GDT auction continues upward trend
Tuesday’s Global Dairy Trade auction registered its 10th consecutive session of gain, inching 0.5% higher on the weighted average of products offered.
That compares to the April 2 rise of 0.8%, 1.9% on March 19, and 3.3% on March 5. Sellers brought 16.2 million pounds of product to the market, down from 17.9 million pounds on April 2.
The gains were led by anhydrous milkfat, up 4.2%, following a 3.7% rise on April 2. Butter was right behind, up 3.5%, after it climbed 5.8% last time. Cheddar was up 1.4%, following a 3.2% boost, and skim milk powder was up 0.2%, after rising 1.8% in the last event.
The losses were led by lactose, down 3.4%, rennet casein, down 2.4%, and whole milk powder, off 0.7%, after a 1.3% descent last time.
FC Stone equates the GDT 80% butterfat butter price to $2.4533 per pound U.S., up 7.5 cents from the last session. CME butter closed Tuesday at $2.27. GDT Cheddar cheese equated to $1.9593 per pound, up 3.2 cents from the last event and compares to Tuesday’s CME block Cheddar at $1.6575.
GDT skim milk powder averaged $1.1169 per pound, and compares to $1.1194 last time. Whole milk powder averaged $1.4829, down from $1.4910 last time. CME Grade A nonfat dry milk closed Tuesday at 98 3/4-cents per pound.
Jerry Dryer, analyst and consultant with JDG Consulting, says cheese prices popped higher earlier than he expected this spring, in Monday’s Dairy Radio Now broadcast, although he warned that the price could slip back some, due to the spring flush, which USDA says is occurring in parts of the West and Southern Central regions.
Dryer upped his second quarter Class III price forecast by $1 per hundredweight from where it was a month ago, he said, and added 35 cents to his third quarter projection but explains “It’s not so much a result of sales because we still face the tariffs on exports and domestic sales are nothing to write home about, but the supply is tightening up, the lower prices are having their impact.”
He projects the cheese price to be around $1.75 per pound by October and will average about $1.61 for the year, up from $1.53 last year. That puts the Class III price average at around $16, versus the 2018 average of $14.61, he said.
The butter market is in balance right now, according to Dryer, but “could head sharply higher any minute.” He sees potential for “some major strength” in butter as the supply draws lower, but he is not so confident on NDM. He sees it languishing for the rest of the year.
When asked about the whey market being heavily influenced by the health issue in China’s hog industry, he agreed and said he’s not very optimistic on the whey market and whey prices this year but "cheese will drive that Class III price for us.”
CMC block Cheddar closed Friday at $1.6450 per pound, down 1 1/2-cents on the week but 4 cents above a year ago.
The barrels finished at $1.6175, 4 1/4-cents higher on the week, highest since Sept. 4, 2018, and 15 3/4-cents above a year ago. Ten cars of block were sold on the week and 39 of barrel.
Traders took the blocks up a half-cent Monday, as they anticipated Tuesday morning’s Global Dairy Trade auction, while the barrels rolled 2 cents lower.
Tuesday saw the blocks tick up three-quarters and hit $1.6575 while the barrels remained at Monday’s close of $1.5975.
Dairy Market News reports that spot milk price averages were steeper on average last week. Some cheesemakers sold extra milk back to the market but there is plenty of it for cheese and some producers are running seven-day weeks.
Demand continues to increase steadily for most cheese producers, while others relay that April and May orders are booming. Cheese inventories in the region are generally in “a good place,” while nationally they remain a concern.
Western cheese makers report demand as a “mixed bag.” Some say retail and food service accounts are taking a little more cheese than normal; others say demand the last few weeks has been slow. The current market tone is “a bit uninspiring,” says DMN.
Production is generally active and steady across the region but some processors are trying to hold back making cheese to control inventories, which remain heavy.
CME butter saw a Friday closing at $2.2575 per pound, down 1 1/4-cents on the week and 3 cents below a year ago, on just 1 sale for the week.
Monday’s butter was unchanged but Tuesday added 1 1/4-cents, nudging the spot to $2.27 per pound.
DMN says butter makers are noticing the recent uptrends on cream prices and, with rising cream multiples, some churners are not as full as they prefer.
Some plant managers are looking for cream within the region and expect it to stay pretty tight until the spring holidays. Others expect cream to remain slightly more available for longer this year as schools are running later due to accumulated snow days this winter.
Butter demand has met expectations ahead of the spring holidays. Regional producers continue to see strong export demand as well. In general, butter inventories are in good balance, while production has begun to steady following the busy winter season.
Western butter inquiries continue to roll in as bakers prepare for spring sales and the holiday. Some contacts state that many loads of cream are finding their way to the churns while others report the opposite.
Class II producers are using a good portion of the available cream, reducing the volumes of cream available. This has not created a concern for manufacturers as they have plenty of butter in storage, says DMN, so “The tone of the butter market seems mostly stable.”
Grade A nonfat dry milk held all week at 98 3/4-cents per pound, unchanged on the week but 25 1/2-cents above a year ago, with 11 sales reported on the week.
Monday and Tuesday’s powder was unchanged, holding at 98 3/4-cents per pound for eight consecutive sessions.
Dry whey was up 1 1/4-cents on the week, closing Friday at 35 3/4-cents per pound, 5 1/4-cents above a year ago, with 20 cars sold on the week at the CME.
The whey lost a penny Monday and stayed there Tuesday at 34 3/4-cents per pound.