Tariffs take toll on dairy prices
The cash dairy markets are weakening as fallout from last week’s announced retaliatory tariffs from Mexico, Canada and China begins to hit. The CME Cheddar blocks closed Friday at $1.5950 per pound, down 4 cents on the week and 2 cents below a year ago. The barrels finished at $1.45, down 11 1/2-cents on the week but 7 cents above a year ago.
The blocks were unchanged Monday, as traders sorted out the latest retaliatory tariffs, this time from China, which includes most dairy products from the U.S. Tuesday’s Global Dairy Trade auction added to the angst. Traders took the blocks down 2 3/4-cents, to $1.5675, the lowest CME price since April 5, 2017. The barrels lost a nickel and a half Monday and plunged 7 cents Tuesday, to $1.3250, the lowest price since Feb. 1, 2018, and an unsustainable 24 1/4-cents below the blocks.
Midwestern process cheesemakers report that demand is up one week and down the next, according to Dairy Market News, and the grilling season has done little to quell irregular buying.
Western cheese output remains steady but some plants are planning to slow output in the coming weeks. Inventories are in balance with current needs but a few sellers are starting to feel the impact of the new tariff regulation on sales.
Cash butter closed Friday at $2.3525 per pound, down 3 3/4-cents, and 20 3/4-cents below a year ago.
The butter was down 3 cents Monday and gave up 1 1/4-cents Tuesday, slipping to $2.31, the lowest since April 19, 2018.
DMN says some butter producers who recently relayed tightness in cream in their area are suggesting that supplies have loosened. Butter demand is steady and sales of both salted and unsalted butter are “meeting or above expectations” but “the market tone is a little cloudy.”
Western butter inventories are a little higher than typical for this time of year.
Cash Grade A nonfat dry milk closed Friday at 78 3/4-cents per pound, down 1 3/4-cents on the week and 12 1/4-cents below a year ago.
The spot powder dropped 2 3/4-cents Monday and was down three-quarter-cents Tuesday, to 75 1/4-cents per pound.
Dry whey hit a record high 41 3/4-cents per pound last Monday but saw a Friday close at 41 cents, a quarter-cent lower on the week and ended six consecutive weeks of gain.
It lost a penny Monday and inched a half-cent lower Tuesday, to 35 1/2-cents per pound.
Trade war uncertainty likely contributed to the Global Dairy Trade auction’s additional slippage Tuesday. The weighted average of products offered was down 1.2 percent, following the 1.3 percent loss on June 5.
Cheddar cheese again led the declines, down 3.6 percent, duplicating the drop on June 5. Anhydrous milkfat was down 2.5 percent, after falling 1.7 percent. Skim milk powder was down 1.1 percent, following an uptick of 0.3 percent last time, and whole milk powder was down 1 percent, after slipping 1.1 percent.
Lactose was up 8.2 percent, following a 3.9 percent gain last time, and butter inched 0.8 percent higher, following a 3.5 percent descent last time.
HighGround Dairy equates the GDT butter price to $2.55 per pound U.S. CME butter closed Tuesday at $2.31. GDT Cheddar cheese equated to $1.74 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.5675. GDT skim milk powder averaged 91 cents per pound and whole milk powder averaged $1.45. CME Grade A nonfat dry milk closed Tuesday at 75 1/4-cents per pound.
May milk up
The slowing in U.S. milk output was again evident in May but still ahead of the previous year for the 53rd month. Preliminary USDA data shows output at 17.9 billion pounds in the top 23 states, up 0.9 percent from May 2017. The 50-state total, at 19.1 billion pounds, was up 0.8 percent. Revisions lowered the April estimate 18 million pounds to 17.3 billion, up just 0.5 percent from 2017.
May cow numbers totaled 8.74 million head in the 23 states, up 2,000 from April and 10,000 more than a year ago. The 50-state total, at 9.4 million head, was virtually unchanged from March and a year ago. Output per cow averaged 2,052 pounds in the 23 states, up 15 pounds from a year ago.
California milk output was up 0.5 percent despite a drop of 18,000 cows from a year ago but output per cow was up 30 pounds. Wisconsin was up 1.1 percent on a 30-pound gain per cow but 5,000 fewer cows were milked.
Looking at the other top producers; New York was down 1.2 percent, thanks to a 25-pound drop per cow. Cow numbers were unchanged. Idaho was up just 0.6 percent on 5,000 more cows but got 5 pounds less per cow. Pennsylvania was down 2.1 percent on a 30-pound loss per cow and 2,000 fewer cows. Minnesota was unchanged despite a 20-pound gain per cow. Cow numbers were down 5,000 head.
Michigan was off 0.3 percent on 4,000 fewer cows but output per cow was up 15 pounds. New Mexico was unchanged even though output per cow was up 80 pounds and 3,000 more cows were milked. Texas bulk tanks were bulging again, up 6.6 percent, thanks to 12,000 more cows and 85 pounds more per cow. Vermont was down 2.1 percent on a 10-pound loss per cow and 2,000 fewer cows. Washington state was up 2.3 percent on a 25-pound gain per cow and 3,000 additional cows milked.
Fluid milk consumption inched up 0.4 percent in April, according to the USDA’s latest data, and paused 10 months of decline. Fluid sales totaled 3.86 billion pounds, up 0.4 percent from April 2017.
Conventional product sales totaled 3.6 billion pounds, up 0.2 percent from a year ago. Organic products, at 211 million pounds, were up 4.9 percent and represented about 5.5 percent of total sales for the month.
Whole milk sales totaled 1.19 billion pounds, up 2.7 percent from a year ago, up 3.0 percent year to date, and made up 30.8 percent of total fluid sales in the month. Skim milk sales, at 311 million pounds, were down 7.6 percent from April 2017 and down 9.5 percent year to date.
Total packaged fluid milk sales in four-month period climbed to 15.9 million pounds, down 1.3 percent from the same period a year ago.
Conventional products year-to-date totaled 15.0 billion pounds, down 1.4 percent. Organic products, at 871 million pounds, were down 0.1 percent. Organic represented about 5.5 percent of total fluid milk sales January through April.