Dairy markets dip, then reverse
Cash markets were mostly lower in the Fourth of July holiday-shortened week, thanks to the Global Dairy Trade auction and the uncertainty in the overall global market.
The Cheddar blocks closed Friday at $1.5425 per pound, down 1 1/4-cents on the week and a penny below a year ago. The barrels finished at $1.2450, down 14 1/2-cents on the week, 13 cents below a year ago, the lowest CME price since July 30, 2009, and a whopping 29 3/4-cents below the blocks.
Monday’s and Tuesday’s block price was unchanged, as traders awaited the afternoon’s World Agricultural Supply and Demand Estimate report which includes the USDA’s latest projections on U.S. milk production and milk prices. The barrels were up 1 3/4-cents Monday and jumped 7 1/2-cents Tuesday, to $1.3375.
Cheese demand is slipping, according to Midwestern producers’ reports to Dairy Market News, and there is growing concern over the markets. Milk supplies in the region have yet to taper and were as low as $5 under class.
Some Western manufacturers are cutting output but abundant milk supplies are keeping cheese output active. Trade issues are unsettling the market.
DMN also reports that European Union cheese output was up 2.1 percent in the first four months of 2018, though the market has been absorbing it. Some reports suggest that the current trade dispute may create even more international sales for EU cheese.
The bleeding butter price stopped Friday at $2.17 per pound, down 9 3/4-cents on the week, the lowest CME price since Feb. 22, 2018, and 41 1/2-cents below a year ago.
Monday’s butter jumped 3 cents and added 2 1/2-cents Tuesday, climbing back to $2.2250.
DMN says butter sales have softened and cream has been available further into the summer this year than expected but butter makers say they are continuing to pack away supplies for the fall.
Western stocks are heavy and more than enough to meet customer needs.
Grade A nonfat dry milk closed Friday at 77 1/4-cents per pound, up 2 1/2-cents on the week but 9 1/2-cents below a year ago.
The powder was unchanged Monday and Tuesday.
Friday’s dry whey closing was at 39 cents per pound, 1 3/4-cents lower on the week, with 3 cars sold at the CME.
Monday’s whey was up three-quarter-cents and it gained three-quarters Tuesday, climbing back to 40 1/2-cents per pound.
The nation’s June Federal order Class III benchmark milk price crept to the highest level in six months, but that’s not saying much. The Agriculture Department announced the June Class III price at $15.21 per hundredweight, up just 3 cents from May but $1.23 below June 2017 and 78 cents above California’s comparable 4b cheese milk price. It equates to $1.31 per gallon, down from $1.41 a year ago.
That put the six-month average at $14.41, down from $16.12 a year ago and compares to $13.48 in 2016.
Class III futures, as of Monday’s settlements, portended a July Class III at $14.16; August, $14.52; September, $15.06; October, 15.35; November, $15.41 and December at $15.38.
The Class IV price is $14.91, up 34 cents from May, 98 cents below a year ago but the highest Class IV since September 2017. Its six-month average is at $13.67, down from $15.08 a year ago and compares to $13.18 in 2016.
The latest Dairy Products report shows May cheese output totaled 1.09 billion pounds, up 1.7 percent from April and 1.4 percent above May 2017. Year-to-date output stands at 5.36 billion pounds, up 2.5 percent from this time a year ago.
Wisconsin produced 287.5 million pounds of that cheese, up 1.1 percent from April and 0.5 percent above a year ago. California output totaled 216.8 million pounds, up 2.9 percent from April but 1.3 percent below a year ago.
Idaho provided 77.4 million pounds, down 9.5 percent from April and 2.1 percent below a year ago.
Italian cheese totaled 457.2 million pounds, up 0.4 percent from April and 1.1 percent above a year ago. Year to date (YTD) Italian is at 2.3 billion pounds, up 2.8 percent from a year ago. Mozzarella, at 356.3 million pounds, was up 1.7 percent, with YTD at 1.78 billion pounds, up 2.8 percent.
American type cheese production totaled 442.7million pounds, down 0.1 percent from April and 0.1 percent below a year ago, with YTD at 2.16 billion pounds, up 1.3 percent.
Cheddar output, the cheese traded at the CME, totaled 317.5 million pounds, down 0.4 percent from April and 3.0 percent below a year ago, with YTD Cheddar at 1.57 billion pounds, down 1.9 percent.
U.S. churns produced 167.9 million pounds of butter, down 4.2 percent from April but 2.8 percent above a year ago. YTD output is at 877.5 million pounds, up 4.3 percent.
Yogurt output amounted to 373.9 million pounds, down 2.9 percent from a year ago, with YTD hitting 1.9 billion pounds, down 3.1 percent.
Dry whey totaled 85.6 million pounds, up 3.2 percent, with YTD output at 441.3 million pounds, up 6.5 percent. Stocks totaled 78.9 million pounds, up 15.2 percent from April but 7.8 percent below those a year ago.
Nonfat dry milk production totaled 160.4 million pounds, down 2.1 percent from April and 4.5 percent below a year ago. YTD output stands at 821.1 million pounds, up 2.8 percent. Stocks slipped to 271.4 million pounds, down 2 million pounds or 0.7 percent from April and are 8.7 million pounds or 3.1 percent above those a year ago.
Skim milk powder production totaled 50.4 million pounds, up 1.9 percent from April but 1.9 percent below a year ago. YTD skim is at 225.3 million pounds, down 10.2 percent from a year ago.
The California Department of Food and Agriculture announced the Golden State’s August Class I milk price at $16.14 per hundredweight for the north and $16.41 for the south. Both are down 72 cents from July and $2.18 below August 2017. These are the lowest August Class I prices since the disastrous year of 2009 when they were at $11.71 and $11.98 per cwt., respectively.
The eight month average stands at $16.12 for the north, down from $17.84 a year ago and compares to $15.49 in 2016. The southern average, at $16.40, is down from $18.11 a year ago compares to $15.76 in 2016. The August Federal order Class I base milk price will be announced by the USDA on July 18.