U.S. dairy markets took last week’s Dairy Products report and Global Dairy Trade auction in stride in the Labor Day holiday-shortened week.
The block cheddar closed Friday at $1.6425 per pound, up 10 1/4-cents on the week but 6 3/4-cents below a year ago.
The barrels climbed to $1.58 Wednesday, then relapsed and finished at $1.54, still 2 cents higher on the week, 6 1/2-cents below a year ago, but 10 1/4-cents below the blocks.
Twenty-two cars of block and 62 of barrel traded hands on the week.
The blocks inched down a quarter-cent Monday and stayed there Tuesday at $1.64. The barrels were unchanged Monday but jumped 3 cents Tuesday, to $1.57.
Reports on milk availability for cheese production are mixed in the Central region, according to Dairy Market News. Some producers reported that expected milk supplies were reduced by bottlers for school intakes. Spot milk prices into Class III ranged from $1.50 under to $1 over Class. Cheese sales are slower for Midwest cheesemakers but some pizza cheesemakers are still reporting heavy orders. The market tone is unstable.
Western cheese output is active with plenty of milk finding its way into the vat. Contacts describe domestic demand as steady or solid, however, some indicate a short term lull on either side of the last summertime holiday weekend. Food service demand is picking up slightly as schools resume. Inventories are larger than typical, but some participants feel this is a new norm. International buyers are watching U.S. prices and as the price fluctuates, so does their level of interest.
It was a weak week for butter, which dropped to $2.4375 per pound Tuesday, lowest price since June 1, 2017, then recovered some, but finished at $2.4575, down a nickel on the week and the fifth consecutive week of decline, but is still 42 1/2-cents above a year ago.
It lost 4 3/4-cents Monday but regained 1 3/4-cents Tuesday, inching back to $2.4275.
Butter makers are taking advantage of favorable cream prices and butter output continues as peak demand season draws near.
Western output is following the previous week’s trend and inventories are sufficient to meet the needs of buyers and end-users.
Cash Grade A nonfat dry milk closed Friday at 82 1/2-cents per pound, down 3 3/4-cents on the week and 8 cents below a year ago.
Monday took the powder down a half-cent and it held there Tuesday at 82 cents per pound.
Where did milk go?
USDA’s latest Dairy Products report shows July cheese output totaled 1.03 billion pounds, down 0.3 percent from June but 1.0 percent above July 2016. Year-to-date output stands at 7.2 billion pounds, up 2.5 percent from a year ago.
Italian cheese totaled 449.5 million pounds, down 0.1 percent from June but 1.2 percent above a year ago, with YTD output at 3.1 billion pounds, up 1.3 percent.
Mozzarella, at 352.1 million pounds, was up 1.1 percent, with YTD at 2.4 billion pounds, up 0.8 percent. Total American type cheese production hit 401.8 million pounds, down 0.4 percent from June but 0.2 percent above a year ago. YTD totaled 2.86 billion pounds, up 3.5 percent. Cheddar output, the cheese traded at the CME, totaled 286.4 million pounds, down 0.3 percent from June, but up 0.8 percent from a year ago, with YTD at 2.1 billion pounds, up 5.2 percent.
U.S. butter churns produced 137.3 million pounds, down 2.0 percent from June but 1.6 percent above a year ago. YTD totaled 1.1 billion pounds, down 1.4 percent. Dry whey totaled 99.2 million pounds, up a hefty 21.0 percent, with YTD hitting 601.8 million pounds, up 6.1 percent.
Nonfat dry milk production totaled 148.4 million pounds, down 9.1 percent from June and 1.6 percent below a year ago, with YTD at 1.1 billion pounds, up 1.8 percent.
Skim milk powder production totaled 50.2 million pounds, up 25.5 percent from June and 2.9 percent above a year ago. YTD output is at 339.4 million pounds, up 2.6 percent.
The report pegged July nonfat dry milk stocks at 298.8 million pounds, up 3.1 million pounds or 1.1 percent from June and a whopping 41.7 million pounds or 16.2 percent above a year ago.
The Agriculture Department raised its 2017 milk production forecast in its latest World Agricultural Supply and Demand Estimates report, reversing five months of decreases, reasoning that “increases in milk per cow more than offset a slower rate of milk cow expansion.” But, the 2018 forecast was reduced from last month’s report due to “slower growth in cow inventories.”
2017 production and marketings were projected at 216.0 billion and 215.0 billion pounds, respectively, up 300 million pounds from last month. If realized, 2017 production would still be up 3.6 billion pounds, or 1.7 percent from 2016.
2018 production and marketings were projected at 220.1 billion and 219.1 billion pounds, respectively, down 200 million pounds from last month. If realized, 2018 production would be up 4.1 billion pounds, or 1.9 percent from 2017.
The 2017 Class III milk price average was raised as higher forecast cheese prices offset lower whey prices. Look for a 2017 average of about $16.15 per hundredweight, up 15 cents from last month’s forecast and compares to $14.87 in 2016 and $15.80 in 2015. The 2018 average was lowered to $16.50, down 30 cents from what was expected a month ago.
The Class IV price was reduced on lower butter and NDM. It is projected to average around $15.55, down 35 cents from last month’s estimate and compares to $13.77 in 2016 and $14.35 in 2015. The 2018 Class IV average is now pegged at about $15.65, down 60 cents from a month ago.