Dairy prices continue to climb
Cash block Cheddar closed the last Friday of April at $1.62 per pound, up 1 3/4-cents on the week, 14 cents above a year ago, and 9 cents higher than it was on April 2.
The barrels finished at $1.4875, down 1 1/4-cents on the week, 7 cents above a year ago, up 4 1/4-cents on the month, but 13 1/4-cents below the blocks. Six cars of block were sold on the week at the CME and 45 of barrel.
The blocks were up a penny Monday and gained 3 more Tuesday, hitting $1.66, highest CME price since Nov. 16, 2017. The barrels were unchanged Monday but pole vaulted 11 1/2-cents Tuesday, to $1.6025, as traders must have liked what they saw in the morning’s GDT auction. That’s the highest barrel price since Dec. 15, 2017 and narrows the spread to a closer to normal 5 3/4-cents.
The cheese market tone remains uncertain, according to Dairy Market News. Cheese demand is generally unchanged and sales are reported as fair to slightly up week over week. Spot milk prices remain discounted, $2 to $4 under Class III.
Western cheesemakers report plenty of milk is flowing through cheese vats but interest from international buyers, looking for favorable price spreads, has aided movement of U.S. cheese into international markets.
Cash butter climbed to $2.38 per pound Thursday but saw a Friday close at $2.36, 4 1/2-cents higher than the previous week and 25 1/2-cents above a year ago, with a whopping 87 cars exchanging hands last week.
The butter was up a penny Monday but gave it back Tuesday.
“World markets are cause for conversation amongst butter producers and analysts in the Central U.S.,” says DMN. “One reason is a top butter exporting country, New Zealand, has experienced milk output declines due to dry weather. Another talking point is that milkfat shortages continue worldwide. There is some uncertainty as to how, or if, U.S. producers will attempt to fill that breach.”
Cream is widely available in the West and churns are actively running, but ice cream manufacturers are starting to take a little more cream, though cream supplies are “lavish,” says DMN. Inventories are building but demand from the international market has also increased due to favorable U.S. prices.
Spot Grade A nonfat dry milk continued the previous week’s rally, skyrocketing to the highest price since September 2017; 84 1/4-cents per pound, 3 3/4-cents higher on the week, just 2 1/2-cents below a year ago, but 15 1/4-cents higher on the month, with 67 carloads sold last week.
Monday saw the powder gain 1 1/4-cents, then drop 3 cents, to 82 1/2-cents per pound.
DMN says “The change in the prices of nonfat dry milk is astonishing to many,” as supplies are “overflowing and production is very active. Others explain the upsurge in prices by the fact that higher international prices are boosting U.S. export demand.”
Spot dry whey closed Friday at 31 cents per pound, down a half-cent.
The whey was unchanged Monday and Tuesday.
Some of the wind in dairy’s global “sales” was taken away in Tuesday’s Global Dairy Trade (GDT) auction. The weighted average of products offered slipped 1.1 percent, following a 2.7 uptick on April 17.
Leading the losses was rennet casein, down 10.5 percent. Anhydrous milkfat was down 1.9 percent, after jumping 5.3 percent last time, and whole milk powder was off 1.5 percent, after it inched 0.9 percent higher.
The gains were led by skim milk powder, up 3.6 percent, which follows a 3.6 percent increase last time. Cheddar was up 3.1 percent and follows a 4.6 percent boost. Lactose inched up 0.6 percent, after leading the gains last time by 14.8 percent.
FC Stone equates the GDT 80 percent butterfat butter price to $2.4991 per pound U.S. CME butter closed Tuesday at $2.36. GDT Cheddar cheese equated to $1.8252 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.66. GDT skim milk powder averaged 90.68 cents per pound and whole milk powder averaged $1.4657. CME Grade A nonfat dry milk closed Tuesday at 82 1/2-cents per pound.
Rising feed cost
A small increase in the U.S. All Milk price average could not overcome sharp increases in corn, soybean, and hay prices and thereby pulled the March milk feed price ratio lower. The Agriculture Department’s latest Ag Prices report shows the March ratio at 1.97 down from 2.03 in February and 2.40 in March 2017.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk today purchases just 1.97 pounds of dairy feed containing that blend.
The U.S. All-Milk price averaged $15.60 per hundredweight (cwt.), up 30 cents from February but $1.70 below March 2017. The low was $14.10 in Michigan, with California at $14.86, up 11 cents from February, and Wisconsin at $16.20, up 60 cents.
March corn averaged $3.51 per bushel, up 13 cents from February and 2 cents per bushel above March 2017. Soybeans averaged $9.81 per bushel, up 32 cents per bushel from February and 12 cents per bushel above a year ago. Alfalfa hay averaged $166 per ton, up $11 from February, and $32 per ton above a year ago.
Looking at the cow side of the ledger, the March cull price for beef and dairy combined averaged $68.90 per cwt., up $3.30 from February, 60 cents below March 2017 and $2.70 below the 2011 base average of $71.60 per cwt.
Milk cows averaged $1,360 per head in April, down from $1,520 in January, and $280 below April 2017. They averaged $1,300 in California, down from $1,500 in January and $1,600 a year ago. Wisconsin cows averaged $1,320 per head, down from $1,470 in January and $1,710 per head in April 2017.