Cheese prices continue to sputter
CME spot cheese prices plunged ahead of Friday afternoon’s September Milk Production report and Monday’s Cold Storage report and were down for the third consecutive week.
The Cheddar blocks closed Friday at $1.4975 per pound, down 11 1/4-cents on the week and 17 1/4-cents below a year ago. The barrels fell to $1.2675, down 9 1/4-cents on the week and 37 1/4-cents below a year ago.
The blocks regained three-quarters Monday but dropped 3 cents Tuesday to $1.4750, the lowest price since June 26, 2018.
The barrels dropped 2 3/4-cents Monday and lost 2 cents Tuesday, descending to $1.22, the lowest CME price since June 26, 2018 and approaching 9-year lows. They are now 25 1/2-cents below the blocks.
FC Stone dairy broker Dave Kurzawski wrote in his Oct. 23 Early Morning Update; “This is the first time in 12 years that the price of barrel cheese fell below $1.30 during the month of October. For blocks, to print a sub-$1.50 price, which last week before bouncing back over $1.50 yesterday, we have to go back 9 years to October 2009. Make no mistake, this type of cheese pricing we just don’t normally see in October, even for barrels.”
Midwestern cheese production is active, according to Dairy Market News. Spot milk prices are at a premium, from 50 cents to $2.00 over Class III, thus nonfat fortifying is reportedly at its peak. Cheese market tones are bearish.
Western cheese manufacturing is active because of higher milk availability. Class III plants are running at or close to full capacities despite solid milk intakes from other classes of milk. Retail and food service sales of cheese have declined slightly, but are still at a good level.
Contacts believe some processors are producing more domestic barrel cheese to compensate for weaker exports. Others say they are still seeing Cheddar interest in the export market. The present large price spread is reflecting the uncertainty of the cheese market, according to DMN.
Cash butter jumped 4 cents last Monday, then roller-coastered to a Friday close of $2.26 per pound, up a penny on the week but 9 cents below a year ago.
Monday’s butter lost 4 1/2-cents and gave up 2 cents Tuesday, falling to $2.1950, lowest since Sept. 5, 2018.
DMN says cream remains tight for churning in the Central region but varies by plant. Plants able to locate financially feasible cream have churns running actively. Others are buying increasing amounts of bulk butter. Some have found Western loads at more favorable prices than within the region.
Western butter output is active with generally plentiful cream supplies. Production of heavy fat, holiday consumer products is increasing and processors expect tighter supplies of cream soon. Some eastern buyers are making butter purchases in the West to meet their needs, but trucks and truckers are costly and in tight supply.
Spot Grade A nonfat dry milk closed Friday at 87 1/4-cents per pound, up a half-cent on the week and 13 1/4-cents above a year ago.
The powder inched a quarter-cent lower Monday and stayed there Tuesday at 87 cents per pound.
Cash dry whey saw a Friday close at a new high of 57 1/2-cents per pound, up 1 1/4-cents on the week, with 2 sales on the week.
Monday’s whey dropped a nickel and did so again Tuesday, biggest drops ever for the seven-month-old market, tumbling to 47 1/2-cents per pound, lowest since Aug. 23, 2018. 8 cars were sold Monday and 12 Tuesday.
September milk up
Strong gains in milk per cow kept U.S. milk output above that of a year ago for the 58th consecutive month. Preliminary September data shows the 50-state total, at a slightly bullish 17.38 billion pounds, up 1.3 percent from 2017. Revisions lowered the initial 50-state August estimate 43 million pounds to 18.25 billion pounds, up 1.1 percent.
Cow numbers in the 50 states totaled 9.37 million head, down 12,000 from August and 32,000 less than a year ago, third time cow numbers were below a year ago since May 2016. August numbers were revised lower by 21,000. Output per cow averaged 1,855 pounds, up 30 pounds from a year ago.
California output jumped a hefty 4.8 percent, spurred by a 95-pound gain per cow outweighing the loss of 11,000 cows from a year ago. Wisconsin showed a 2.0 percent increase on a 45-pound gain per cow, though numbers were down 4,000.
Idaho was up 1.6 percent, thanks to 4,000 more cows and a 20-pound increase per cow. New York inched up 0.8 percent, on a 25-pound gain per cow outweighing 3,000 fewer cows. Pennsylvania dropped 4.3 percent on 8,000 fewer cows and a drop of 45 pounds per cow. Minnesota was up 1.5 percent, on a 50-pound gain per cow offsetting a loss of 6,000 cows.
Elsewhere, Michigan was down 2.1 percent, on 6,000 fewer cows and output per cow being down 15 pounds. New Mexico inched up 0.9 percent, on a 40-pound gain per cow. Cow numbers were down 4,000. Texas upped its output 8.9 percent, thanks to a 75-pound gain per cow and 24,000 more cows. Vermont was down 0.9 percent, on 2,000 fewer cows, though output per cow was up 10 pounds. Florida was down 8.7 percent on 5,000 fewer cows and a drop of 70 pounds per cow. Washington State was up 2.2 percent on a 20-pound gain per cow and 3,000 additional cows milked.
September butter stocks were down from August but well above September 2017 and the 7th consecutive month they topped year-ago levels, according to the Agriculture Department’s latest Cold Storage report.
The Sept. 30 inventory slipped to 283.1 million pounds, down only 7.8 million pounds or 2.7 percent from August and the slowest September decline since 2012, according to HighGround Dairy, but a bearish 27.2 million pounds or 10.7 percent above September 2017.
American type cheese, which includes Cheddar, climbed to 792.4 million pounds, up 6 million pounds, or 0.8 percent from August, and 11.9 million or 1.6 percent above a year ago.
The other cheese category crept up to 543.1 million pounds, up 2 million pounds from August or 0.4 percent from August, and 40.9 million or 8.1 percent above a year ago.
The total September cheese inventory stood at 1.37 billion pounds, up 7.8 million pounds or 0.6 percent from August and a bearish 58.3 million pounds or 4.5 percent above a year ago and the 47th consecutive month stocks topped a year ago.
HGD says “Overall, today’s report is unabashedly bearish, showing much less product than normal moving out of storage in September, a month that usually sees end users begin to pull product to meet Fourth Quarter/holiday demand.”
Class I down
The November Federal order Class I base milk price is $15.52 per cwt., down 81 cents from October, 89 cents below November 2017, and equates to $1.33 per gallon, down from $1.40 in October. The 11-month average stands at $14.82, down from $16.41 a year ago.
It is California’s first Federal order Class I base price. As in the other milk market orders of the country, this is the price that is added to the individual Class I differential to determine that order’s Class I milk price.