September U.S. cheese output slipped to 1.08 billion pounds, down 3.7% from August but 2.1% above September 2018, according to the USDA’s latest Dairy Products report. Year-to-date output is at 9.77 billion pounds, up 1.1% from a year ago.

Wisconsin produced 281.3 million pounds of the September total, down 2.2% percent from August but 0.7% above a year ago. California output fell to 203.5 million pounds, down 4.5% from August and 0.9% below a year ago. Idaho contributed 83.7 million pounds, down 5.3% from August and 1.3% below a year ago. Minnesota output slipped to 59.8 million pounds, down 1.1% from August but 0.1% above a year ago. New Mexico, at 76.5 million, was down 15.5% from August but 6.4% above a year ago.

Italian cheese totaled 469 million pounds, up 0.4% from August and 4.0% above a year ago, and brought year to date output to 4.2 billion pounds, up 2.6%.

American type cheese totaled 418.1 million pounds, down 9.0% from August and 1.4% below a year ago. YTD American is at 3.89 billion pounds, down 0.7%.

Cheddar, the cheese traded at the CME, totaled 288.4 million pounds, down 36.7 million pounds or 11.3% from the revised August figure and 9.2 million pounds or 3.1% below a year ago. YTD Cheddar is at 2.77 billion pounds, down 2.3%.

Butter output, at 136.6 million pounds, was down 0.5% from August but was up 1.6 million pounds or 1.2% from a year ago. YTD butter is at 1.4 billion pounds, down 0.5% from 2018.

Yogurt output hit 357.2 million pounds, down 3.5% from a year ago, with YTD at 3.3 billion pounds, down 3.3%.

Dry whey totaled 92 million pounds, up 8.3% from August and 31.5% above a year ago, with YTD at 729.8 million pounds, down 5.0%. Stocks totaled 79.3 million pounds, up 9.8% from August and 14% above those a year ago.

Nonfat dry milk production totaled 123.0 million pounds, up 7.9% from August but 8.0% below a year ago. YTD powder is at 1.4 billion pounds, up 2.3% from 2018. Stocks fell to 254.1 million pounds, down 15.6 million or 5.8% from August and 7.5 million pounds or 2.9% below the 2018 level.

Skim milk powder output slipped to 48.8 million pounds, down 2.6 million or 4.9% from August but were 2.1 million pounds or 4.6% above a year ago. YTD skim hit 373.6 million pounds, down 12.1% from a year ago.

Meanwhile, the international dairy market got a boost as the weighted average of products offered in this week’s Global Dairy Trade auction jumped 3.7%. That followed a 0.5% gain on Oct. 15, 0.2% Oct. 1, and 2.0% on Sept. 17.

Skim milk powder led the gains this time, up 6.7%, following a 2.4% jump last time. Buttermilk powder was up 5.4% and rennet casein was up 5.1%. Whole milk powder was up 3.6%, after holding steady last time, and anhydrous milkfat was up 2.6%, after inching up 0.8%. Butter was up 0.2%, after slipping 0.4%.

Lactose was down 1.9%. It was not traded last time and GDT Cheddar was off 0.6%, after a 2.2% descent last time.

There was good news on the trade front. HighGround Dairy reports that September U.S. cheese exports totaled 61.2 million pounds, up 7.8% from August and 13.3% above September 2018. Mexico captured 28% market share, with South Korea and Japan following.

Butter exports totaled 4.5 million pounds, up 36.3% from August and 3.3% ahead of a year ago. Nonfat dry milk and skim milk powder combined totaled 144 million pounds, up 32.4% from August and 25.1% ahead of a year ago. This is the highest level so far this year, according to the Daily Dairy Report, and the largest volume for any September on record.

Butter imports totaled 10.6 million pounds, up 6.4% from August and 15.7% above a year ago, with year to date imports up 26.9%. Cheese imports amounted to 42.7 million pounds, up 23.9% from August and 34.5% above a year ago.

Part of the increases are due to the coming implementation of U.S. tariffs on EU-28 butter and cheese imports, says the DDR, as well as the large disparity between U.S. and world butter prices.

Dry whey exports, at 27.4 million pounds, was down 6.0% from August and down 22.4% from a year ago. China continues to represent the majority of the decline, says HGD. Shipments to China fell 66% year over year even as it remained the top export destination for U.S. product in the month, with 16% market share.

Trade was a big part of the joint annual meeting this week in New Orleans of the National Milk Producers Federation, United Dairy Industry Association, and the National Dairy Promotion and Research Board.

Hoards Dairyman’s managing editor Corey Geiger reported in the Nov.11 “Dairy Radio Now” broadcast that one of the takeaways was the frustration of dairy being a pawn in the ongoing trade wars. He said consumers think the government’s mitigation payments have made dairy farmers whole but haven’t.

He reported that attendees were told that U.S. consumers devour about $65 billion worth of dairy products a year and Chinese consumers about $62 billion. But, if you look back 10 years ago, Chinese consumption was at $20 billion, Geiger said, so consumption has grown threefold. He adds that China seeks to triple the dairy consumption of its over 1 billion citizens over the next decade, growing it by $180-$200 billion. The U.S. dairy industry is pretty much locked out of that market right now and that has led to a lot of frustration in the industry.

Domino’s CEO, Richard Allison, pointed out that 25% of U.S. cheese goes on U.S. pizza and that Americans consume pizza every 12-13 days while Asians consume it once every 30-40 days. There’s a lot of upside demand there, Geiger said, and Domino’s is seeking to meet that demand and is using U.S. cheese to do so and countries like China, Japan, and Vietnam hold great potential.

Cooperatives Working Together member cooperatives accepted 10 offers of export assistance this week to help capture sales of 747,367 pounds of cheese, 125,664 pounds of butter, 330,693 pounds of whole milk powder and 335,103 pounds of cream cheese. The product is going to customers in Asia, Central America and the Middle East, through March 2020.

Dairy Market News reports that cheese markets are the hot topic not only in cheese production circles but in agricultural commodity circles nationwide as prices have not been this bullish since third quarter 2014. For context, $2.49 was a market high in late September of that same year. Notably, by New Year’s Eve, 2014 barrel prices were roughly $1 below their autumn acme. All that said, barrel producers continue to report being behind on orders. Milk production reports continue to show heavier component levels and milk prices saw a drop-off this week: $1.50 under Class to $1 over by midweek, says DMN.

Consumer cheese demand is solid in the west but buyers are hesitant to take extra loads at current prices. Seasonal sales were flowing steadily but manufacturers suggest the run up in CME prices has “squelched additional demand.” Cheese production is steady and strong and ample milk is available. Inventory is adequate for block and aged cheese but tighter for fresh barrels.

Cream offerings are plentiful and churning remains slightly more active than expected, according to Central plant managers. Cream is readily available from Western suppliers and plentiful enough to offset freight costs. Production and supplies are not alarmingly higher, says DMN, but “import and export figures do not bode well for long term strength.” “Market tones still remain generally steady and contacts who view things with a bearish lens suggest first quarter 2020 prices could bridge the $1.80-$1.90 range.” November 2016 was the last time butter prices fell below $2 per pound, according to DMN.

Western butter prices are weak and lower international prices could be one of the causes as buyers continue to seek the best deals possible, including ones offshore. Butter supplies are more prevalent than usual for this time of the year and orders for the holiday are reported as good but not as good as expected.