Too much to digest at dairy markets
Dairy traders had a lot to digest last week and it wasn’t just turkey. The menu also included the October Milk Production, Cold Storage and Slaughter reports, plus the Global Dairy Trade auction.
They closed the Thanksgiving-holiday shortened week with CME block Cheddar at $1.61 per pound, down a penny on the week and 25 cents below a year ago.
The barrels finished at $1.6750, up 4 3/4-cents, 1 1/2-cents below a year ago, and an inverted 6 1/2-cents above the blocks.
The blocks fell 6 cents Monday only to get it back Tuesday, returning to $1.61.
The barrels rolled 8 1/2-cents lower Monday and lost a nickel Tuesday, plunging to $1.54, the lowest price since Sept. 21, with 13 cars selling Monday and 14 more on Tuesday.
Cheesemakers in the Midwest were receiving spot milk offers early last week and expected them to continue through Wednesday, according to Dairy Market News, and spot milk prices range from flat market to $5 under class. Cheese inventories vary but are generally “fairly long.” Cheese orders have been steady to slow, with some contacts suggesting that buyers are waiting for steadying market prices.
Western cheesemakers report steady production and plenty of milk available, says DMN. “Demand is stable, but not as robust as previous years. Interest from foreign buyers has picked up as prices have eased on market exchanges” and “exports may play a critical role in maintaining comfortable cheese stocks entering into 2018.”
Cash butter closed last Wednesday at $2.2225 per pound, up three-quarter cents on the week and 17 1/2-cents above a year ago, with 22 cars exchanging hands.
The October Cold Storage report butter data didn’t seem to matter Monday as the butter lost a penny and a half and melted down another 2 1/4-cents Tuesday, to $2.1850.
Central region butter makers reported active production schedules Thanksgiving Week, as cream was readily accessible and “finding its way into Midwestern butter plants from regions across the country,” according to DMN. “Butter sales remain strong late into the busy season, and the butter market tone is holding somewhat steady.”
Western processors also have enough cream for churning. Holiday demand is “solid and drawing down butter inventories,” but supplies remain plentiful. Retail stores have increased butter promotions. International market competition between the EU and the USA for market share is increasing, says DMN.
Cash Grade A nonfat dry milk dipped to 70 1/2-cents per pound Tuesday, lowest price since April 2016, but finished Wednesday at 71 1/4-cents, down 1 1/4-cents on the week and 19 1/4-cents below a year ago. Only two cars sold on the week.
Monday took the powder up three-quarters and added a penny Tuesday, creeping back to 73 cents per pound.
Class I up
The Agriculture Department announced the final Class I base milk price of 2017 at $16.88 per hundredweight, up 47 cents from November and even with December 2016.
It is the highest Class I since March 2017 and equates to $1.45 per gallon. The year’s average is $16.45, up from $14.80 in 2016 and $16.34 in 2015.
Americans continue to chow down butter and cheese supplies. The USDA’s latest Cold Storage report put Nov. 30 butter stocks at 219.75 million pounds, down 36 million or 14 percent from September and 8.4 million pounds or 4 percent below 2016. The September estimate was revised 1.1 million pounds lower.
American type cheese, at 739.3 million pounds, was down 41.2 million pounds or 5.0 percent from September and only 3.3 million pounds above, virtually unchanged, from a year ago. The “other” cheese category showed stocks of 504.2 million pounds, up 2 million pounds from September and 42.3 million or 9 percent above a year ago.
The total cheese inventory stood at 1.27 billion pounds, down 40.2 million pounds or 3 percent from September but 45.5 million or 4.0 percent above a year ago. Revisions added 2.7 million pounds of American cheese to September’s total, 1.8 million pounds to the other cheese total, and 2.5 million pounds to the total cheese estimate. Pundits viewed the report as bullish on cheese and neutral on butter.
Rising milk output and falling prices are pushing more dairy cows into retirement. U.S. dairy cow culling reversed gears in October and was up from September and October 2016. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 261,000 head were slaughtered under federal inspection, up 11,400 head from September and 23,800 head above a year ago.
Culling in the first 10 months of 2017 totaled 2.497 million head, up 108,000 from the same period a year ago.