Butter price slips below $2
CME butter fell below $2 per pound in the Thanksgiving holiday shortened week while the other products strengthened.
The 40-pound Cheddar blocks closed Wednesday at $1.9625 per pound, 12 cents higher on the week and 60.25 cents above a year ago.
The 500-pound Cheddar barrels saw a Wednesday close at $2.2475 per pound, up 6.25 cents on the week and 93.25 cents above a year ago.
Seven cars of block traded hands in the three days of trading, 49 in the month of November, down from 63 in October. Only 2 cars of barrel sold last week, with 16 for the month, down from 66 in October.
The blocks lost 3 cents Monday but gained back a penny and a half Tuesday, hitting $1.9475, as traders absorbed the morning’s GDT. The barrels gained a penny Monday and inched a half-cent higher Tuesday, climbing to $2.2625, an inverted 31.5 cents above the blocks.
Midwestern cheesemakers say the short holiday week saw continued weakness in ordering. “Expectations were not strong, as market tones are creating a hesitant buyer sentiment,” says DMN. Extra holiday milk was running as low as $5 under Class. Spot milk was available, but there were still some premiums being reported. Some cheesemakers suggest this is their first year seeing premiums on spot milk on Thanksgiving week. Market tones are creating anxiety among contacts in the region. Some are hopeful for late season Super Bowl related buying activity but “Generally, the market tone is not on terra firma.”
Western contacts report that spot cheese sales are a bit slower to materialize as most customers have enough stocks and are not looking to purchase more. The recent declines in CME prices are reinforcing the wait-and-see approach. Retail sales are at seasonal levels and contractual negotiations for 2020 are what end users/buyers are working on.
A lot of milk continues to move to the cheese vats. There’s sufficient stocks of blocks and barrels in warehouses but barrel stocks are becoming more available compared to previous weeks.
CME butter finished the week and month at $1.9975 per pound, down 2.75 cents on the week, first time it’s been below $2 since Nov. 15, 2016, and is 24.5 cents below a year ago. Nine cars were sold last week, 58 on the month, down from 115 in October.
Butter’s meltdown continued Monday, dropping 2.75 cents, and did it again Tuesday, falling to $1.9425, lowest CME price since Nov. 9, 2016.
Butter makers say there were a lot of spot cream loads being offered Thanksgiving Week. Fall stores of bulk butter have been pulled down pretty briskly, according to plant managers.
Regional contacts say lower prices may be timely and may spur more buying following holiday demand peaks.
Western butter makers report strong demand for print butter. Thanksgiving sales were solid and retailers appear eager to reorder for the next holiday push. Cream supplies are plentiful and inexpensive, resulting in active butter production.
Cash Grade A nonfat dry milk closed Wednesday at $1.2375 per pound, up 1.75 cents on the week and 33.25 cents above a year ago. Fifteen cars found new homes on the week, with 69 for November, 9 more than in October.
Monday’s powder jumped 2.5 cents but it eased back 1.25 cents Tuesday, to $1.25 per pound, still the highest since Oct. 23, 2014.
Spot dry whey closed Wednesday at 35.25 cents per pound, up a half-cent on the week but 8.25 cents below a year ago. Only 1 car was sold last week, with 116 for the month, down from 305 in October.
The whey inched a quarter-cent higher Monday and stayed there Tuesday at 35.5 cents per pound.
The second to last Global Dairy Trade auction of 2019 ended five consecutive sessions of gain. Tuesday’s weighted average of products offered was down 0.5%, following a 1.7% rise Nov. 19 and 3.7% rise on Nov. 5.
Anhydrous milkfat and butter led the declines, down 5.1% and 4.9%, respectively, following respective losses last time of 1.5% and 1.3%.
Rennet casein again led the gains, up 4.9%, which follows a 5.6% gain last time. Cheddar was next, up 2.7%, following a 2.5% rise. Skim milk powder was up 1.9%, after a 3.3% rise, and buttermilk powder was up 1.6%. Whole milk powder inched up 0.1%, after rising 2.2% in the last event.
FC Stone equated the GDT 80% butterfat butter price to $1.7626 per pound U.S., down 3.4 cents from the last event. CME butter closed Tuesday at $1.9425.
GDT Cheddar cheese equated to $1.7224 per pound, up 4.4 cents and compares to Tuesday’s CME block Cheddar at $1.9475.
GDT skim milk powder averaged $1.3918 per pound and compares to $1.3683 last time.
Whole milk powder averaged $1.5108, up from $1.5063. CME Grade A nonfat dry milk closed Tuesday at $1.25 per pound.
Milk-feed ratio rises
A higher All Milk price pushed the October milk feed price ratio a little higher, the fourth consecutive month of gain. The USDA’s latest Ag Prices report put the ratio at 2.39, up from 2.33 in September and compares to 2.22 in October 2018.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk today purchases 2.39 pounds of dairy feed containing that blend.
The U.S. All-Milk price averaged $19.90 per hundredweight (cwt.), up 60 cents from September and $2.40 above October 2018. California’s All Milk price was $18.90, up 30 cents from September and $1.86 above a year ago. Wisconsin’s, at $20.50, was up 60 cents from September and $2.70 above a year ago.
The national average corn price averaged $3.84 per bushel, up 4 cents from September and 42 cents per bushel higher than October 2018. Soybeans averaged $8.60 per bushel, up 25 cents from September and a penny per bushel above a year ago. Alfalfa hay averaged $179 per ton, down $2 from September but $3 per ton above a year ago.
Looking at the cow side of the ledger; the October cull price for beef and dairy combined averaged $60.90 per cwt., down $4.70 from September, $3.10 above October 2018, but $10.70 below the 2011 base average of $71.60 per cwt.