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Dairy Market: Benchmark milk price loses $4.77

The Agriculture Department announced the August Federal order Class III benchmark milk price at $19.77 per hundredweight, down $4.77 from July but still $2.17 above August 2019 and the highest August Class III since 2014.


The 2020 Class III average sits at $17.61, up from $15.83 a year ago and $14.44 in 2018.

Friday’s Class III futures settlements portended a September price at $17.06; October, $18.89; November, $17.55; and December at $16.65.


The August Class IV price is $12.53, down $1.23 from July, $4.21 below a year ago and the lowest August Class IV since 2009. Its 2020 average is at $13.62, down from $16.19 a year ago and $13.85 in 2018.


Cheese higher

CME block Cheddar topped $2 per pound ahead of last week’s Dairy Products report and the Labor Day weekend and closed Friday at $2.1250, up 29.75 cents on the week, highest since July 31, and 12.75 cents above a year ago.


The barrels finished at $1.70, 27 cents higher on the week but 4.25 cents below a year ago; 17 cars of block sold last week at the CME and 14 of barrel.


The markets were closed Monday for the Labor Day holiday but Tuesday’s traders took the blocks up 2.75 cents, to $2.1525, highest since July 31, on 4 sales.


The barrels were up 1.50 cents Tuesday, hitting $1.7150, highest since Aug. 4, but a whopping 43.75 cents below the blocks.


StoneX dairy broker Dave Kurzawski stated in the Sept. 7 "Dairy Radio Now" broadcast that there’s plenty of uncertainty in the markets and when asked about the significance of many schools not returning to the classroom, said he believes it will be very significant.

He said that we also have to consider the impact of holiday parties and gatherings not occurring because of COVID. Plus, the weather right now is great and people are eating outside at restaurants, but what is that going to look like in Boston, Chicago, New York and other cities on Nov. 1?


Midwest cheese output remains busy, according to Dairy Market News, and orders have been robust on the retail side. Continued governmental assistance has spurred customers to get ahead of potential price increases but the wide spread between blocks and barrels is viewed as a sign of uncertainty, says DMN. Anything less than 10 cents is indicative of “healthier market tones.”


The western market is volatile and impacted by the effects of COVID. USDA’s additional Food Box purchases has some contacts believing this will continue to help clear cheese while others fear it might bring more volatility to the market. Retail cheese sales are strong but orders from food service are still down. International sales are active with the lower prices. Some manufacturers are preparing for the expected growth in year-end holiday demand but difficulties finding qualified staff at a few plants disrupted output last week, says DMN.


Cash butter closed last week at $1.4925 per pound, up 4.50 cents but 68 cents below a year ago, with 58 sales reported.


Tuesday’s butter gained 0.75 cents, climbing to $1.50, on a bid.


Bulk butter is reportedly available in and outside the Midwest though, for most of the summer, cream has been up and down. Unsurprisingly, as the holiday weekend approached, cream was more available though some suggest it may lighten near term because less cream will be spun off from bottlers due to lighter school demand. DMN says, “Butter market tones are trying, but struggling, to find any bullish notes.”


Western butter makers were preparing for a surge of cream over the weekend. Ice cream production is slowing. Some schools have reopened or are planning to soon, engaging school milk bottling, so that is adding cream. Butter stocks are heavy. Retail orders have cooled but manufacturers expect more demand closer to the holiday baking season. DMN says, “It’s difficult to assess what impacts the mix of virtual, hybrid and in-person classrooms will have on near-term butter needs for food service, baking and at-home family meal preparations. Regional dining out is improving but foodservice demand is still languishing.”


Grade A nonfat dry milk climbed to $1.0350 per pound last Wednesday, highest since July 7, but finished Friday at $1.03, a penny higher on the week, but 1.75 cents below a year ago, on 13 sales for the week.


Tuesday’s powder held at Friday’s close.


CME dry whey closed Friday at 33.25 cents per pound, down 0.75 cents on the week and 6.25 cents below a year ago, with 4 carloads finding new homes.


The whey was unchanged Tuesday, with 4 bids going unfilled.


More butter & cheese

You’ll recall that July milk production hit 18.6 billion pounds, up 1.5% from July 2019. The July Dairy Products report shows where that milk went.


Cheese output slipped to 1.106 billion pounds, down 0.4% from a revised June total of 1.111 billion, but was 1.8% above July 2019. Year to date production stood at 7.65 billion pounds, up 0.8% from a year ago.


Wisconsin produced 288.6 million pounds of the total, down 0.6% from June but 1.2% above a year ago. California output, at 202.5 million pounds, was down 0.6% from June and 3.8% below a year ago. Idaho vats contributed 89.2 million pounds, up 2.2% from June and 2.4% above a year ago.


Italian type cheese totaled 457.1 million pounds, down 4.2% from June and 1.5% below a year ago. YTD Italian output was at 3.3 billion pounds, down 0.2%.


American type cheese jumped to 451.7 million pounds, up 3.5% from June and 4.0% above a year ago. YTD American was at 3.1 billion pounds, up 1.8%.


Mozzarella output slipped to 368.8 million pounds, down 3.5% from June but 0.2% above a year ago, with YTD at 2.6 billion pounds, unchanged from 2019.


Cheddar, the cheese traded at the CME, climbed to 321.2 million pounds, up 12.2 million pounds or 3.9% from June and 15.3 million or 5.0% above July 2019. Year to date Cheddar stood at 2.2 billion pounds, up 1.7% from a year ago.


Butter production hit 151.8 million pounds, up 1.6 million pounds or 1.1% from June and 1.1 million pounds or 0.7% above a year ago. YTD butter output was at 1.27 billion pounds, up 6.2% from 2019.


Dry whey totaled 84.5 million pounds, down 0.3% from June but 1.9% above a year ago, with YTD whey at 576.6 million pounds, up 3.7%. Dry whey stocks totaled 84.5 million pounds, down 0.1% from June but 24.9% above a year ago.


Nonfat dry milk totaled 163.4 million pounds, up 16.3 million pounds or 11.1% from June but 8.9 million or 5.2% below a year ago. YTD powder sits at 1.17 billion pounds, up 0.7% from 2019. Stocks climbed to 309.6 million pounds, up a bearish 20.6 million or 7.1% from June and 17.5 million or 6.0% above 2019.


Skim milk powder output fell to 51.2 million pounds, down 10.1 million pounds or 16.4% from June but 4.5 million pounds or 9.7% above a year ago. YTD skim milk powder hit 319.3 million pounds, up 10.1% from a year ago.






From: Capital Press

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