Dairy: Barrels roll to 9-year low
Cash dairy prices fell the second week of the new year. The Cheddar blocks saw daily slippage until Friday when they reversed, gained 1 3/4-cents, and closed at $1.4550 per pound, still down 4 cents on the week and 27 cents below a year ago.
Friday’s large crash was the barrels plunging to $1.2175, down 17 1/4-cents on the week, the lowest price since July 30, 2009, 42 1/4-cents below a year ago, and a whopping 23 3/4-cents below the blocks.
Six cars of block traded hands last week at the CME and 37 of barrel.
The markets were closed Monday for the Martin Luther King holiday but the blocks were up 1 1/4-cents Tuesday, to $1.4675. The barrels jumped 5 3/4-cents and climbed back to $1.2750, 19 1/4-cents below the blocks.
Dairy Market News reports that Midwestern cheesemakers continue to receive offers of discounted spot milk, although above the discounted prices of previous weeks. Some cheese producers are cutting back production and taking time off before gearing up for the Super Bowl. Others have begun to ramp up and are operating seven days a week.
Western cheese sales are reportedly “within seasonal norms.” Orders for the Super Bowl have started to pick up but some contacts are “not optimistic about the future development of the cheese market due to supplies outweighing current demand.”
Spot butter fell to $2.1550 per pound last Thursday, lowest price since May 10, 2017, but closed Friday at $2.16, down 7 3/4-cents on the week and 65 cents below a year ago.
The butter held at $2.16 Tuesday.
Cream offers are aplenty for butter producers and cream continues to flow into the upper Midwest from the West and Southwest.
Plentiful cream and low multiples are prompting some Western butter makers to actively operate churns near full capacity.
Cash Grade A nonfat dry milk closed Friday at 66 3/4-cents per pound, down 1 1/4-cents on the week and 36 1/2-cents below a year ago.
The powder rebounded 2 1/4-cents Tuesday, hitting 69 cents per pound.
GDT up 4.9 percent
The second Global Dairy Trade auction of 2018 added to the encouragement of the first, with a 4.9 percent gain in the weighted average of all products offered. That followed the 2.2 percent rise Jan. 2. The quantity sold slipped to 51.4 million pounds, lowest since June 2017.
Butter led the gains, up 8.8 percent, following a 0.6 percent advance Jan. 2. Skim milk powder was up 6.5 percent after rising 1.6 percent last time. Cheddar cheese was up 5.2 percent, after falling 2.1 percent. Whole milk powder was up 5.1 percent, after a 4.2 percent advance, and anhydrous milkfat was up 2.2 percent, after slipping 0.2 percent last time.
FC Stone equated the GDT 80 percent butterfat butter price to $2.1669 per pound U.S. CME butter closed Tuesday at $2.16. GDT Cheddar cheese equated to $1.5814 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.4675. GDT skim milk powder averaged 82.46 cents per pound U.S. and whole milk powder averaged $1.3651 per pound. CME Grade A nonfat dry milk price closed Tuesday at 69 cents per pound.
Calif. Class I falls
California’s February Class I milk prices fell to the lowest levels since July 2016. The northern price, at $15.47 per cwt., was down 60 cents from January and $2.66 below February 2017. The southern price is $15.74, down 61 cents from January and $2.66 below a year ago.
Fluid sales off
USDA’s latest data shows November packaged fluid sales at 4.1 billion pounds, down 1.1 percent from November 2016. Conventional product sales totaled 3.9 billion pounds, down 1.2 percent from a year ago; organic products, at 222 million pounds, were off 0.1 percent. Organic represented about 5.4 percent of total sales for the month.
Whole milk sales totaled 1.27 billion pounds, up 3.2 percent from a year ago, up 2.5 percent year to date, and made up 30.6 percent of total fluid sales in the month. Skim milk sales, at 335 million pounds, were down 10.2 percent from a year ago and down 11.9 percent, year to date.
Total packaged fluid milk sales in the nine-month period totaled 43.9 billion pounds, down 2.0 percent from the same period a year ago.
Year-to-date sales of conventional products, at 41.6 billion pounds, were down 2.1 percent; organic products, at 2.4 billion pounds, were up 0.2 percent. Organic represented about 5.4 percent of total fluid sales in 2017.
The Agriculture Department lowered its 2017 and 2018 milk production forecasts in its latest World Agricultural Supply and Demand Estimates report.
The 2017 estimate was reduced, based on the most recent data, and the 2018 projection was reduced due to slower anticipated growth in the dairy cow herd combined with continued slow growth in milk per cow.
2017 production and marketings were projected at 215.5 billion and 214.5 billion pounds, respectively, down 200 million pounds from last month. If realized, 2017 production would be up 3.1 billion pounds or 1.5 percent from 2016.
2018 production and marketings were projected at 218.8 billion and 217.8 billion pounds, respectively, down 500 million pounds from last month. If realized, 2018 production would be up 3.3 billion pounds or 1.5 percent from 2017.
The 2018 dairy product price projections were reduced due to slowing domestic demand and global competition. The 2018 Class III and Class IV milk price forecasts were reduced, based on the lower product prices.
The 2018 Class III milk price is projected to range $14.25-$15.05, $1.05 per cwt. below what was expected a month ago.
The 2018 Class IV price is projected at $13.55-$14.45, down 35 cents from last month’s estimate.