Cheese rally short-lived
Cheese prices rallied the last week of June Dairy Month following two weeks of loss, especially on the barrels. CME block Cheddar closed Friday at $1.5550 per pound, up 6 1/2-cents on the week, 3 cents above a year ago, but down 4 1/4-cents from where it was on June 1.
The barrels, after plunging 28 cents and hitting a 9 year low of $1.2050 last Monday, brought back the buyers and rallied to a Friday close of $1.39, up 10 1/2-cents on the week, 3 3/4-cents above a year ago, but down 13 cents on the month. 5 cars of block traded hands last week at the CME and 80 of barrel. A total of 231 cars of barrels traded hands since June 1 and 62 of block.
The blocks jumped 2 3/4-cents Monday but gave back 3 1/4-cents Tuesday, as traders absorbed the morning’s GDT and prepared to take Wednesday off for the 4th of July, plus anticipated Thursday’s May Dairy Products report. The blocks fell to $1.55.
The barrels shot up 4 cents Monday and dropped 6 3/4-cents Tuesday, dipping to $1.3625, an unsustainable 18 3/4-cents below the blocks.
Dairy Market News says the cheese market is “undoubtedly shaken by a laundry list of bears: trade concerns, cold storage data and recently inconsistent barrel demand to name a few.”
Milk into cheese remains discounted $3 to $4 under Class and plant managers expected discounts to remain into this week. “However, as temperatures rise throughout the country, some are expecting volumes to wane following the holiday week.”
Western sources report that international cheese demand has started to slip and some overseas customers are canceling contractual orders, blaming current trade issues. Some U.S. sellers are adjusting prices down to maintain current contracts. There are additional trade concerns following Mexico’s election of leftist President Andres Manuel Lopez Obrador, a consistent critic of President Trump.
Spot butter, after dipping to $2.2450 per pound last Tuesday, finished Friday at $2.2675, down 2 1/4-cents on the week, 3 3/4-cents below a year ago, and 11 cents lower than its June 1 perch.
It lost a penny and a half Monday, then plunged 5 1/4-cents Tuesday, to $2.20, lowest CME price since March 28, 2018.
Central butter producers, like a number of processors in the dairy industry, are concerned about recent market trends. There still is confidence in the foundation of the butter market but some contacts report a steady to slowing demand. Cream remains available even during the ice cream manufacturing peak.
Western contacts also say butter demand has softened and cream is readily available.
Cash Grade A nonfat dry milk closed Friday at 74 3/4-cents per pound, down 1 1/2-cents on the week, 9 3/4-cents below a year ago, and down 7 3/4-cents from June 1.
Monday’s powder was down three-quarters and stayed there at 74 cents per pound on Tuesday.
Dry whey saw a Friday closing at 40 3/4-cents per pound, up a penny on the week but 2 1/4-cents lower since June 1.
The whey inched up a quarter-cent Monday but lost a penny Tuesday, slipping back to 40 cents per pound.
While the cheese market at the Chicago Mercantile Exchange may have recovered a little lost ground, particularly on barrel cheese, that was not the case in Tuesday’s Global Dairy Trade (GDT) auction where the weighted average of products offered dropped 5.0 percent. That followed a 1.2 percent slippage June 19, a 1.3 percent loss on June 5, and 1.3 percent on June 5.
Sellers brought 58.5 million pounds of product to sell, highest total since Dec. 19, 2017. And, with the global market becoming a dumping ground for powder from Canada, the EU and now India, it should come as no surprise that powder led the declines.
Whole milk powder fell 7.3 percent, following a 1 percent decline on June 19. Skim milk powder was down 4.6 percent after slipping 1.1 percent last time. Cheddar was down 4.3 percent, after it fell 3.6 percent last time, and butter was down 4.0 percent, after inching 0.8 percent higher. Anhydrous milkfat was off 1.7 percent, and follows a 2.5 percent decline last time.
Only two offerings showed positive movement: buttermilk powder was up 6.4 percent and rennet casein was up 3.6 percent.
FC Stone equates the GDT 80 percent butterfat butter price to $2.3850 per pound U.S. CME butter closed Tuesday at $2.20. GDT Cheddar cheese equated to $1.6843 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.55. GDT skim milk powder averaged 86.77 cents per pound and whole milk powder averaged $1.3175. CME Grade A nonfat dry milk closed Tuesday at 74 cents per pound.
Calif. benchmark down
California’s June Class 4b cheese milk price is $14.43 per hundredweight, down 47 cents from May and $1.17 below a year ago. The 4b’s six month average stands at $14.05, down from $15.12 a year ago and compares to $12.75 in 2016.
The Class 4a butter-powder price is $14.22, up 16 cents from May, $1.69 below a year ago, but the highest 4a price since October 2017. The 4a average for the year now stands at $13.37, down from $14.85 a year ago and $12.92 in 2016. Comparable Federal order prices will be announced by the USDA on Thursday.
Milk-feed ratio flat
A higher U.S. All Milk price average could not offset higher feed prices but the May milk feed price ratio was unchanged from April, ending five consecutive months of decline. The Agriculture Department’s latest Ag Prices report shows the May ratio at 1.90, unchanged from April but down from 2.20 in May 2017.
The U.S. All-Milk price averaged $16.20 per cwt., up 40 cents from April but still 50 cents below May 2017. Michigan and New Mexico showed the bottom price at $14.80, with California at $15.66, up 40 cents from April, and Wisconsin at $16.70, also up 40 cents.
May corn averaged $3.67 per bushel, up another 9 cents from April after jumping 7 cents from March, and is 22 cents per bushel above May 2017. Soybeans averaged $9.84 per bushel, up a penny from April and 55 cents per bushel above a year ago. Alfalfa hay averaged $189 per ton, up $6 from April, and $32 per ton above a year ago. The May cull price for beef and dairy combined averaged $66.20 per cwt., down $1.30 from April, $7.10 below May 2017 and $5.40 below the 2011 base average of $71.60 per cwt.