Dairy prices remain unsteady
Cash block cheese closed the Friday before Christmas at $1.39 per pound, down 1 3/4-cents on the week and 10 1/4-cents below a year ago.
The barrels finished at $1.2950, down 1 1/2-cents, 11 1/2-cents below a year ago when they plunged 25 cents. Only 4 cars of barrel were traded last week at the CME.
The blocks lost 4 cents on Monday Christmas Eve, falling to $1.35, while the barrels were unchanged. The markets are closed Tuesday for Christmas and reopen Wednesday.
Demand is mixed in the Midwest cheese sector, says Dairy Market News. Some Cheddar demand is seasonally slower but mozzarella and other pizza cheese producers suggest orders are steady to better than expected. Milk availability is varied but a number of contacts suggested that milk was less available than expected.
Some cheesemakers suggest their inventories are “scant, as demand is seasonally lethargic but cheese markets are slowly beginning to show promise after a resoundingly bearish late fall.”
Western cheese sales have been solid but contacts say the supply chain is full. With the passing of the large chunk of holiday demand, manufacturers are wondering where a lift in sales would come from. Demand for mozzarella has been strong and lower market prices have generated more interest from international buyers. Inventories are quite heavy and, with plenty of milk on hand, cheese output is expected to continue strong and that may make it difficult for the industry to reduce stockpiles in the near future.
Butter closed Friday at $2.2050 per pound, up 1 1/2-cents on the week and 2 1/2-cents above a year ago when it lost 6 1/2-cents. 15 sales were reported for the week.
The butter was down a penny and a half Monday, slipping to $2.19.
Cream supplies are now primarily sourced regionally, as opposed to recent months when most Class IV spot loads were being supplied from the West. Cream prices are not as low as a number of contacts expected them to be, says DMN.
Butter churning is busy and will be through the rest of the month, as manufacturers look to utilize holiday cream availability and rebuild inventories. Some analysts expect another range-bound year in 2019, with a little more downward pressure on the global markets due to New Zealand’s ample supplies.
Western manufacturers are trying to estimate post-holiday butter demand so they can approximate the price range for first quarter 2019 contracts. Cream offerings are picking up and are expected to further increase the next two weeks. More cream will likely move to the churns but butter makers are not looking to add to their inventories, though current stocks are balanced, according to DMN.
Grade A nonfat dry milk closed at 94 cents per pound, unchanged from the previous week but 27 1/2-cents above a year ago. Futures prices in 2019 were pointing to prices topping $1 per pound, a level not seen at the CME since January 2017.
Monday’s powder was down 1 3/4-cents, sliding to 92 1/4-cents per pound.
Spot dry whey finished last week at 49 cents per pound, up 4 cents and the highest CME price since Oct. 22, 2018.
It remained at Friday’s close on Monday.
Uncle Sam 'holiday'
As of midnight Dec. 21, a partial shutdown of the government went into effect due to the failure of a House-passed continuing resolution in the Senate. At issue is President Trump’s insistence on funding for a border wall with Mexico.
The Agriculture Department announced a contingency plan for its services. It will continue to publish its weekly National Dairy Products Sales Report but will not produce the monthly NASS Milk Production, Cold Storage, or Dairy Products reports. Monthly milk price announcements will also continue. The last time a shutdown impacted dairy programs was October 2013.
November milk up
Increased output in milk per cow again pushed November production above November 2017, the 60th consecutive month that output topped that of the year before. Preliminary USDA data in the top 23 producing states shows output at 16.4 billion pounds, up just 0.8 percent from 2017, with the 50-state total, at 17.37 billion pounds, up 0.6 percent. Revisions lowered the initial 50-state October estimate by 18 million pounds to 17.89 billion, up 0.7 percent from 2017.
November cow numbers in the 50 states totaled 9.36 million head, down 8,000 from October and 38,000 less than a year ago, fifth time that cow numbers were below a year ago since May 2016. Output per cow averaged 1,856 pounds, up 19 pounds from the year before and the 37th consecutive month of gain.
California output was up 91 million pounds or 2.9 percent from a year ago, thanks to a 65-pound gain per cow outweighing 12,000 fewer cows.
Wisconsin inched up 0.1 percent on a 10-pound gain per cow but cow numbers were down 5,000 head. Data indicates that America’s Dairyland lost 638 dairy farms in 2018.
Idaho was up 4.0 percent, thanks to 10,000 more cows and a 45-pound gain per cow.
New York slipped 0.3 percent, on a loss of 5,000 cows though output per cow was up 10 pounds. Pennsylvania was down for the 9th consecutive month, dropping 4.1 percent on 12,000 fewer cows and 30 pounds less per cow.
Minnesota was off 0.3 percent, on a drop of 5,000 cows, though output per cow was up 15 pounds.
Elsewhere, Michigan was down for the fifth consecutive month, off 1.1 percent, on 6,000 fewer cows though output per cow was up 5 pounds.
New Mexico was down 2.9 percent, on a 35-pound drop per cow and 4,000 fewer cows milked. Texas put 51 million pounds more in the tank than a year ago, a 5.2 percent increase, thanks to 24,000 more cows and 10 pounds more per cow.
Vermont was down 2.3 percent, on 2,000 fewer cows and a 15 pound loss per cow. Florida was down 4.8 percent on 6,000 fewer cows. Output per cow was unchanged.
Washington state output jumped 6.0 percent on a 70-pound gain per cow and 6,000 additional cows milked.
Dairy cow culling dropped dramatically in November but was well above a year ago. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 268,000 head were slaughtered under federal inspection, down 20,200 head from October but 24,300 or almost 10 percent above a year ago.
A total 2.89 million head have been culled in the 11-month period, up 150,600 head or 5.5 percent from 2017.
Butter stocks plunge
November butter stocks saw the biggest drawdown ever for the month and fell below a year ago for the first time since February, according to the Agriculture Department’s latest Cold Storage report.
The Nov. 30 inventory dropped to 153.7 million pounds, down 77 million pounds or 33.3 percent from October and 5.6 million pounds or 3.5 percent below November 2017.
American type cheese, which includes Cheddar, slipped to 803.4 million pounds, down 8 million pounds, or 1 percent from October, but 70 million or 9.5 percent above a year ago. Revisions added 2.4 million pounds to the October estimate.
The other cheese category fell to 520.5 million pounds, down 8.3 million pounds or 1.6 percent from October but was 20.2 million pounds or 4 percent above a year ago.
The total cheese inventory stood at 1.35 billion pounds, down 17.3 million pounds, or 1 percent from October but a bearish 94.2 million pounds or 7 percent above a year ago and the 49th consecutive month stocks topped a year ago.