Dairy prices begin to climb
Dairy prices were mostly higher last week. Cheddar block cheese closed Friday at $1.6025 per pound, up 7 1/4-cents on the week and 14 1/4-cents above a year ago.
The barrels finished at $1.45, up a penny and 1 1/2-cents above a year ago. Six cars of block were traded on the week at the CME and 32 of barrel.
The blocks were unchanged Monday but jumped 3 3/4-cents Tuesday, to $1.64, highest price since Nov. 16, 2017. The barrels were up 2 3/4-cents Monday to narrow the gap, but stayed there Tuesday at $1.4775, a still too high 16 1/4-cent spread.
Cheese demand is mixed, says Dairy Market News. Reversing a trend from previous weeks, Italian style cheesemakers report steady to increased sales. While traditional style cheesemakers, who have recently provided generally positive demand reports, are relaying decreasing sales in some cases. More cheesemakers are taking discounted spot milk, with prices ranging $2.50 to $5 under Class and milk offers are prevalent.
Western cheese is active as milk continues to be readily available with the spring flush. “Some contacts report that prices are not reflecting the current condition of the market. Cheese inventories/production are more than demand; therefore, according to contacts, prices are supposed to be lower than they are.”
Cash butter shot up 9 1/2-cents last Wednesday to $2.3350 per pound, despite a lot of product finding its way to Chicago, but closed Friday at $2.2875, up 7 1/4-cents on the week and 19 cents above a year ago, with 51 cars sold last week. Monday’s butter jumped 3 1/4-cents and stayed there Tuesday, at $2.32, with 23 cars trading hands plus 12 on Monday.
Cream headed for the churns is not where some butter producers were expecting following the holiday. Butter demand is not slowing and contacts say the increased cold storage data has not affected overall market positivity.
Western butter makers report spring holiday retail sales were good but orders have slowed. Cream is readily available, butter production is vigorous, and inventories are heavy and growing.
Cash Grade A nonfat dry milk closed Friday at 72 3/4-cents per pound, up 3 3/4-cents on the week but 8 1/4-cents below a year ago.
The powder was steady Monday but inched three-quarters higher Tuesday, to 73 1/2-cents per pound.
Spot dry whey finished at 32 cents per pound, up 3 1/2-cents on the week.
It lost a penny both Monday and Tuesday, slipping to 30 cents per pound.
The March Federal order Class III benchmark milk price started climbing out of its hole and hit $14.22 per hundredweight, up 82 cents from February but is $1.59 below March 2017. It is 26 cents above California’s comparable 4b cheese milk price and equates to $1.22 per gallon, up from $1.15 in February and compares to $1.36 a year ago. The First Quarter average is at $13.87, down from $16.49 at this time a year ago and compares to $13.75 in 2016.
Monday’s Class III futures portended an April price of $14.46; May, $14.87; and June at $15.19, with a peak at $16.16 in September.
The March Class IV price is $13.04, up 17 cents from February but $1.28 below a year ago. Its First Quarter average stands at $13.01, down from $15.37 a year ago and compares to $13.75 in 2016.
The Agriculture Department left its 2018 milk production forecast in Tuesday’s World Agricultural Supply and Demand Estimates report unchanged.
2018 production and marketings remain at 219.0 and 218.0 billion pounds, respectively. If realized, 2018 production would be up 3.5 billion pounds or 1.6 percent from 2017.
The Class III milk price average was lowered, based on a lower whey price forecast. Look for a 2018 average of around $14.45 per cwt., down 15 cents from last month’s projection, and compares to the 2017 average of $16.17 and $14.87 in 2016.
The Class IV price estimate was lowered, based on the lower NDM and butter price forecasts. It is estimated to average around $13.55, down a nickel from last month’s estimate, and compares to $15.16 in 2017 and $13.77 in 2016.
Output above 2017
USDA’s latest Dairy Products report pegged February cheese output at 981.6 million pounds, down 10.5 percent from January but 4.2 percent above February 2017. That put the two-month total at 2.08 billion pounds, up 4.6 percent from a year ago.
Italian cheese totaled 423.9 million pounds, down 10.6 percent from January but 4.3 percent above a year ago. Year to date Italian cheese sits at 898.3 million pounds, up 4.4 percent from a year ago. Mozzarella, at 325.9 million pounds, was up 3.5 percent, with YTD at 692.9 million pounds, up 3.9 percent.
American type cheese production totaled 396.6 million pounds, down 8.5 percent from January but 6.1 percent above a year ago, with YTD at 830.3 million pounds, up 4.9 percent. Cheddar output, the cheese traded at the CME, totaled 291.8 million pounds, down 8.3 percent from January but 5.7 percent above a year ago, with YTD Cheddar hitting 610.0 million pounds, up 3.8 percent.
Churns produced 168.6 million pounds of butter, down 7.4 percent from January but 4.7 percent above a year ago. YTD butter output is at 350.7 million pounds, up 3.5 percent. Dry whey totaled 89.4 million pounds, up 14.6 percent, with YTD output at 179.7 million pounds, up 12.1 percent. Stocks totaled 88.6 million pounds, down 1.8 percent from January but 24.8 percent above those a year ago.
Nonfat dry milk production totaled 158.5 million pounds, down 1.1 percent from January but 12.1 percent above a year ago. YTD, NFDM output stands at 318.8 million pounds, up 8.2 percent. Stocks climbed to 323.99 million pounds, up 17 million or 5.5 percent from January and 61.9 million pounds or 23.6 percent above a year ago. January stocks were revised sharply lower to the tune of 33.2 million pounds.
Skim milk powder production totaled 36.5 million pounds, down 20.3 percent from January and 8.9 percent below a year ago.