With most CME spot dairy prices declining, dry whey prices have started to help stem the pain of falling milk prices.
“While the prices of most dairy products have come under pressure in recent weeks, whey remains a glaring exception,” says Monica Ganley, analyst for the “Daily Dairy Report” and principal of Quarterra, an agricultural consulting firm in Buenos Aires.
Rising dry whey prices, which are providing critical support to Class III milk prices, could not be occurring at a better time — especially since cheese prices have been under pressure for weeks. For every penny increase in the dry whey price, the Class III price rises by about 6¢.
“Even though the impact of dry whey on the milk price is much smaller than that of cheese, it can nevertheless provide essential support to producer price, particularly during a period of slimming margins,” Ganley says.
For weeks, the CME spot price for dry whey has continued to move incrementally higher, hitting a recent high of 71¢ per pound on Friday, October 31 — the highest price since January. That means since late July, whey has added more than a dollar to the Class III price.
“Both supply and demand are working to keep whey prices supported. On the supply side, even though cheese production is robust, the amount of raw whey available to be dried into sweet whey remains limited,” Ganley says.
Demand for high-protein whey products, such as whey protein concentrates and whey protein isolates continues to be robust. seemingly insatiable.
“As a result of this seemingly insatiable demand, manufacturers are routing a majority of the raw whey stream to these high-protein products, leaving only nominal volumes to be dried into whey powder. As a result, dry whey inventories are tight, and spot loads are a challenge to come by.”
At the same time supply of dry whey has been limited, demand for the most part has remained upbeat — but needs are mixed across the country. “Dairy Market News” recently reported that in the eastern part of the country, suppliers have plenty of demand to meet. Demand is reportedly softer in the western United States, but limited production in this part of the country has, nevertheless, kept the market supported.
“Market participants indicate that export demand for U.S. whey powder was strong earlier this fall but has been starting to weaken. And even though a rapidly evolving trade policy environment — especially the conflicts between the United States and China — created challenges for dry whey exports for much of the year. Gobal buyers had been looking to the United States to fill their dry whey needs,” Ganley says. “More recently, though, demand from Asia has weakened because European whey prices have become more competitive.”
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