Cheese, powder prices rebound

Cheese and powder prices strengthened during the Martin Luther King Day holiday-shortened week, buoyed in part by last Tuesday’s GDT. The Cheddar blocks closed Friday at $1.5650 per pound, up 11 cents on the week but 13 1/4-cents below a year ago.


The barrels finished at $1.3450, up 12 3/4-cents on the week, 19 cents below a year ago, but an unsustainable 22 cents below the blocks.


Only 2 cars of block traded hands last week at the CME and 45 of barrel.


The blocks inched up a half-cent Monday, as many in the dairy industry are in Palm Desert, Calif., attending the International Dairy Foods Association’s annual Dairy Forum, but they pulled back a penny Tuesday and slipped to $1.56.


The barrels were up 2 cents on Monday, to $1.3650, and stayed there Tuesday.


The December Milk Production and Cold Storage reports scheduled for release Tuesday afternoon were rescheduled to Wednesday due to the government shutdown on Monday.

Cheese production is mixed in the Central region, according to Dairy Market News, and some plants reduced output to manage growing supplies. Cheese sales were also mixed and Midwestern barrel contacts were “fretful, as prices dropped and buyers waited out continuing price slips or are simply hesitant to take on extra at this time.”


Block sales are generally solid and beating some expectations but pizza cheese makers are concerned regarding inclement winter weather affecting the Northeast, where Super Bowl retail sales are typically strong for many Midwestern mozzarella and provolone manufacturers. Milk prices have tightened again.


Western cheese output is active due to plentiful milk supplies. Disruptions at several processing facilities released more milk into the market. Industry contacts say a few larger cheese plants have agreed to reduce down time or juggle production schedules in order to take the extra loads of milk. Cheese demand is fair. Manufacturers report the pizza season has generated solid sales for mozzarella, but retail demand is still tepid for most cheese types. Cheese purveyors would like to see much stronger demand to help reduce heavy inventories but recent lower prices are helping interest in the export market.


Spot butter closed Friday at $2.12 per pound, 4 cents lower on the week and 13 cents below a year ago, with 10 cars trading places.


Monday left the butter unchanged but it inched a half-cent lower Tuesday and slipped to $2.1150, lowest CME price since May 9, 2017.


DMN says cream remains readily available throughout the Central region and butter sales are generally on par with expectations. Markets are mixed. Some participants expect butter to remain above $2.00, while others are starting to question its steadfastness, says DMN.

Western butter sales are quiet, but retailers continue to restock shelves. Current butter supplies are ample but abundant cream at lower prices is a big contributing factor to increased butter output and “butter sales will have to increase substantially for a large reduction in inventory.”


Cash Grade A nonfat dry milk climbed to 71 1/2-cents per pound Thursday, highest price since Nov. 20, 2017, but closed Friday at 70 3/4-cents, up 4 cents on the week but 29 3/4-cents below a year ago, with a whopping 33 cars exchanging hands last week at the CME.

The powder was unchanged Monday but gained a penny Tuesday, climbing to 71 3/4-cents per pound.


The European Commission announced that it will begin to limit the volume of skim milk powder it purchases in its intervention program. There is plenty in storage, plus U.S. stocks are high, which is keeping pressure on prices.


FC Stone reported that provisional information shows that the EU Commission sold about 1,864 tons of SMP out of Intervention in the tender that closed Jan. 16.


Class I decreases

The February Federal order Class I base milk price was announced by the USDA at $14.25 per hundredweight, down $1.19 from January, $2.48 below February 2017, and the lowest Class I since July 2016. It equates to $1.23 per gallon, down from $1.33 in January and compares to $1.44 a year ago.


California price

Even as the road to forming a Federal milk market order in California is progressing, the bleak price outlook has prompted Western United Dairymen and California Dairy Campaign to petition the California Department of Food and Agriculture (CDFA) for an emergency hearing to consider increases to Class 1, 2, 3, 4a and 4b milk prices for 12 months.


The requested increase would add about 35 cents per cwt. to the overbase price, according to a WUD press release, which argued; “California dairy families have suffered severe economic hardship in the past three years. Many have gone out of business or acquired massive debt on top of eroded equity. The significant negative margins witnessed every quarter since January 2015 have placed many producers in a dire financial situation. 2017 displayed a modest recovery in the markets but the improvements were short lived and not significant enough to allow for positive margins. According to CDFA’s cost of production data, the smallest loss recorded these past three years was 23 cents per cwt. of milk produced during the first quarter of 2017.”


From: Capital Press

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