Dairy Market: Cheese in the cellar
CME cash cheese prices ended November strengthened but still in the cellar. Block Cheddar, after dropping 10 3/4-cents Thanksgiving week, finished last week and the month at $1.36 per pound, up 1 1/2-cents on the week but 9 1/2-cents below its November 1 level, and a hefty 20 1/4-cents below a year ago.
The barrels closed Friday at $1.3150, up 7 1/2-cents on the week, after plunging 12 cents the previous week, but was 6 cents lower on the month, and 22 cents below a year ago. There were 7 cars of block sold last week, 71 on the month, plus 8 cars of barrel sold on the week, with 44 on the month.
The first day of trading in December left the blocks unchanged but the barrels rolled 3 1/2-cents lower, to $1.28. Both were unchanged Tuesday, as traders weighed the morning’s GDT reversal and anticipated the afternoon’s October Dairy Products report.
Midwest cheese production has slowed, reports Dairy Market News, and some plants are shifting away from barrel production to other varieties, such as curds, or selling milk into bottling. Shredded cheese demand is reportedly strong. Other orders are “average to slow,” according to a growing number of contacts.
Western cheese prices are low and overall U.S. cheese prices are lower than those of the European Union. Western processors are seeing more demand from the export market, particularly from Mexico.
However, the general market undertone seems mixed as some players said they saw more pushback on cheese demand last week. Cheese output remains active as milk is plentiful and cheese is abundant in the West.
October Cold Storage data was a bit bullish for butter but that didn’t do much for the CME price. It closed the week and the month at $2.2425 per pound, down 3 3/4-cents on the week and 5 3/4-cents lower on the month, but is 2 3/4-cents above a year ago when it fell 14 cents. 7 cars sold on the week, 59 on the month.
Monday’s butter was unchanged but lost a penny Tuesday, slipping to $2.2325.
Butter markets typically see a significant decline this time of year, says DMN. The difference of the weekly average CME butter market price, between weeks 48 and 52, from 2013 to 2017, was a decrease of 24.15 cents. Contacts are concerned about the potentiality of a large drop-off this year. Cream is becoming more available for butter in the region, although some suggest the momentum is slow to build. Butter inventories are “balanced to declining,” reports DMN.
Western contacts say retail sales have been strong and print orders are coming in for the final holiday push. Butter inventories are seasonally lower but butter makers know they will have the opportunity to rebuild stocks after the holidays.
Grade A nonfat dry milk saw a Nov.30 close at 90 1/2-cents per pound, up three-quarters on the week, up 1 1/4-cents on the month, and 18 1/2-cents above a year ago. 17 cars exchanged hands on the week and 69 for the month.
The powder gained a penny Monday and held there Tuesday at 91 1/2-cents per pound.
Dry whey closed Friday at 43 1/2-cents per pound, up a penny on the week but 1 1/4-cents lower on the month, with 11 cars selling on the week and 86 for the month.
The whey eased back a half-cent Monday but regained a quarter-cent Tuesday, inching up to 43 1/4-cents per pound.
GDT up 2.2 percent
The proverbial "light at the end of the tunnel" was seen in Tuesday’s Global Dairy Trade auction, perhaps driven in part by the U.S. and China’s agreement for a 90-day moratorium in their tariff war.
The weighted average of products offered jumped 2.2 percent, which followed a 3.5 percent drop on Nov. 20 and a 2.0 percent decline on Nov. 6, and ended seven consecutive sessions of decline. Sellers brought 80.4 million pounds to market, down from 94.7 million in the previous session which was the largest amount this year.
Gains were led by buttermilk powder, up 16.9 percent, followed by anhydrous milkfat up 3.9 percent, after plunging 9.4 percent on November 20. Butter was up 2.7 percent, after leading the declines last time with a 9.6 percent drop, and whole milk powder was up 2.5 percent, after dropping 1.8 percent last time. Rennet casein was up 2.0 percent, lactose was up 0.5 percent, and skim milk powder inched up 0.3 percent, after it saw a 1.6 percent decline last time.
The only loss was in Cheddar, down 2.2 percent, after it inched 0.2 percent higher last time.
FC Stone equates the GDT 80 percent butterfat butter price to $1.6573 per pound U.S., up 4.8 cents from the last session but is 36.7 cents below where it was a year ago. CME butter closed Tuesday at $2.2325. GDT Cheddar cheese equated to $1.4443 per pound, down 3.1 cents from the last event, 23.2 cents below a year ago, and compares to Tuesday’s CME block Cheddar at $1.36.
GDT skim milk powder averaged 89.35 cents per pound, up from 89.13 cents last time, and whole milk powder averaged $1.2095, up from $1.1789. CME Grade A nonfat dry milk closed Tuesday at 91 1/2-cents per pound.
Milk feed ratio up
A higher U.S. All Milk price average and some lower prices on feed pushed the October milk feed price ratio higher for the third month in a row and the highest level since January 2018, but farm margins have since fallen. The Agriculture Department’s latest Ag Prices report shows the October ratio at 2.20, up from 2.10 in September but down from 2.47 in October 2017.
The U.S. All-Milk price averaged $17.40 per hundredweight (cwt.), up 70 cents from September but 70 cents below October 2017.
The national average corn price in October averaged $3.41 per bushel, up 2 cents from September and 15 cents per bushel above October 2017. Soybeans averaged $8.58 per bushel, down 19 cents from September and 60 cents per bushel below a year ago. Alfalfa hay averaged $178 per ton, down $2 from September but $25 per ton above a year ago.
The milk-over-feed margin was up 70 cents from September, at $8.96 per cwt., based on the Margin Protection Program calculation, highest margin of the year but still $1.17 below a year ago.
Looking at the cow side of the ledger, the October cull price for beef and dairy combined averaged $57.80 per cwt., down $3 from September, $7.60 below October 2017 and $13.80 below the 2011 base average of $71.60 per cwt.