Dairy prices mixed again
Cash dairy product prices were mixed the second week of May. Block Cheddar climbed to $1.7025 per pound last Tuesday, the highest since Nov. 15, 2017, but saw a clo
se Friday at $1.6325, down 3 1/4-cents on the week and a quarter-cent below year ago.
Barrel hit $1.6525 Monday, the highest price since Dec. 15, 2017, but finished at $1.62, up 2 cents on the week and 9 cents above a year ago.
The blocks were up three-quarter-cents Monday and stayed there Tuesday, at $1.64, as traders absorbed the morning’s Global Dairy Trade auction. The barrels lost 2 cents Monday and held there at $1.60 Tuesday.
Dairy Market News reports that Central cheesemakers suggest that buying is day-to-day, as buyers wait for a potential price drop. Others are pleasantly surprised by a continued uptrend in orders. Milk continues at a discounted $1-$4 under Class III. With schools on the verge of closing and spring flush in effect, cheese producers are not expecting milk prices to increase unless unexpected heat brings overall milk production down a lot.
Cheese is moving relatively well out West but buyers are cooling to rising prices.
Butter fell to $2.3025 per pound last Tuesday but closed Friday at $2.3350, down 1 3/4-cents on the week and 7 1/4-cents above a year ago, with 52 cars sold last week.
Monday’s butter inched up a half-cent, then jumped 4 1/4-cents Tuesday with 24 cars sold and hitting $2.3825, highest CME price since Oct. 18, 2017.
DMN says 80-degree days have begun to grace the upper Midwest resulting in a noticeably lighter cream supply, due at least in part to an increase in ice cream manufacturers clearing more cream.
Western butter supplies are steady but churning remains strong. Class II demand for cream is increasing, but not enough to absorb all the cream. Butter exports are strong in that U.S. prices are favorable in the international market.
Cash Grade A nonfat dry milk climbed to 86 cents per pound last Monday, highest price since Sept. 1, 2017. It closed Friday at 85 cents, up three-quarter cents on the week and 1 1/4-cents below a year ago, with 35 cars changing hands.
The powder was down a quarter-cent Monday and stayed there Tuesday, at 84 3/4-cents per pound.
Dry whey closed Friday at 32 1/2-cents per pound, up three-quarter cents on the week. Monday’s whey was up a half-cent and stayed there Tuesday, at 33 cents per pound, highest price since it began trading on March 12, 2018.
Gears reversed in Tuesday’s Global Dairy Trade auction, with the weighted average of products offered rising 1.9 percent, following a 1.1 slip on May 1.
Anhydrous milkfat led the climb, up 5.8 percent, following a 1.9 percent dip on May 1. Cheddar was up 4.4 percent, following a 3.1 percent advance, and skim milk powder was up 3.0 percent, after it advanced 3.6 percent last time. Butter rounded out the gains, up 2.4 percent, it was unchanged in the last event. Rennet casein was down 6.1 percent and lactose was down 3.5 percent.
FC Stone equates the GDT 80 percent butterfat butter price to $2.5607 per pound U.S. CME butter closed Tuesday at $2.3825. GDT Cheddar cheese equated to $1.9072 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.64. GDT skim milk powder averaged 92.87 cents per pound and whole milk powder averaged $1.4634. CME Grade A nonfat dry milk closed Tuesday at 84 3/4-cents per pound.
The Agriculture Department lowered its 2018 milk production forecast in the latest World Agricultural Supply and Demand Estimates report (WASDE), and gave us our first look into 2019. The 2018 forecast was reduced from the previous month on lower milk cow numbers and slow growth in milk per cow.
2018 production and marketings were projected at 218.7 billion and 217.7 billion pounds, respectively, down 300 million pounds from last month’s estimates. If realized, 2018 production would be up 3.2 billion pounds or 1.5 percent from 2017.
2019 production and marketings were estimated at 221.5 billion and 220.5 billion pounds, respectively. If realized, 2019 production would be up 2.8 billion pounds or 1.3 percent from 2018.
Milk output for 2019 was forecast higher on gradual recovery in milk per cow. Cow numbers are expected to remain near 2018 levels.
Commercial exports on both a fat and skim-solids basis were forecast higher than the previous year on robust global demand. Fat and skim-solids basis imports were unchanged from 2018. With stronger expected domestic and export demand, cheese, nonfat dry milk, and whey prices were forecast higher for 2019. Butter prices were forecast slightly lower.
Cheese, butter, NDM and whey prices were raised from the previous month resulting in both Class III and Class IV prices being raised. Look for a 2018 Class III average of around $15.05 per hundredweight, up from $14.45 projected a month ago and compares to $16.17 in 2017 and $14.87 in 2016. The 2019 average is projected to range $14.80-$15.80 per cwt.
The Class IV price is forecast higher also as a stronger expected NDM price more than offsets the lower butter price. The 2018 average is expected around $14.05, up from $13.55 a month ago and compares to the 2017 average of $15.16 and $13.77 in 2016. The 2019 average is expected at $13.65-$14.75.
Exports were raised from the previous month on both a fat and skim-solids basis on strong global demand. Imports are lowered on a fat and skim-solids basis.
June Class I milk prices jumped in California. The northern price was announced at $17.19 per cwt. and the southern price at $17.46. Both are up $1.10 from May, 20 cents above June 2017, and the highest Class I since December 2017.
The six month northern average stands at $16.00, down from $17.65 at this time a year ago and compares to $15.45 in 2016. The southern average, at $16.27, is down from $17.93 a year ago and compares to $15.72 in 2016.