Butter melting; cheese recovering

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

By Lee Mielke

For the Capital Press

Published on September 5, 2017 12:37PM

Lee Mielke

Lee Mielke

Dairy prices plunged the last week of August as traders weighed the heavy stocks of cheese in storage.

The block cheddar closed Sept. 1 at $1.54 per pound, down 11 cents on the week after losing 10 1/2-cents the previous week, 14 cents below a year ago, and 24 3/4-cents below the Aug. 1 level.

The markets were closed Monday for Labor Day but Tuesday saw the blocks jump 5 3/4-cents, to $1.5975, as traders considered the morning’s GDT and anticipated Tuesday afternoon’s July Dairy Products report.

The barrels closed Friday at $1.52, down 3 3/4-cents on the week, 12 cents below a year ago and down 14 cents on the month.

They gained 3 3/4-cents Tuesday, hitting $1.5575, with 20 cars selling on the day.

The lower prices and weakening dollar lead many to believe exports should be multiplying. Dairy Market News says milk is “fairly available for cheese processing in the Midwest,” and spot milk prices are $1 under to $1 over class.

Western producers are not having trouble finding milk, and cheese output is robust. Cheese demand is mixed and inventories are building slightly. With school startups and the unofficial end of summer at hand, consumer grilling demand is slowing, but cut and wrap demand is solid. Contacts suggest some requests for mozzarella and other pizza cheeses have yet to develop, leading some to speculate that end users bought supplies earlier in the summer.

Cash butter was also caught in last week’s downdraft, closing Friday at $2.5075 per pound, down 12 cents on the week, 45 3/4-cents above a year ago, and down 17 1/2-cents on the month, but is the cheapest butter on the planet.

Tuesday took the butter down another 7 cents, to $2.4375, lowest price since June 1, 2017.

Butter demand continues to be positive but Central producers report more interest in unsalted butter, as global prices are markedly higher than domestic rates. Butter output remains active and the market tone has been fairly steady though contacts who thought a $3.00 market price was a near-term possibility have tempered their expectations.

Grade A nonfat dry milk saw little change, closing Friday at 86 1/4-cents per pound, up 1 3/4-cents but three-quarter cents below a year ago. The powder lost three-quarters Tuesday, slipping to 85 1/2-cents per pound.

FC Stone says, “We are still sitting on large (powder) stocks domestically and in the EU, which is keeping the market in check. Mexico inquiries are picking up slightly, although competition in the export markets is fierce.”

Benchmark up

The August Federal order Class III benchmark milk price is $16.57 per hundredweight, up $1.12 from July but 34 cents below August 2016. It is the highest Class III price since February 2017 and equates to $1.42 per gallon, up from $1.33 in July.

The eight-month average stands at $16.09, up from $14.13 at this time a year ago, $16.07 in 2015 and $22.49 in 2014.

Class III futures settled Friday with a September price of $16.15; October, $16.36; November, $16.16; and December at $16.01.

The August Class IV price is $16.61, up a penny from July, $1.96 above a year ago, and the highest Class IV price since November 2015

Calif. benchmark up

California’s comparable Class 4b cheese milk price is $16.26 per cwt., up 97 cents from July and the highest since December 2016, but is 8 cents below a year ago and 30 cents below the Federal order Class III price.

Its eight month average is at $15.28, up from $13.44 a year ago, $14.58 in 2015, and $20.30 in 2014.

The 4a butter-powder price is $16.68, up 27 cents from July and the highest 4a since November 2014, $2.69 above a year ago.

GDT creeps higher

Gears reversed ever so slightly in Tuesday’s Global Dairy Trade auction where the weighted average for all products offered was up 0.3 percent, following a 0.4 percent slippage on Aug. 15 and 1.6 percent Aug. 1.

Whole milk powder was down 1.6 percent, following a 0.6 percent slippage last time, and skim milk powder was off 1.2 percent, after it inched up 0.3 percent.

Butter was up 3.8 percent, following a 1.3 percent drop Aug. 15. Anhydrous milkfat was up 3.6 percent, after slipping 1.3 percent last time, and Cheddar was up 2.5 percent, following a 1.4 percent rise.

FC Stone equated the GDT 80 percent butterfat butter price to $2.6349 per pound U.S. CME butter closed Tuesday at $2.4375. GDT Cheddar cheese equated to $1.8681 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.5975. GDT skim milk powder averaged 88.17 cents per pound and whole milk powder averaged $1.4061. CME Grade A nonfat dry milk price closed Tuesday at 85 1/2-cents per pound.

Milk-feed ratio slips

Higher corn and soybean prices and a steady All-Milk price reversed last month’s upturn in the milk feed price ratio. The July ratio is 2.29, down from a revised 2.31 in June but up from 2.16 in July 2016.

The U.S. average All-Milk price remained at $17.30 per cwt., unchanged from June but $1.20 above July 2016. Prices ranged from a low of $16 in Michigan to $22 in Florida.

July corn averaged $3.49 per bushel, up 6 cents from June but 11 cents per bushel below July 2016. Soybeans averaged $9.42 per bushel, up 32 cents from June and $78 cents per bushel below July 2016. Alfalfa hay averaged $152 per ton, down $2 per ton from June but $14 per ton above July 2016.

The July cull price for beef and dairy combined averaged $77.30 per cwt., up 80 cents from June but $4.20 per cwt. below July 2016, and $5.70 above the 2011 base average of $71.60.

Prices received for milk cows in July averaged $1,620.00 per head, down $20 from April and $110.00 below July 2016.


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