New Year unkind to cash dairy prices

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

By Lee Mielke

For the Capital Press

Published on January 9, 2018 11:37AM

Lee Mielke

Lee Mielke


Cash dairy prices were mixed in the New Year’s holiday-shortened week. The Cheddar blocks closed the first Friday of 2018 at $1.4950 per pound, down 4 1/2-cents on the week and 17 1/2-cents below a year ago.

The barrels finished at $1.39, down 5 1/4-cents on the week and 18 1/2-cents below a year ago.

Monday took the blocks down a half-cent, and they dropped 3 1/2-cents Tuesday, to $1.4550.

Monday’s loud crash were the barrels dropping 6 1/2-cents. They rolled 2 1/2-cents lower Tuesday, falling to $1.30, the lowest price since May 12, 2016, and at a 15 1/2-cent deficit to the blocks.

Dairy Market News reports that some Central cheesemakers are no longer taking spot milk as they have more than needed and those that are, are paying $1.50 to $6.00 under Class III.

Western cheese production is active, and there’s still plenty of milk although some is refilling bottling pipelines as schools restart. “Export interest may be increasing,” says DMN, “But it may be due to lower price points. While stocks have become more comfortable, there is the underlying sense that milk production regionally, nationally and globally, will continue to fuel the production of cheese and rebuild inventories.”

Cash butter saw a Friday close at $2.2375 per pound, up 3 cents on the week and 1 3/4-cents above a year ago.

Butter then lost 4 3/4-cents Monday and a penny Tuesday, dipping to $2.18 per pound.

Butter churns were running actively New Year’s Week,” says DMN, as cream supplies helped drive butter output.

Western butter supplies have been drawn down due to holiday demand and many retailers are replenishing post-holiday stocks sooner than usual.

Grade A nonfat dry milk remains in the cellar, closing Friday at 68 cents per pound, up a quarter-cent on the week but 37 1/4-cents below a year ago.

The powder traded a quarter-cent lower Monday and lost three-quarters Tuesday, sliding to 67 cents per pound.


Milk price falls


The December Federal order Class III milk price is $15.44 per hundredweight, down $1.44 from November, $1.96 below December 2016, and the lowest Class III since April 2017. It equates to about $1.33 per gallon, down from $1.45 in November and $1.50 a year ago. The 2017 Class III averaged $16.17, up from $14.87 in 2016 and $15.80 in 2015.

Class III futures portend a very lean 2018, with prices well below $16 per cwt. The January contract settled Monday at $13.85; February, $13.24; March, $13.31; April, $13.64; May, $14.07; and June at $14.52, with a peak of only $15.67 in October.

The December Class IV is $13.51 per cwt., down 48 cents from November, $1.46 below a year ago, and the lowest Class IV price since May 2016. Its 2017 average is $15.16, up from $13.77 in 2016 and $14.35 in 2015.


Price drops


California’s December Class 4b cheese milk price is $13.52 per cwt., down $2.00 from November and $3.07 below a year ago. It is the lowest 4b price since June 2016. The 2017 4b average stands at $15.20, up from $14.27 in 2016 and $14.47 in 2015.

It’s also $1.92 below the comparable Federal order Class III milk price, second largest deficit in 2017. The gap ranged from a low of 16 cents in July to $2.05 in March.

The December 4a butter-powder price is $13.36, down 26 cents from November and $1.43 below a year ago and the lowest 4a price since October 2016. It averaged $14.95 in 2017, up from $13.41 in 2016 and $14.10 in 2015.


California says ‘Yes’


California dairy producers have given a thumbs up to the California Department of Food and Agriculture’s Quota Implementation Plan, should they approve a Federal Milk Market order in a future referendum.

CDFA conducted the referendum of all market milk producers in the state and reported that 703 valid ballots out of a possible 1,059 were received. The final tally showed that 66 percent of the state’s eligible producers participated, with 613, or 87 percent, voting in favor and 90, or 13 percent, opposed.

The USDA has issued a Recommended Decision on a California Federal market order but has yet to issue its Final Decision. Once that happens, informational meetings will likely be held in the state, with a final producer referendum after that.


Dairy products


USDA’s latest Dairy Products report pegs November cheese output at 1.054 billion pounds, down 2.0 percent from October but 2.8 percent above November 2016. Year to date output stands at 11.4 billion pounds, up 2.6 percent from a year ago.

Italian cheese output totaled 454.7 million pounds, down 0.6 percent from October but 3.6 percent above a year ago, with YTD output at 4.9 billion pounds, up 1.7 percent.

Mozzarella, at 350.4 million pounds, was up 3.3 percent, with YTD at 3.8 billion pounds, up 1.2 percent.

American type cheese production totaled 401.2 million pounds, down 4 percent from October but 0.6 percent above a year ago. YTD totaled 4.47 billion pounds, up 3.2 percent.

Cheddar output, the kind traded at the CME, totaled 284.7 million pounds, down 3.5 percent from October and virtually unchanged from a year ago, with YTD at 3.25 billion pounds, up 4.1 percent.

Butter churns produced 145.7 million pounds of butter, up 1.6 percent from October and 1.86 percent above a year ago. YTD butter totaled 1.67 billion pounds, down 0.2 percent.

Nonfat dry milk production totaled 140 million pounds, down 2.9 percent from October but 9.7 percent above a year ago, with YTD at 1.66 billion pounds, up 3.9 percent.

Skim milk powder production totaled 41.8 million pounds, up 63.1 percent from October but 11.9 percent below a year ago. YTD output is at 483.96 million pounds, down 4.1 percent.

The report also showed November nonfat dry milk stocks at 301.7 million pounds, up 1.7 million pounds or 0.5 percent from October but 86.6 million pounds or 40.2 percent above a year ago.



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