Friday, December 18, 2009

Global Dairy

Three times this week the price of butter fell on the CME. The latest information from dairy market news shows we are now $0.40 below the low Oceania butter price.

MD DA124 Butter - Oceania

MADISON, WI. December 10, 2009 (REPORT 49)

INFORMATION GATHERED 11/30/2009 - 12/11/2009

BUTTER: Oceania butter markets and prices are firm. Butterfat continues to be
in strong demand. Anhydrous milk fat is absorbing a significant portion of
butterfat at this time. At the second global/Dairy Trading event for anhydrous,
the price averaged $4,349 per MT., 8.6% lower than the previous event. This
downward adjustment was not surprising to many traders and handlers as many
thought the average price for the first trading event was too high.

82% BUTTERFAT: 3,800 - 4,500

Note: a metric ton equalls 2204.6 pounds.

New Zealand Cheddar is $2.13 per pound, which raises the question, why is not the world coming to the U.S. for cheese and butter?

The short answer is we make 80% butterfat butter and the world wants 82%. For Cheddar, the answer I have gotten is that the U.S. a lot of crappy Cheddar loaded with MPCs.

So, the irony here is that we get most of the MPCs from Fonterra, which makes money for Fonterra but, also, insures we will not be able to compete with them on the global market.


  1. John,
    What more need be said about U.S. dairy processors and marketers not being competitive? The windfall profits they make off our backs leave them perfectly complacent while farmers who would profit from world markets twist in the breeze...Where is the supposed advantage to farmer members of processing dairy co-ops if their management refuses to pursue world butter contracts?
    As for U.S. Cheddar cheese not being competitive on world markets; DUH!! Leave it to good old U.S. dairy processors to value corporate bottomline over producing a quality product and valuing it as such... Nate Wilson

  2. I agree, some of the cheddar produced in this country is crap - Kraft cheddar normally isn't fit for a dog... sad but true.

    Remember if we export too much we wouldn't have enough for this country and prices paid for milk would have to go up - higher raw material prices aren't in everyone's best interest, so best we keep going the way we are.

  3. Peter,

    MPCs are "milk protein concentrate" which can and are added to cheese vats to boost the yield. The resulting cheese is of poorer quality.