Cheese prices reverse course
CME cash cheese prices headed lower again last week as traders absorbed the neutral to bearish December Milk Production and Cold Storage reports.
Block Cheddar, after jumping 11 cents the previous week, closed Friday at $1.4725 per pound, down 9 1/4-cents on the week and 21 1/2-cents below a year ago.
The barrels finished at $1.32, down 2 1/2-cents and 12 3/4-cents below a year ago. Nine cars of block were sold on the week and 20 of barrel.
The blocks were down a half-cent both Monday and Tuesday, slipping to $1.4625 per pound. The barrels held both days at $1.32, an unsustainable 14 1/4-cents below the blocks.
Central cheese plant managers are experiencing seasonal slowdowns, according to Dairy Market News, and taking time to make updates and repairs while others continue seven-day workweeks, and plan to for the foreseeable future.
Some discounted spot milk changed hands and a number of cheese producers reported that offers have yet to decrease. Barrel processors are “facing a stark disadvantage right now regarding market prices,” and continue to report fairly slow orders.
Central cheese inventories vary but “the market tone has yet to find its footing,” according to DMN. “Much of the last quarter of 2017 presented cheese sellers and buyers with a confounding inverted price gap. Up to this point in 2018, the price gap, although no longer inverted, has grown to what contacts assert to be antithetical to a stable market.”
Readily available milk in the West is stimulating more cheese production. Cheese supplies remain substantial despite processors’ efforts to keep inventories in check. Super Bowl interest for mozzarella is helping support the market. International cheese inquiries are slower for some sellers, while others report strong demand partly due to the recent drop in prices.
Cash butter closed Friday at $2.13 per pound, a penny higher on the week but 9 cents below a year ago, with 12 cars exchanging hands last week.
The butter was steady Monday but inched up a penny and a quarter Tuesday, to $2.1425.
A snowstorm early in the week saw Central butter plants in affected areas down on employees and forced to reduce output. Hauling delays and trucking obstacles were also reported.
Western butter makers say the market tone is “quiet” but butter output is “active amidst abundant supplies of cream and manufacturers are running churns near capacity.”
Cash Grade A nonfat dry milk ended the week at 71 cents per pound, up a quarter-cent but 23 3/4-cents below a year ago.
The powder was down a half-cent Monday and stayed there Tuesday, at 70 1/2-cents per pound.
Milk up 1.2 percent
December U.S. milk output was up for the 48th consecutive month and totaled 17.0 billion pounds in the top 23 states, according to preliminary USDA data, up 1.2 percent from December 2016. The 50-state total, at 18.0 billion pounds, was up 1.1 percent. Revisions lowered the November 23-state estimate 24 million pounds, to 16.2 billion, up just 1.0 percent.
December milk cow numbers totaled 8.74 million head in the 23 states, up 3,000 from November and 54,000 more than a year ago. The 50-state total, at 9.4 million head, was up 1,000 from November and 47,000 above a year ago. Output per cow averaged 1,943 pounds in the 23 states, up 11 pounds.
The data, pending December revisions, pegs 2017 milk output for the 50 states at 215.43 billion pounds, up almost 3 billion pounds or 1.4 percent from 2016. Cow numbers were up 64,000 and output per cow was up 164 pounds from 2016.
California output was down just 0.3 percent from 2016, thanks to a 10-pound increase per cow, partially offsetting a drop of 14,000 cows. However, that was the 12th consecutive month the Golden State trailed the previous year. Wisconsin was up 1.0 percent, on a 25-pound gain per cow, offsetting a loss of 3,000 head.
New York dropped 2.2 percent on a 60-pound drop per cow, though cow numbers were up 5,000 head. Idaho was off 0.2 percent on a 5-pound drop per cow. Cow numbers were unchanged. Pennsylvania was up 0.5 percent on a 10-pound gain per cow. Cow numbers were unchanged. Minnesota was up 1.1 percent, on a 40-pound gain per cow, offsetting a 5,000 cow loss.
Michigan was up 2.5 percent on a 40-pound gain per cow and 3,000 more cows. New Mexico was up 3.1 percent on 7,000 more cows and a 20-pound gain per cow. Texas was up a tank busting 8.1 percent, thanks to 25,000 more cows and an impressive 55-pound gain per cow. Washington state was down 1.1 percent on a 15-pound loss per cow and 1,000 fewer cows milked.
Plenty in storage
The Agriculture Department’s latest Cold Storage report shows Dec. 31 butter stocks at 169.1 million pounds, up 9.8 million pounds or 6.2 percent from November and 3.1 million, or 1.9 percent above December 2016. The November estimate was revised up 435,000 pounds from last month’s report.
American type cheese, at 746.8 million pounds, was up 13.4 million pounds, or 2 percent from November and 20.4 million or 3 percent above a year ago. The other cheese category totaled 507.3 million pounds, up 1 percent from November and 13 percent above a year ago.
The total cheese inventory stood at 1.28 billion pounds, up 22 million pounds, or 2 percent from November and 82.3 million pounds, or 7 percent above a year ago.
U.S. dairy cow culling was up in December but down from a year ago. The latest Livestock Slaughter report shows an estimated 247,300 head were slaughtered under federal inspection, up 3,600 head from November but 5,700 head below a year ago. Culling in 2017 totaled 2.99 million head, up 102,700 or 3.6 percent from a year ago.