Dairy prices continue to slip
After weighing last week’s February Milk Production and Cold Storage reports, plus Tuesday’s GDT, traders took the Cheddar blocks to a Friday close of $1.5450 per pound, down 4 cents on the week and 3 cents below a year ago. The barrels finished at $1.51, down a nickel on the week and three-quarter cents below a year ago when they plunged 10 1/4-cents.
The blocks were unchanged Monday and Tuesday. The barrels lost a penny Monday and stayed there Tuesday, at $1.50.
Dairy Market News reports that demand for cheese is trending up. “Manufacturers of most varieties and styles are reporting bullish ordering ahead of the spring holidays. On the other hand, for some Midwestern producers, Northeastern weather continues to hinder sales as the fourth “nor’easter” in three weeks struck the densely populated customer base.”
Spot milk prices are discounted $3 to $4 under Class, with no shortage of milk offers. Cheese inventories are generally long, but vary from manufacturer to manufacturer. Some barrel producers are suggesting their stocks are lighter than expected.
Although milk availability is ample, some Western cheese processors are not running at full capacity but are planning to increase output in the coming weeks as the spring flush gets near. Overall, cheese supplies are “copious,” says DMN. “Some cheese outputs are being stocked for future usage as current demand, although strong, seems to still be below total production levels. Export market activities are flat and are expected to remain the same unless domestic or international cheese prices change.”
The Daily Dairy Report’s (DDR) Sarina Sharp warned in the March 16 Milk Producers Council newsletter that improved export demand has helped cheese prices, “but domestic demand accounts for about 95 percent of cheese consumption. It’s going to be hard to make a dent in the massive cheese stockpile without a hearty domestic hunger for cheese.”
Cash butter finished last week at $2.19 per pound, down 2 cents but 6 cents above a year ago, with 39 carloads exchanging hands on the week.
Monday’s butter was down a penny and held there Tuesday at $2.18.
Butter producers report that demand is at or near expectations, according to DMN. “Undoubtedly, spring holiday orders have been fulfilled and production is generally quieter. A number of Central butter makers are buying from the Western region where cream supplies, along with discounted spot loads, are abundant.
Western butter makers are “seeing the window of spring holiday demand starting to close,” and export demand has been slow to develop. “Manufacturers are not overly concerned, however with plenteous amounts of cream and active butter production, many expect butter inventories to grow.”
Spot Grade A nonfat dry milk closed Friday at 69 1/4-cents per pound, up three quarter-cents on the week but 13 cents below a year ago.
The powder was unchanged Monday but inched up a half-cent Tuesday, to 69 3/4-cents per pound.
Cash dry whey closed its second week of existence at 28 3/4-cents per pound, down a half-cent on the week, with no sales reported. The latest Ag Market Service surveyed dry whey price dropped 1.4 cents to 24.06 cents per pound.
Monday’s whey was unchanged but it crept a quarter-cent higher Tuesday on a sale, to 29 cents per pound.
Dairy stocks high
Dairy product inventories saw large gains in February, particularly on butter. The Agriculture Department’s latest Cold Storage report shows February 28 butter stocks swelled to a just under 277 million pounds, up 50.2 million pounds or 22.1 percent from January and 7 million or 2.6 percent above February 2017. Revisions added 2.8 million pounds to the January total.
American type cheese grew to 762.7 million pounds, up 20.9 million pounds or 2.8 percent from January and 18.1 million or 2.4 percent above a year ago. Revisions added 3.6 million pounds to the January inventory.
The other cheese category totaled 523.5 million pounds, up 15.4 million pounds or 3.0 percent from January and 68.7 million or 15.1 percent above a year ago.
That nudged the total cheese inventory to 1.3 billion pounds, up 35.5 million pounds or 2.8 percent from January and 87.7 million or 7.2 percent above a year ago.
Class I up
The April Federal order Class I base milk price was announced at $14.10 per hundredweight, up 74 cents from March but $1.95 below April 2017. It equates to $1.21 per gallon, up from $1.15 in March and compares to $1.45 a year ago.
The four month average is at $14.29, down from $16.78 at this time a year ago and $14.30 in 2016.
Dairy cow culling dropped sharply in February but was still above February 2017. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 260,700 head were slaughtered under federal inspection in February, down 29,100 head from January but 7,500 above a year ago, up almost 3 percent. A total 550,400 head were “retired” from the dairy business in the first two months of 2018, up 28,100 head or 5.4 percent.