Cheese prices continue to sputter
Cash cheese prices plunged in the shortened Thanksgiving Week. The Cheddar blocks fell to $1.34 per pound last Tuesday, the lowest CME price since May 2016, then closed Wednesday at $1.3450, down 10 3/4-cents on the week and 26 1/2-cents below a year ago.
The barrels rolled to $1.24 per pound Wednesday, approaching lows seen just four weeks ago, down 12 cents on the week, and a whopping 43 1/2-cents below a year ago. Some 15 cars of block traded hands last week at the CME and only 6 of barrel.
Traders inched the blocks up a half-cent both Monday and Tuesday, to $1.3550. The barrels were unchanged Monday but gained a penny Tuesday, climbing to $1.25, still leaving the spread at a higher than normal 10 1/2-cents.
Many Midwestern cheese plants allotted more time off last week, according to Dairy Market News. Reported spot milk prices were all discounted, ranging $1 to $3 under Class. Although discounts were reported, spot milk prices from Thanksgiving Week a year ago were as low as $5 under Class.
Inventories vary from plant to plant, while barrel producers have begun to see a necessary downshift in stocks the past two weeks. Some cheese producers relay that markets have slowed sales for most of the fall, while others are not as affected. There are contacts who foresee a bullish 2019 ahead and suggest that cheese inventories will begin to clear up as milk intakes have been tighter than in recent years, creating an improved supply/demand balance.
Western cheese demand remains steady. Contacts suggest domestic buyers continue to seek cheese for retail and food service accounts and seasonal holiday demand appears to be picking up somewhat. The strong dollar is creating headwinds for export sales, however. Inventories, especially for barrels, are heavy in the West and milk supplies are ample for most cheese making needs.
Cash butter started last week by jumping a nickel and a half but then came Tuesday’s GDT and it was downhill from there. It closed Wednesday at $2.28 per pound, still a half-cent higher on the week and 5 3/4-cents above a year ago with 33 cars trading hands last week.
Monday’s butter dropped a nickel and then lost a penny and a half Tuesday, dipping to $2.2150 per pound.
Midwestern butter makers report that demand is expectedly strong, according to DMN. Cream is more available, but not as much as was expected during the holiday week.
Some Central region churns were clearing cream from the West, as locally produced cream continues to make its way into Class II manufacturing within the region. Butter markets are “steadily bullish,” says DMN.
Western cream inventories are adequate for butter manufacturing. As transportation allows, eastern buyers are sourcing their butter needs in the West due to limited butter availability in their region.
Grade A nonfat dry milk crept up to 89 3/4-cents per pound by Wednesday, up 1 1/4-cents on the week and 18 1/2-cents above a year ago.
The powder market gained three-quarters Monday and a half-cent Tuesday, climbing to 91 cents per pound, highest price since early September 2018.
Global demand for powder has been quiet, says FC Stone. “The uncertainty surrounding trade wars along with a strong US dollar are a few factors keeping global demand weak.”
The spot dry whey price closed the shortened week at 42 1/2-cents per pound, a half-cent lower on the week, with 11 cars finding new homes.
The whey was down a half-cent Monday but it ticked up three-quarters Tuesday, to 42 3/4-cents per pound.
Butter stocks fall
October butter stocks saw the biggest drawdown in 25 years but remain well above October 2017 and the 8th consecutive month they topped year ago levels, according to the Agriculture Department’s latest Cold Storage report.
The Oct. 31 inventory plunged to 230.7 million pounds, down 52.5 million pounds or 18.5 percent from September but were 12.8 million pounds or 5.9 percent above October 2017.
American type cheese, which includes Cheddar, grew to 813.8 million pounds, up 10 million pounds, or 1.2 percent from September, and 73.4 million or 9.9 percent above a year ago.
Revisions added 11.4 million pounds to the September estimate and this was the first time American stocks grew in October since 2010, according to FC Stone.
The other cheese category fell to 528.8 million pounds, down 14.3 million pounds or 2.7 percent from September but was 25.5 million pounds or 5.1 percent above a year ago.
The total cheese inventory stood at 1.37 billion pounds, down 5.2 million pounds, or 0.4 percent from September but a bearish 104.6 million pounds or 8.2 percent above a year ago and the 48th consecutive month stocks topped a year ago.
Dairy cow culling jumped in October as finances tightened on the farm and many shutter their operations. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 288,200 head were slaughtered under federal inspection, up 40,800 from September and 27,200 above a year ago.
A total 2.6 million head have been culled in the 10-month period, up 126,300 or 5.1 percent from 2017.
Class I falls
The Agriculture Department announced the December base price at $15.05 per hundredweight, down 47 cents from November, $1.83 below December 2017, and the lowest December Class I since 2009 when it was at $13.99.
This is California’s first Federal order Class I base price and the price that individual orders add their specific Class I differential to, to determine that order’s Class I price.
The Federal order Class I base averaged $14.84 in 2018, down from $16.45 in 2017 and compares to $14.80 in 2016. It ranged from a low of $13.36 in March to a high of $16.33 in October.