October milk production up 1.3%
The Agriculture Department reports preliminary October output at a bearish 18.1 billion pounds, up 1.3% from October 2018. Output in the top 24 states totaled 17.3 billion, up 1.7%.
Revisions also added 7 million pounds to the original September total, now put at 17.7 billion, up 1.3% from September 2018.
Cow numbers were up in October. The 50-state count totaled 9.327 million head, up 5,000 from the September count, which was revised up 7,000 cows, but is still 40,000 head below a year ago. Output per cow averaged 1,941 pounds, up 51 pounds from September and 33 pounds above a year ago.
California output was up 2.8%, thanks to a 60-pound gain per cow offsetting 5,000 fewer cows milked. Wisconsin was up 1.0%, on a 30-pound gain per cow. Cow numbers were down 6,000.
Virginia again showed the biggest loss, down 7.0% on 7,000 fewer cows. Arizona was down 5.6% on 11,000 fewer cows.
Texas showed the biggest increase, up 9.3%, thanks to 31,000 more cows and a 65-pound gain per cow.
Idaho was up 2.3%, thanks to 20,000 more cows offsetting a 20-pound loss per cow. New York was up 1.8%, on 5,000 more cows and a 20-pound gain per cow, and Minnesota was up 1.8% on a 50-pound gain per cow offsetting 4,000 fewer cows.
Michigan was up 3.0% on a 35-pound gain per cow and 6,000 more cows. New Mexico was up 2.3%, on a 40-pound gain per cow and 1,000 more cows milked.
Oregon inched 0.5% higher on a 10-pound gain per cow. Pennsylvania output remains depressed, down 3.5% on a drop of 30,000 cows. However, output per cow was up 40 pounds.
Vermont was up 0.5% on a 25-pound gain per cow offsetting 1,000 fewer cows. Florida was up 1.2% on a 45-pound gain per cow offsetting 2,000 fewer cows.
Washington state was off 0.4% on a 20-pound gain per cow, but cow numbers were up 2,000 head.
GDT up 1.7%
Strength remains in the international market as Tuesday’s weighted average of products offered in the Global Dairy Trade auction was up 1.7%. That was down from a 3.7% jump on Nov. 5, and is the fifth consecutive session of gain.
Rennet casein led the gains, up 5.6%, which follows a 5.1% gain last time. Skim milk powder was up 3.3%, after jumping 6.7% last time, and GDT Cheddar was up 2.5%, after slipping 0.6% last time. Whole milk powder was up 2.2%, following a 3.6% rise last time, and lactose was up 1.3%.
Anhydrous milkfat and butter made up the losses, down 1.5% and 1.3% respectively, after respective gains of 2.6% and 0.2% in the last event.
FC Stone equated the GDT 80% butterfat butter price to $1.7969 per pound U.S., down 2.5 cents from the last event. CME butter closed Tuesday at $2.0650.
GDT Cheddar cheese equated to $1.6788 per pound, up 4.2 cents and compares to Tuesday’s CME block Cheddar at $1.8375.
GDT skim milk powder averaged $1.3683 per pound and compares to $1.3262 last time. Whole milk powder averaged $1.5063, up from $1.4762. CME Grade A nonfat dry milk closed Tuesday at $1.2350 per pound.
Cheese dip continues
Cheese prices continued to weaken last week. Block Cheddar closed Friday at $1.89 per pound, down 12.5 cents on the week but 43.75 cents above a year ago.
The barrels fell to $2.1975, down 13.25 cents on the week but 83.75 cents above a year ago. Only 4 cars of block were traded last week at the CME and 3 of barrel.
The blocks lost 2.25 cents Monday and 3 cents Tuesday and dipped to $1.8375, as traders weighed the morning’s GDT and anticipated the afternoon’s October Milk Production report. This is the lowest CME block price since Aug. 2 and 40 cents below its Sept. 16 peak.
The barrels were down 4.25 cents Monday and inched a half-cent lower Tuesday, to $2.15, lowest since Oct. 23 and at an inverted 31.25 cents above the blocks.
