In less than two years, dry whey prices have rallied from their all-time low on the Chicago Mercantile Exchange to surpass 75¢ for only the second time in history. Moreover, as holiday demand dried up this fall, dry whey prices continued to strengthen while other dairy commodity prices dropped, according to Monica Ganley, analyst for the Daily Dairy Report and principal of Quarterra, a consulting firm in Buenos Aries.
“The whey price rally is good news for dairy producers because every penny increase in the dry whey price adds about 6 cents to the Class III price, and stronger dry whey prices are poised to offer critical value to producer milk prices over the coming weeks and months,” Ganley said.
The CME spot price for dry whey has been trending higher since mid-2023 ,when it bottomed out at 22.5 cents per pound, the lowest price since the market began trading in March 2018, Ganley noted. In recent weeks, though, increases in the dry whey price have accelerated. In the 15 trading sessions from November 21 through December 13,the dry whey price climbed 14.5 cents to 79.25 cents per pound.
“Tight supplies have been the primary driver behind the strength in dry whey market,” Ganley said. “Even as milk production stumbled throughout most of 2024, healthy component levels and strong demand continued to draw milk into cheese vats. Over the first 10 months of this year, cheese production was 0.5% higher than in the same period last year, resulting in an ample whey stream. However, whey manufacturers increasingly prioritized the production of higher value products, so output of dry whey suffered.”
According to USDA data, in the first 10 months of 2024, U.S. manufacturers produced just over 677 million pounds of dry whey for human consumption. That’s 10.2% less than in the same period last year. Similarly, year-over-year production of whey protein concentrates (WPC) with protein levels of 25% to 49.9% slumped 17.2% in the first 10 months of the year. However, output of higher-protein WPCs, with between 50% and 89.9% protein, climbed 5.2% and whey protein isolate production, which is also high in protein, soared 41.9% compared to the first 10 months of last year.
“Recent plant investments suggest that manufacturers expect to continue favoring higher-protein whey products for the near- to medium-term,” Ganley said. “While tight dry whey supplies have been the principal driver of market strength, demand has contributed as well.”
U.S. exporters shipped 336.3 million pounds of dry whey offshore in the first 10 months of the year, up 0.8% from the same period last year. Domestic demand for dry whey remains strong as well, and Dairy Market News reported that market participants expect strong prices to persist.
Inventories of dry whey for human consumption have also declined, falling to their lowest level since 2012, or 47.7 million pounds by the end of October, according to USDA data. “Such light inventories suggest that price strength will likely persist in coming weeks, and that will continue to support Class III prices,” Ganley added.
