Dairy prices wobble through holidays
Cash dairy prices weakened the week before Christmas though cheese and powder regained a little ground at week’s end.
A somewhat bullish Milk Production report may have been partly responsible but traders were also anticipating the November Cold Storage report.
CME block Cheddar fell to $1.4350 per pound last Wednesday, lowest price since March 21, 2017, but jumped a nickel Friday to close at $1.4925, down 3 3/4-cents on the week, down 22 1/4-cents since Nov. 3, and 19 3/4-cents below a year ago when they dropped 11 cents.
The barrels dipped to $1.40 last Wednesday, the lowest price since July 10, 2017, but closed Friday at $1.41, down 25 cents on the week, 14 1/2-cents below a year ago when they dropped 14 1/2-cents, and they reversed the inverted spread to 8 1/2-cents below the blocks. Nine cars of block traded hands last week at the CME and 42 of barrel.
The markets were closed Christmas Day but Tuesday’s trading took the blocks down a penny, to $1.4875, while the barrels were up a penny, to $1.42.
Cheese producers accepted spot milk at marked discounts last week, according to Dairy Market News, ranging $4 to $8 under Class III. Cheese sales remained steady to slow. DMN said there would be some allotted days off during the holidays but plants plan to ramp up cheese production to meet the abundant milk intakes.
Western cheese makers report solid domestic retail and food service demand has generally helped support the cheese market this fall. However, as holiday shipment obligations are fulfilled, there is concern that there may be a lull following the winter holidays, before the football playoffs.
Cash butter finished Friday at $2.18 per pound, down 6 1/2-cents on the week and 6 3/4-cents below a year ago, the first time in almost a year that it fell below a year ago. Seventeen cars found new homes last week.
The butter lost a penny Tuesday, slipping to $2.17, lowest price since $2.13 on May 10, 2017.
DMN says butter sales are on par with previous years. Holiday retail orders are completed, thus food service is now one of the priorities on the production side. Cream has been abundant but the market tone remains somewhat resilient.
The western butter market was steady to weak last week. Contacts report that prices are higher than expected as holiday orders have mostly been fulfilled and butter supplies are plentiful. Some buyers are expecting and waiting for further price decreases so they are limiting purchases to their immediate needs.
Cash Grade A nonfat dry milk set a record low of 64 3/4-cents per pound last Tuesday; however, it closed Friday at 66 1/2-cents, up three quarter-cents on the week but 35 1/2-cents below a year ago, with 17 cars exchanging hands on the week.
The powder gave up a penny and a half Tuesday, falling to 65 cents per pound.
The Agriculture Department’s last Cold Storage report of 2017 shows Nov. 30 butter stocks stood at 158.8 million pounds, down 59.1 million pounds or 27 percent from October and 2.4 million or 1 percent below November 2016.
American type cheese, at 733.2 million pounds, was down 7.2 million pounds or 1 percent from October but 20 million or 3 percent above a year ago. The other cheese category totaled 500.3 million pounds, down 1 percent from October but 13 percent higher than a year ago. The total cheese inventory was down 9.3 million pounds or 1 percent from October but 76 million pounds or 6 percent above a year ago.
FC Stone says the large jump in the “other cheese” category may indicate that we are producing quite a bit more mozzarella and that may have had something to do with the wide barrel/block inversion.
U.S. dairy cow culling nose-dived in November but was up slightly from November 2016. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 243,700 head were slaughtered under federal inspection, down 17,300 head from October but 500 head above a year ago. Culling in the first 11 months of 2017 totaled 2.74 million head, up 108,000 from a year ago.
Class I down
The first Federal order Class I base milk price of 2018 was announced by the USDA at $15.44 per hundredweight, down $1.44 from December 2017, $2.01 below January 2017, and equates to about $1.33 per gallon, down from $1.45 in December. It is the lowest Class I price since June 2017.