Dairy markets trying to climb
CME block Cheddar closed Aug. 3 at $1.5875 per pound, up 6 3/4-cents on the week and the highest since June 18, but 11 cents below a year ago.
The barrels finished at $1.4750, down 4 1/2-cents and 5 1/2-cents below a year ago.
The blocks were down 1 3/4-cents Monday but regained three-quarters Tuesday, climbing back to $1.5775. The barrels gained a penny Monday and stayed there Tuesday, at $1.4850, 9 1/4-cents below the blocks.
FC Stone’s Dave Kurzawski wrote in his Aug. 2 Early Morning Update: “The relationship between blocks and barrels has been exacerbated by trade wars as less cheese exports means more surplus milk will move into barrel production that will have to find a home domestically.”
Dairy Market News reports that pizza cheesemakers are gearing up for heavier sales as schools and colleges prepare to open their doors and football season draws near. Cheese producers are “slightly anxious, but hopeful regarding some steadiness moving forward in the cheese markets.”
Western cheese output is steady and manufacturers have plenty of milk. Even with summer heat suppressing milk volumes and components, cheese output has been active and June inventories were at record levels.
Butter finished Friday at $2.32 per pound, up 5 3/4-cents and the fourth consecutive week of gain, but 41 cents below a year ago.
Monday’s butter lost a penny and a half but gained back the penny Tuesday, hitting $2.3150.
Kurzawski said he “hasn’t heard too many people talking about consistently lower ice cream production in the country, but June’s production was down 4.7 percent with California down a whopping 38 percent. More than likely this means more cream will need to find a home at a churn.”
DMN says butter makers continue to sell cream to the spot market instead of churning. They maintain that retail and food service sales are meeting expectations. Fall outlooks are mixed but most “lean bullishly, with suggestions that the lack of churning currently will lead to a balanced, if not favorable, supply-demand ratio.”
Tighter cream stocks are restricting Western butter manufacturing as ice cream and butter makers compete for cream. Issues with truck availability combined with higher temperatures are making it tougher to move cream in some areas.
Cash Grade A nonfat dry milk closed a penny higher last week, at 82 3/4-cents per pound, 3 1/2-cents below a year ago.
Spot powder inched a quarter-cent higher Monday and added another three-quarters Tuesday, arriving at 83 3/4-cents per pound.
Dry whey closed Friday at 43 1/2-cents per pound, up a penny on the week.
It was unchanged Monday but inched a quarter-cent higher Tuesday, to a fresh high for the new market at 43 3/4-cents per pound.
There wasn’t a lot to see in Tuesday’s Global Dairy Trade auction, or was there?
The weighted average was unchanged, after falling 1.7 percent on July 17 and 5.0 percent July 3. Sellers brought 75.1 million pounds of product to sell, up from 56.1 million last time and the most since Nov. 21, 2017.
The losses were led by buttermilk powder, down 5.9 percent. Butter was down 3.2 percent, after plunging 8.1 percent last time, and skim milk powder was off 0.3 percent, following a 0.8 percent rise.
Rennet casein led the gains, up 8.0 percent, after it led the declines last time, falling 9.5 percent. Cheddar was up 1.3 percent, after dropping 3.3 percent. Anhydrous milkfat was up 1.2 percent, after falling 5.2 percent last time, and whole milk powder inched 0.1 percent higher, after gaining 1.5 percent last time.
FC Stone equates the GDT 80 percent butterfat butter price to $2.1250 per pound U.S. CME butter closed Tuesday at $2.3150. GDT Cheddar equated to $1.6614 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.5775. GDT skim milk powder averaged 89.47 cents per pound U.S. and whole milk powder averaged $1.3419. CME Grade A nonfat dry milk closed Tuesday at 83 3/4-cents per pound.
The July Federal order Class III benchmark milk price is $14.10 per hundredweight, down $1.11 from June, $1.35 below July 2017, and the lowest Class III since February 2018. It equates to $1.21 per gallon, down from $1.33 a year ago.
The seven-month Class III average is $14.37, down from $16.02 at this time a year ago and compares to $13.73 in 2016.
Monday’s Class III futures settlements portend an August price at $14.82; September, $15.48; October, $15.97; November, $16.03; and December at $15.86.
The Class IV price is $14.14, down 77 cents from June, $2.46 below a year ago, and the lowest Class IV since April 2018. Its seven-month average is at $13.73, down from $15.30 a year ago and compares to $13.42 in 2016.
California’s July Class 4b cheese milk price is $14.09 per cwt., down 34 cents from June, $1.20 below a year ago, a penny below the FO Class III price (smallest differential since February’s 2 cents) and the lowest 4b price since March 2018.
Its seven-month average is at $14.06, down from $15.14 a year ago and compares $13.02 in 2016.
The Class 4a butter-powder milk price is $13.72, down 50 cents from June and $2.69 below a year ago.
Its seven-month average is at $13.42, down from $15.07 a year ago and compares to $13.11 in 2016.
Wisconsin No. 1
USDA’s latest Dairy Products report shows June cheese output totaled 1.06 billion pounds, down 1.9 percent from May but 1.8 percent above June 2017. Year-to-date output stands at 6.4 billion pounds, up 2.2 percent from this time a year ago. June was the 63rd consecutive month output exceeded that of a year ago.
Wisconsin remains the No. 1 cheese producer, hitting 276.5 million pounds in June, down 3.1 percent from May and 0.7 percent below a year ago. No. 2 California produced 204.98 million pounds, down 5.5 percent from May and 1.1 percent below a year ago. Idaho provided 83.7 million pounds, up 8.1 percent from May and 1.1 percent above a year ago.
Italian cheese totaled 449.7 million pounds, down 1.8 percent from May and 0.1 percent below a year ago. Year to date Italian is at 2.7 billion pounds, up 2.4 percent from a year ago. Mozzarella, at 354.4 million pounds, was up 1.4 percent, with YTD at 2.1 billion pounds, up 2.7 percent.
American type cheese production totaled 430.5 million pounds, down 2.9 percent from May but 2.7 percent above a year ago, with YTD at 2.6 billion pounds, up 1.6 percent. Cheddar output, the cheese which is traded daily at the CME, totaled 314.1 million pounds, down 1.8 percent from May but 4.0 percent above a year ago, with YTD Cheddar at 1.89 billion pounds, down 0.9 percent.
Churns produced 143.5 million pounds of butter, down 14.7 percent from May but 3.1 percent above a year ago. YTD output is at 1.02 billion pounds, up 4.1 percent.
California butter totaled 44.5 million pounds, down 12.3 percent from May but a generous 9.5 percent above a year ago.
Dry whey for human consumption totaled 85.9 million pounds, up 2.9 percent from May and down 0.8 percent from a year ago. Stocks totaled 71.3 million pounds, up 7.4 percent from May but 13.1 percent below those a year ago.
Nonfat dry milk production totaled 148.2 million pounds, down 7.3 percent from May and 9.0 percent below a year ago. YTD output stands at 968.8 million pounds, up 0.8 percent. Stocks climbed to a hefty 301.9 million pounds, up 31.2 million pounds or 11.5 percent from May and are 4.1 million pounds or 1.4 percent above those a year ago.
Skim milk powder production totaled 58.9 million pounds, up 16.9 percent from May and 49.1 percent above a year ago. YTD skim is at 284.2 million pounds, down 2.1 percent from a year ago.