Cheese prices slipping
Cheddar block cheese closed the fourth Friday of July at $2.54 per pound, down 12 cents on the week after losing 25.5 cents the previous week, but was still 71.5 cents above a year ago.
The barrels climbed to $2.4650 last Tuesday, the highest since Sept. 25, 2019, but finished Friday at $2.45, 2 cents higher on the week and 73 cents above a year ago. The spread was reduced to 9 cents; 16 cars of block were sold last week at the CME and 23 cars of barrel.
The blocks tumbled 6 cents Monday and lost 4 cents more Tuesday, slipping to $2.44, lowest CME price since June 1.
The barrels were unchanged Monday but gave up a penny Tuesday on 2 offers, also slipping to $2.44 per pound and matched the block price.
Central cheese buyers are reluctant to take extra loads, according to Dairy Market News, due to the roller coaster prices. Cheese producers are limiting output even though block and barrel supplies are, for the most part, spoken for.
Last week’s cheese purchases were a bit below previous week levels in the west. Retail buyers' intakes were somewhat down and food servicers were limiting purchases of cheese as growing uncertainty related to the coronavirus pandemic is pushing some customers to cut back on their trips to restaurants and hotels.
Butter fell to $1.6625 per pound last Tuesday, lowest CME price since May 29, but closed Friday at $1.73, up 4 cents on the week and the first positive weekly move since the first week of June, but is 64 cents below a year ago. 18 cars were sold last week.
The butter slipped a quarter-cent Monday and was down 1.75 cents Tuesday, dipping to $1.71.
Midwest butter churning is active, says DMN. Plant managers reported clearing spot cream loads at multiples higher than typical weeks, thanks to retail demand and governmental purchasing.
Western butter makers’ attention is on filling retail demand. Print butter production is running at near full schedules. Cream supplies are not an issue, even as ice cream makers pull heavy volumes of cream from the churns. Contacts are concerned about the swell of new COVID-19 cases and fear reinstituted restaurant restrictions may “quell the rise and extend the slump.”
Grade A nonfat dry milk saw a 99-cent per pound finish Friday, a penny lower on the week and 4 cents below a year ago, with 13 sales reported on the week.
Monday’s and Tuesday’s powder was unchanged.
Dry whey closed the week a half-cent lower, at 34 cents per pound, 1.25 cents below a year ago, with only 1 car exchanging hands at the CME.
The whey inched up a quarter-cent Monday and stayed there Tuesday at 34.25 cents per pound.
The Agriculture Department’s June Cold Storage report shows America’s dairy appetite was strong. Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter, said the report was indicative of the country reopening in the July 27 "Dairy Radio Now" broadcast and showed faster than normal drawdowns.
June 30 butter stocks fell to 361.6 million pounds, down an impressive 14.2 million pounds or 3.8% from May, highest June drawdown since 2012, according to HighGround Dairy, but were 35.3 million pounds or 10.8% above a year ago, topping the previous year for the 12th consecutive month.
American type cheese storage totaled 793.3 million pounds, down 26.7 million pounds or 3.3% from May but 8.9 million pounds or 1.1% above a year ago. The five-year average drawdown is typically flat from May to June, according to Gould.
The “other” cheese category slipped to 599.0 million pounds, down 10.9 million pounds or 1.8% from May but was 30 million or 5.3% above a year ago.
The total cheese inventory fell to 1.416 billion pounds, down 38.1 million pounds or 2.6% from May, the steepest June decline on record, but is still 35.6 million pounds or 2.6% above June 2019, the third consecutive month total stocks topped prior year levels.
Gould said that people ask how prices can be so high with inventories being above a year ago and his answer was, “The supply chain has to carry more inventory just because of all the uncertainty, just trying to keep up with the changes, you have to be prepared for what if.”
Dairy cow culling remains below a year ago as farmers try to keep milk tanks full with milk prices being what they are. The latest Livestock Slaughter report shows an estimated 227,000 head were sent to slaughter under federal inspection in June, down 6,300 head or 2.7% from May and 4,200 head or 1.8% below June 2019. A total of 1.59 million head have been culled in the first half of 2020, down 45,200 head or 2.8% from 2019.
StoneX, however, states that “when you account for the increase of imported Canadian cows for slaughter, actual domestic dairy cow slaughter was about 12% lower than year-ago levels. That level of slaughter compared to replacement heifer numbers suggests the herd should have at least been steady in those months, if not increasing. It certainly does not line up with the large declines that the USDA is showing in the Milk Production Report.”
Class I up $3.22
The Agriculture Department announced the August Federal order Class I base milk price at $19.78 per hundredweight, up $3.22 from July, $1.89 above August 2019, and the highest Class I since December 2014. It equates to $1.70 per gallon, up from $1.42 in July and $1.54 a year ago.
The 2020 Class I average stands at $16.42, up from $16.34 at this time a year ago and $14.54 in 2018.