The Livestock Dairy and Poultry Outlook report just came out. It is available at: http://www.ers.usda.gov/Publications/LDP/2010/07Jul/LDPM193.pdf
On page 20: "The current situation has Class IV prices above Class III prices, a reflection of the tightness in fat availability. Lower fat tests have boosted butter prices and may have helped firm up cheese prices as well. This situation should correct itself early in 2011."
I'm not sure of that. The protein test in the federal orders have been off as well - by a full point.
According to NASS milk production in the first six months of 2009 was 96262
million pounds and in 2010 Jan -June it was 97,076 million pounds - not a full point increase.
Total cheese production was up 1.9%. If you're following this, there is something very wrong with the picture. Last year they were putting considerable magic dust in the cheese vat. Cheese production - everything being equal , which it never is - should have been flat without even more "magic" in the cheese vat.