Not a good Groundhog Day for dairy

Columnist Lee Mielke wraps up the week's dairy industry news.

By Lee Mielke

For the Capital Press

Published on February 2, 2016 1:39PM

Lee Mielke

Lee Mielke

While the famous Punxsutawney Phil failed to see his shadow Tuesday, meaning there’ll be an early spring, that’s not the case for the dairy world, based on Tuesday’s Global Dairy Trade auction.

Dairy prices at the Chicago Mercantile Exchange saw little change the last week of January — in fact, none on cheese, something that hasn’t happened since the week of Oct. 8, 2012, but things are looking different for February.

The block Cheddar held all week at $1.46 per pound, 7 1/4-cents below a year ago, and the barrels stayed at $1.43, 7 1/2-cents below a year ago. The only activity was two unfilled bids of each Friday morning at the existing price.

The blocks were unchanged Monday and Tuesday this week while the barrels ticked up 2 cents Monday and were unchanged Tuesday, holding at $1.45.

“The impact on cheese sales increases attributed to Super Bowl is a discussion topic which seems to have stretched over several months,” according to Dairy Market News. “In reality most orders for retail or food service frozen pizza cheese that will be consumed before or during the event have been filled. Cheese manufacturers are now looking forward into spring.” However, “some Midwest cheese manufactured for sales to eastern customers was not sold or shipped as a result of the substantial snowstorms over the weekend. This resulted in some increase in manufacturer inventories.”

DMN also warned that “strong domestic milk production seems to be a likely reality in coming months. Midwest weather quickly bounced back from a cold spell and now looks to remain mild in coming weeks, which will keep the milk flowing. The same is true in the EU. The outcome will be continuing strong cheese production on both continents.

“That will also maintain greater competition in cheese export markets. Growing inventories are a resulting reality more manufacturers expect to have to deal with. The two most significant questions are whether domestic cheese demand will remain strong and whether expanded cheese exports will materialize in a world with much cheese export competition.”

The ever-resilient spot butter closed Friday at $2.22 per pound, up a nickel on the week and 47 cents above a year ago when it plunged 20 cents to $1.75 per pound. Thirteen cars exchanged hands on the week at the CME.

But two sales on Monday, preceded by plenty of offers, plunged the CME price 12 1/4-cents lower. Two sales Tuesday, however, inched it back up a quarter-cent, to $2.10 per pound, as eyes watched the GDT and for any impact from the CME policy change requiring offered product to have the Double A grade.

DMN says the Central butter market is steady to firm, although market participants find it difficult to reconcile the current prices and stocks on hand.”

Cash Grade A nonfat dry milk closed Friday at 71 3/4-cents per pound, up three-quarters on the week but 34 3/4-cents below a year ago on 24 cars sold.

The powder gave up three-quarters Monday and lost a penny and a half Tuesday, slipping to 69 1/2-cents per pound, the lowest spot price since Aug. 14, 2015.

GDT plunges 7.4 percent

Just as the political aspirations of many ended Monday night in Iowa, so went hopes for strength in global dairy prices on Tuesday. The third Global Dairy Trade auction of 2016 added to the losses of the first one. The weighted average for all products offered plunged 7.4 percent, the largest decline since the Nov. 17, 2015 event, and follows a 1.4 percent descent on Jan. 19.

Not one increase was registered, and the losses were led by whole milk powder, down 10.4 percent, following a 0.5 percent slippage last time.

Butter was second, down 8.3 percent, after dropping 5.9 percent on Jan. 19. Buttermilk powder was down 6.7 percent after gaining 2.7 percent last time, and anhydrous milkfat followed close behind, down 6.6 percent, after gaining 2.4 percent last time.

Cheddar cheese was down 4.2 percent, after slipping 3.4 percent last time, and rennet casein was down 3.7 percent, after dropping 7.8 percent last time. Lactose was next, down 2.6 percent, following a 1.7 percent loss last time, and skim milk powder was off 2.2 percent, after dropping 3.2 percent last time.

FC Stone reported the average GDT butter price equated to about $1.3179 per pound U.S., down from $1.4341 in the Jan. 19 event. Contrast that to CME butter, which plunged 12 1/4-cents Monday and closed Tuesday at $2.10 per pound.

GDT Cheddar cheese equated to about $1.2731 per pound U.S., down from $1.3006 last time, and compares to Tuesday’s CME block Cheddar at $1.46.

GDT skim milk powder, at 81.31 cents per pound U.S., is down from 83.23 cents per pound last time, and the whole milk powder average, at 88.53 cents per pound U.S., is down from 99.26 cents per pound in the last event and the lowest level since the Aug. 18, 2015 event. The CME Grade A nonfat dry milk price closed Tuesday at 69 1/2-cents per pound.

Calif. benchmark up 18 cents

California’s January Class 4b cheese milk price was announced by the California Department of Food and Agriculture Monday at $13.08 per hundredweight, up 18 cents from December 2015 but 67 cents below January 2015. It includes the temporary price adjustment mandated by the CDFA, resulting from the June 3, 2015, hearing, and in effect until through July 2016.

The 4a butter-powder price is $13.26, down $1.29 from December but 17 cents above a year ago.


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