prices could be a “reflection of the short term demand we’re seeing.” At the time this article was published, June fluid milk contracts had surpassed $19.00 and July contracts were above $18.00.