Dairy cash market still searching
Cash block cheese closed Friday at $1.6350 per pound, up 3 cents on the week and 2 1/4-cents above a year ago, as traders absorbed last week’s August Milk Production and Livestock Slaughter report and anticipated Monday afternoon’s August Cold Storage report.
The barrels fell to $1.36 Friday, down 6 cents on the week, 24 cents below a year ago, lowest CME price since July 23, 2018, and a precarious 27 1/2-cents below the blocks.
Monday’s block price was unchanged while the barrels picked up 2 cents. Traders left the blocks alone Tuesday, after digesting the slightly bullish Cold Storage data, but rolled the barrels down 4 cents, to $1.34, widening the spread to 29 1/2-cents.
FC Stone reported in its Sept. 14 Early Morning Update that American cheese demand in July was 5.8 percent above a year ago, but down 7.1 percent versus previous-month levels, according to USDA’s Livestock, Dairy, and Poultry Outlook.
Demand for the “other” cheese category increased 7.4 percent from 2017 levels and was 0.8 percent higher than month-earlier levels. Total cheese use was up 6.8 percent from a year ago but 2.4 percent below June. 2018 American cheese use is 3.1 percent higher and other than American cheese use is up 2.7 percent, which puts total cheese use up 2.9 percent.
Dairy Market News reports that cheese sales have slipped for some Midwest producers though the drop-off did not come as a surprise to contacts who have seen barrel prices slide more than 20 cents below the blocks.
Western cheese output is steady to higher than expected due to readily available milk at some localities. Inventories remain abundant but not burdensome. Domestic orders are solid. International demand is generally good, though cheese prices have been declining and some participants have put off purchases and are reevaluating conditions.
Cash butter climbed to $2.3050 Wednesday but plunged 7 cents Friday, closing at $2.2350 per pound, unchanged on the week but 21 1/4-cents below a year ago.
The butter jumped 4 cents Monday and added a half-cent Tuesday, closing at $2.28.
Cream availability has lightened in the Central region. Butter sales reports continue to be mostly bullish, says DMN.
Western butter continues at a steady pace, with adequate amounts of cream however bulk butter demand has softened as buyers appear to have most of their needs filled for the year.
Grade A nonfat dry milk closed Friday at 87 1/4-cents per pound, down a quarter cent on the week but a nickel above a year ago.
Monday’s powder was unchanged but inched a quarter-cent higher Tuesday, to 87 1/2-cents per pound.
Nonfat dry milk use dropped 13.9 percent in July and butter demand was 12.4 percent higher, compared with previous-year levels.
Spot dry whey climbed to a record 52 1/2-cents per pound Tuesday but closed Friday at 51 1/2-cents, down three-quarters on the week, first decline in the new market since July 24, 2018.
It gained three-quarters both Monday and Tuesday, setting another record high 53 cents per pound.
August milk up
Increased milk per cow coaxed U.S. milk output to climb in August more than most expected. The latest data for the top 23 states put output at 17.2 billion pounds, up a bearish 1.4 percent from August 2017 and the 57th consecutive month output topped year ago levels.
The 50-state total, at 18.3 billion pounds, was also up 1.4 percent. Revisions added 16 million pounds to the July estimate, now put at 17.3 billion pounds, 0.5 percent above a year ago.
Cow numbers in the 50 states totaled 9.4 million head, up 5,000 from July but 4,000 less than a year ago, the second time cow numbers were below a year ago since May 2016. Output per cow averaged 1,946 pounds, up 27 pounds from a year ago.
California was up 1.2 percent, highest August volume since 2015, thanks to a 35-pound gain per cow offsetting a loss of 12,000 cows from a year ago. Wisconsin was up 1.4 percent on a 35-pound gain per cow but 4,000 fewer cows were milked.
Idaho climbed 0.9 percent, thanks to 4,000 more cows and a 5-pound increase per cow. New York was up 1.7 percent, on a 40-pound gain per cow outweighing the loss of 2,000 cows. Pennsylvania was down 2.6 percent on 6,000 fewer cows and a drop of 25 pounds per cow.
Minnesota was up 1.4 percent, on a 50-pound gain per cow offsetting a loss of 6,000 cows.
Michigan was down 0.6 percent, on 5,000 fewer cows, though output per cow was up 10 pounds. New Mexico was up 0.4 percent, on a 30-pound gain per cow outweighing 3,000 fewer cows milked. Everything is big in Texas and so was milk output, up a whopping 9.5 percent, on a 105-pound gain per cow and 20,000 more cows. Washington state was up 2 percent on a 25-pound gain per cow and 2,000 additional cows milked.
U.S. dairy cow culling also jumped in August and remained above a year ago. The latest Livestock Slaughter report shows an estimated 279,700 head were slaughtered under federal inspection, up 39,900 from July and 14,100 or 5.3 percent above a year ago. A total 2.1 million head were culled in the eight-month period, up 101,400 head or 5.1 percent from 2017.
Stocks top 2017
August butter stocks saw another good drawdown but remain above August 2017, according to the latest Cold Storage data. The Aug. 31 inventory fell to 290.8 million pounds, down 27.5 million pounds or 8.6 percent from July but 10.6 million pounds or 3.8 percent above August 2017.
American type cheese, which includes Cheddar, slipped to 787.3 million pounds, down 36 million pounds, or 4.4 percent from July, and 13.7 million or 1.7 percent below a year ago.
The other cheese category fell to 541.2 million pounds, down 16.2 million pounds from July or 2.9 percent, but 35.5 million or 7.0 percent above a year ago.
That put the total August inventory at 1.36 billion pounds, down 53.5 million pounds or 3.8 percent from July but 25.9 million pounds or 1.9 percent above a year ago and the 46th consecutive month stocks were above a year ago.