Some Midwest cheesemakers reported slower sales last week, according to Dairy Market News. Prices have started to feel pressure but remain above the comfort zone for many buyers while other manufacturers report that buyers remain motivated during the holiday demand season.
DMN says the western market seems to be weakening. While buyers are making sure they have enough stocks to satisfy holiday needs, sellers are using any strategy possible to maximize sale volumes. Barrel prices are well above blocks due to tighter inventories but stocks are balanced with the needs of the market. Cheese output is seasonally solid with continuous good flows of milk to the vats.
Cash butter closed Friday at $2.0675 per pound, up 3 cents on the week but 20.75 cents below a year ago.
The butter was up 0.75 cents Monday but lost a penny Tuesday, closing at $2.0650.
Some butter plant managers suggest cream is tightening as demand from Class III producers has pulled from the cream pool. They add that a late Thanksgiving will keep demand up through the first week of December. Others report continued ease in finding cream at favorable multiples, with some coming from Western sources.
Retail butter sales are strong in the West. Buyers seem satisfied with current prices and are actively filling store shelves for the winter holiday baking season, placing a steady draw on inventories and making stocks comfortable for this time of year.
Grade A nonfat dry milk closed last week at $1.2175 per pound, up 1.25 cents and 33.25 cents above a year ago.
Monday’s traders left the powder unchanged but they took it up 1.75 cents Tuesday, to $1.2350, highest since Nov. 4, 2014.
CME dry whey finished Friday at 32 cents per pound, up 4.5 cents on the week but 11 cents below a year ago; 29 cars were sold on the week, with lots of bids going unfilled.
Monday’s whey gained 1.25 cents and it stayed there Tuesday at 33.25 cents per pound, highest since Oct. 3.
Roller coaster explained
A lot of the experts are trying to explain the roller coaster cheese prices. FC Stone’s director of dairy market insight, Nate Donnay, admits “it’s hard to put our finger on the exact drivers behind the rally.”
“The single most supportive hard data point I can see is the sharp drop in Cheddar production in September, which came in 7 million pounds lower than forecast and down 3.1% from last year,” he said.
“Only fresh Cheddar, aged between 4 and 30 days, trades on the CME spot market,” he explained, “so the Cheddar fundamentals have an outsized impact on cheese prices. But it doesn’t look like any one thing is driving this market, it’s a mix of supply and demand issues.”
New CME tool
The Chicago Mercantile Exchange announced that it will launch block cheese futures and options in January 2020, pending regulatory review. The new contracts will be cash-settled to the monthly average price for 40-pound block Cheddar as reported by the USDA's National Dairy Products Sales Report with each contract representing the equivalent of 20,000 pounds.
Fluid sales slip
U.S. fluid milk sales were down in September after slipping in August. The USDA’s latest data show 3.76 billion pounds of packaged fluid sales in September, down 0.8% from September 2018.
Conventional product sales totaled 3.5 billion pounds, down 1.3% from a year ago. Organic products, at 220 million pounds, were up 6.9% and represented 5.9% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, up 0.2% from a year ago and made up 31.7% of total fluid sales in the month. Sales for the nine-month period totaled 11.2 billion pounds, up 1.0% from a year ago.
Skim milk sales, at 265 million pounds, were down 9.7% and made up 7.1% of total milk sales for the month.
Total packaged fluid milk sales, January through September, totaled 34.2 billion pounds, down 1.7% from a year ago.
Conventional products year-to-date totaled 32.3 billion pounds, down 1.7%. Organic products, at 1.9 billion pounds, were down 2.6% and represented about 5.5% of total fluid milk sales for the period.
Fluid fall takes a toll
The nation’s largest fluid milk producer, Dallas-based Dean Foods, announced that it has filed for Chapter 11 bankruptcy protection, blaming the continuing drop in fluid milk consumption as consumers switch to sodas, juices and plant-based beverages. The company has 65 processing plants in 29 states and 15,000 employees and is reported to be in negotiation with Dairy Farmers of America about a potential sale.
From: Capital Press