Traders push cheese prices skyward

Traders appeared to ignore last week’s bearish September Milk Production and Cold Storage reports and took the Cheddar blocks to a Friday close at $2.1225 per pound, up 15.5 cents on the week and 60.75 cents above a year ago.

The barrels caught fire last week and closed at $2.25, up 25 cents on the week, primarily on unfilled bids, the highest barrel price since Sept. 26, 2014, and $1 per pound above a year ago. Twenty-one cars of block traded hands last week at the CME and only 9 of barrel, all on Friday morning.

The blocks added 2 cents Monday and a penny Tuesday, climbing to $2.1525. The barrels inched a quarter-cent higher Monday and stayed there Tuesday at $2.2525, an inverted 10 cents above the blocks.

Midwest cheesemakers continue to report a lack of spot milk, says Dairy Market News, but are keeping a close eye on how much to take on due to production capacity and potential resale concerns. Demand reports continue to be steady but slower than a few weeks ago, and inventories in the region are “mostly in balance.”

Western cheese output is active and cheese demand is “steady, but not phenomenal.” Holiday orders are starting to come but are not impressive. Some contacts suggest that government purchases could be helping support cheese prices. Fiscal 2019 purchases of cheese products are up about 14% from 2018 and processed cheese buys are up nearly 40%.

CME butter fell to $2.0575 per pound last Thursday but closed Friday at $2.06, down 5.5 cents on the week and 17.25 cents below a year ago on 13 sales.

Monday’s butter jumped 2.25 cents and it inched a half-cent higher Tuesday, creeping to $2.0875.

Cream is slightly less available in the Central region and some suggest it may soon be out of reach for churning. Demand is steady, meeting seasonal expectations, but market tones are, relative to their typical steadfastness, “slightly in flux.”

Analysts tell DMN they expect a slightly bearish 2020 butter market as higher imports and stocks put a bearish slant on the overall tone. Still, butter is expected to remain in its range-bound status.

Retail butter orders in the West have been strong the past days, says DMN, but stockrooms are full and, so far, incoming orders for the holiday seem lower than usual. Butter output is steady to up a bit due to readily accessible and reasonably priced cream.

FC Stone points out that 2019 will likely mark the 7th year that National Dairy Product Sales butter prices have averaged above $2.00.

Grade nonfat dry milk closed Friday at $1.1525 per pound, down 1.75 cents on the week but 28.5 cents above a year ago.

Monday’s powder was unchanged but it gained a half-cent Tuesday, climbing to $1.1575.

Dry whey finished Friday at 28.25 cents per pound, a quarter-cent lower on the week and 18.75 cents below a year ago. A lot of product continues to flow to the CME, 75 loads last week and a hefty 273 loads since Oct. 1.

The whey was down a penny Monday and lost a half-cent Tuesday, slipping to 26.75 cents per pound, lowest CME price since March 13, 2018. 24 loads were traded in the two days.

Culling tops 2018

Dairy farmers culled fewer cows in September than they did in August but more than a year ago. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 255,700 head were slaughtered under federal inspection, down 10,900 from August but 8,300 or 3.4% above a year ago. The nine-month cull count totaled 2.417 million head, up 81,100 head or 3.5% from a year ago.

Class I up 30 cents

Class I milk prices will move higher. The Agriculture Department announced the November Federal order Class I base price at $18.14 per hundredweight, up 30 cents from October, $2.62 above November 2018, and the highest Class I since January 2015. It equates to $1.56 per gallon, up from $1.33 a year ago. The 11-month average is at $16.78, up from $14.82 a year ago and $16.41 in 2017.

The October Class III benchmark and Class IV milk prices are announced Wednesday. The October Class III futures contract settled Monday at $18.67, with November at $19.68.

From: Capital Press

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