Cheese prices drift downward
CME dairy prices strengthened the week before Thanksgiving. The Cheddar blocks fell last Monday to $1.35 per pound, lowest price since May 25, 2016. However, they rebounded and closed Friday at $1.4525, up 7 1/4-cents on the week but 16 3/4-cents below a year ago.
The barrels finished at $1.36, up 5 1/2-cents on the week, 26 3/4-cents below a year ago, and a still too high 9 1/4-cents below the blocks.
The three-day Thanksgiving-holiday week started with the blocks giving back 4 1/4-cents, as traders anticipated the afternoon’s October Milk Production report, then plunged 7 cents Tuesday to $1.34, as the market absorbed the morning’s GDT and anticipated Wednesday’s October Cold Storage report.
The barrels plunged 6 1/4-cents Monday and lost 4 3/4-cents Tuesday, dipping to $1.25, lowest price since Oct. 25, 2018.
Dairy Market News says cheese contacts are “concerned about the potentiality of lasting market recuperation, following a bearish onset to fourth quarter 2018.” Midwestern cheese producers have downshifted production and holiday work schedules are lighter than previous years. Spot milk prices ranged $3 under to $1 over class, “a noticeable slide in the price range from week 45.”
Cheese production remains active in the West, with higher milk output noted in many areas. Retailers, food service managers and pizza manufacturers are taking a bit more cheese, however, “holiday buyers haven’t been manifesting themselves that much despite steady to lower cheese prices” and the strong value of the dollar is not helping with international sales either.
CME butter jumped 3 1/4-cents Monday, dropped 2 1/2-cents Tuesday, then regained 4 cents Wednesday, and closed Friday at $2.2750 per pound, up 8 1/4-cents on the week and 6 cents above a year ago.
Monday’s butter jumped a nickel and a half but then gave back 2 3/4-cents Tuesday, reversing to $2.3025, with 26 cars being unloaded.
Cream availability has shown very little change week over week, and butter producers are typically holding back from purchasing cream, according to DMN. Butter stocks vary by producer, but some are relaying very tight supplies with no spot availability.
Western butter makers report that print orders have maintained a strong pace but warn that the current swiftness will not likely continue to the end of the year. Some contacts feel the holiday pipeline is getting filled and a slower tempo is near.
Cash Grade A nonfat dry milk closed Friday at 88 1/2-cents per pound, 2 1/2-cents higher on the week and 16 cents above a year ago.
The powder was unchanged Monday and inched up a quarter-cent Tuesday, to 88 3/4-cents per pound.
The cash dry whey market slumped to 42 1/2-cents per pound last Wednesday, lowest price in 16 weeks, but closed Friday at 43 cents per pound, down a half-cent on the week, with a hefty 32 cars trading hands on the week.
The whey was unchanged Monday but lost a penny Tuesday and slipped to 42 cents per pound.
Increased output in milk per cow nudged October production above October 2017 and was the 59th consecutive month output topped that of the year before. Preliminary data in the top 23 states shows output at a somewhat bullish 16.9 billion pounds, up 1.0 percent from 2017, with the 50-state total, at 17.9 billion pounds, up 0.8 percent. Revisions lowered the initial 50-state September estimate by 2 million pounds to 17.4 billion pounds, up 1.3 percent from 2017.
October cow numbers in the 50 states totaled 9.37 million head, down 2,000 from September and 30,000 less than a year ago, the fourth time cow numbers were below a year ago since May 2016. Output per cow averaged 1,912 pounds, up 21 pounds from the year before.
California output was up 3.2 percent, thanks to a 70-pound gain per cow outweighing 10,000 fewer cows from a year ago. Wisconsin inched 0.3 percent lower on a loss of 4,000 cows. Output per cow was unchanged.
Idaho was up 2.1 percent, thanks to 7,000 more cows and a 20-pound gain per cow. New York was up 1.0 percent, on a 30-pound gain per cow outweighing 3,000 fewer cows. Pennsylvania dropped 3.8 percent on 9,000 fewer cows and 35 pounds less per cow. Minnesota was off 0.5 percent, on a drop of 6,000 cows far outweighing a 15-pound gain per cow.
Michigan was down 1.0 percent on 6,000 fewer cows though output per cow was up 10 pounds. New Mexico inched up 0.2 percent, on a 15-pound gain per cow. Cow numbers were down 2,000. Texans put a 7.5 percent increase in their tanks in October, thanks to 24,000 more cows and 50 pounds more per cow. Washington state was up 2.6 percent on a 30-pound gain per cow and 3,000 additional cows milked.
Dairy trade took another blow in Tuesday’s Global Dairy Trade auction (GDT). The weighted average of products offered plunged 3.5 percent, largest decline since Aug. 21, 2018, and follows a 2.0 percent drop on Nov. 6. It is the 7th consecutive decline. Sellers brought 94.7 million pounds to market, the highest amount so far this year.
The losses were led by butter, down 9.6 percent, which follows a 1.7 percent loss in the last event. Anhydrous milkfat was down 9.4 percent, after a 1.3 percent loss last time.
Rennet casein was down 4.5 percent, after slipping 2.9 percent. Whole milk powder and skim milk powder were down 1.8 and 1.6 percent, respectively. Whole milk powder was down 2.9 percent last time but skim milk powder was up 1.2 percent.
Lactose and Cheddar cheese were the only two in positive territory; lactose up 1.1 percent, and Cheddar up 0.2 percent, after it fell 4.6 percent last time.
FC Stone equates the GDT 80 percent butterfat butter price to $1.6095 per pound U.S., down 18 cents from the last session. CME butter closed Tuesday at $2.3025. GDT Cheddar cheese equated to $1.4751 per pound and compares to Tuesday’s CME block Cheddar at $1.34. GDT skim milk powder averaged 89.13 cents per pound and whole milk powder averaged $1.1789. CME Grade A nonfat dry milk closed Tuesday at 88 3/4-cents per pound.
September fluid milk sales totaled 3.79 billion pounds, down an embarrassing 5.6 percent, according to the USDA’s latest tracking data, as plant-based beverages appear to be stealing market share, which was previously already declining.
Conventional product sales totaled 3.6 billion pounds, down 5.9 percent from a year ago; organic products, at 206 million pounds, were even down, off 1.2 percent, and represented about 5.4 percent of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, down 2.9 percent from a year ago, up 1.2 percent year to date, and made up 31.3 percent of total fluid sales in the month and 31.9 percent for the year so far.
Skim sales, at 293 million pounds, were down 13.4 percent from September 2017, down 10.1 percent year to date, and made up 8.0 percent of total milk sales for the year so far.
Total packaged fluid milk sales in the nine-month period climbed to 34.8 billion pounds, down 2.5 percent from the same period a year ago.
Conventional products year to date totaled 32.9 billion pounds, down 2.6 percent; organic products, at 1.9 billion pounds, were up 0.3 percent. Organic represented about 5.5 percent of total fluid milk sales January through September.