Cash cheese prices in Chicago saw little change last week in Chicago.
The 40-pound block Cheddar closed Friday the 13th at $2.03 per pound, down 2 cents on the week but still 30 3/4-cents above that week a year ago, and still above $2 per pound, the longest run of $2 cheese ever.
The blocks gave up a penny Monday but influence from Tuesday’s Global Dairy Trade may have sparked the blocks to jump 3 cents Tuesday to close at $2.05 per pound.
The 500-pound Cheddar barrels finished Friday at $1.9675, unchanged on the week and 19 1/2-cents above a year ago. They slipped three-quarter cents Monday but jumped 2 3/4-cents Tuesday, to close at $1.9875.
Eleven carloads of block traded hands last week and five of barrel.
Cash Grade A butter saw a second week of decline last week, closing Friday at $2.1850 per pound, down 3 3/4-cents on the week but 65 cents above a year ago. The spot Double A price closed Tuesday at $2.1950, up a penny on Tuesday.
A whopping 37 cars found new homes last week. We’ve seen a nice run of $2 butter but far short of the almost eight full months in 2011.
Cash Grade A nonfat dry milk was steady until Friday, closing at $1.8250 per pound, down 3 1/4-cents on the day and the week and remained there as of Tuesday.
No crash predicted
No crash in cash cheese or butter — that’s the read of FC Stone dairy broker Dave Kurzawski. Speaking on Friday’s “DairyLine,” Kurzawski said the cheese market seems more stable right now and he credited the pipeline refilling as buyers try to replenish supply from previous sales.
But, he admits that we’re putting more milk into the cheese vat right now and he sees that continuing for awhile and more cheese will be made over the next 30-60 days than less.
That will result in continued pressure on spot prices, he warned, and he expects lows in the $1.85-$1.90 a pound range.
Butter wise, Kurzawski says the market is tighter right now and he pointed to strong ice cream sales as cream demand is strong. He doesn’t see much downside for butter, in fact the “pricing skew,” he said, is directing milk out of the churn and more into the vat as “manufacturers don’t want to make a ton of excess butter at these price levels.” He looks for “inflated butter prices” for at least the next 30-45 days.
I asked how he, as a long-time dairy broker, views the Farm Bill’s new safety net, the “Margin Protection Program” for dairy farmers. Do you, in any way, see it as a threat or competition to using dairy options and futures for risk management? He admitted that there’s a lot of talk of that potentially cannibalizing some of the sell side interest on the futures and options market but he doesn’t quite agree. He called the program “a good tool, a progressive tool as far as from a government perspective, a government program that has been put out.” He said it’s a “real advancement in that sense,” but believes it will be used to “augment a producer’s risk management plan, not replace it.”
China dairy export picture still bright
In the June 13 issue of Cheese Market News, the U.S. Dairy Export Council’s Brad Gehrke writes that, in April, the International Monetary Fund reduced its 2015 economic growth forecast for China to 7.3 percent. Should that come to pass, it would be China’s lowest annual growth rate since 1990 — a 25-year period when the country’s economy gained an average of 10 percent annually.
That forecast, coupled with heavy investment in domestic Chinese milk production and signs that Chinese dairy import growth has slowed over the past couple months, have some dairy suppliers wondering if they need to worry about China’s dairy buying future. The quick answer is no.
China’s dairy appetite continues to be robust. A drop in the economic growth rate does not equate to sliding consumer incomes nor or a change in long-term projections for middle class expansion, urbanization or overall population gains — the major drivers of the nation’s growing dairy appetite. And major investments in domestic dairy farms do not mean China will become capable of satisfying that growing appetite.
Read the complete posting at www.usdec.org.
Global Dairy Trade up first time since February
Tuesday’s Global Dairy Trade auction saw the weighted average for all products reverse direction and inch up 0.9 percent, following the 4.2 percent decline in the last session, 1.8 percent drop in the May 20 event, and a 1.1 percent decline in the May 6 event.
The price index has seen declines since reaching its high on Feb. 4. The turnaround was led by a 17 percent jump in butter milk powder, which was down 1.9 percent in the last event. Cheddar cheese was up 2.4 percent after gaining 8 percent in the last session. Whole milk powder was also up 2.4 percent, following an 8.5 percent decline on June 3. GDT butter was up 1.8 percent, unchanged in the last event, and rennet casein was up 4.6 percent, down 10.2 percent in the last event.
The only products showing declines were anhydrous milkfat, down 3.8 percent and down 5 percent in the last event, and skim milk power, which was off 0.2 percent today, following a 2.1 percent increase in the June 3 event. FC Stone reports the average GDT butter price equated to about $1.6780/lb. U.S., up from $1.6485/lb. in the June 3 event ($1.6370/lb. on 80 percent butterfat, up from $1.6083/lb.). CME butter closed today at $2.1950/lb.
The GDT Cheddar cheese average was $1.9873/lb. U.S., up from $1.9213/lb. The U.S. block Cheddar CME price today is at $2.05/lb. GDT skim milk powder, at $1.7486/lb. U.S., is down from $1.7524/lb., and the whole milk powder average at $1.6594/lb. U.S., is up from $1.6303/lb. in the last event. The CME Grade A nonfat dry milk price today stands at $1.8250/lb.