Cash cheese strengthened as February ended and traders weighed last week’s Dairy Products report. Block Cheddar closed Friday at $1.56 per pound, up 6 1/2-cents on the week and 8 cents above a year ago.
The barrels finished at $1.4750, up 1 1/2-cents on the week and 3 3/4-cents above a year ago. Four cars of block traded hands on the week and 33 of barrel.
Monday took the blocks up 4 1/4-cents, to $1.6025, the highest price since Nov. 28, 2017, and held there Tuesday. The barrels climbed 3 3/4-cents Monday and tacked on a quarter-cent Tuesday, rising to $1.5150, the highest since Dec. 18, 2017.
Midwestern cheesemakers report steady retail and food service demand, according to Dairy Market News. Spot milk loads were mostly discounted, although there were a few above Class. With spring flush ahead, a number of Midwestern cheese producers have suggested that spot milk will only garner interest if it is “noticeably discounted.”
Some Western cheesemakers report strong demand and a growing opportunity to export cheese, a few say they are competing against low-priced, European cheese in some international markets, such as Mexico. Facilities are near full.
Cash butter saw a Friday end at $2.20 per pound, up 2 3/4-cents on the week and 3 3/4-cents above a year ago, on a whopping 80 sales for the week.
The Monday butter inched up a quarter-cent and gained 3 cents Tuesday, hitting $2.2325, the highest since Jan. 5, 2018.
DMN says the “New Crop” butter rule, which dictates that only butter produced after Nov. 30, 2017 can be traded on the CME after March 1, 2018, “could be affecting the market, as sellers do their best to liquidate older stocks.” Butter demand is solid even as prices are climbing.
Butter inventories in the West are hefty. Domestic sales are flat to lower but DMN says demand from the export market is picking up “mainly due to a weaker value of the dollar and higher international butter prices.”
Cash Grade A nonfat dry milk closed the week a penny lower, at 66 1/4-cents per pound, and 14 1/4-cents below a year ago.
The powder was down 1 1/4-cents Monday and a quarter-cent Tuesday, slipping to 64 3/4-cents per pound.
Tuesday’s Global Dairy Trade auction saw its weighted average of all products offered ease down another 0.6 percent, albeit after a record 22 rounds. The slippage followed a 0.5 percent setback February 20 and a 5.9 percent upshot on Feb. 6.
Anhydrous milkfat was down 3.2 percent, following a 1.9 percent drop last time. Butter was down 1.0 percent, after gaining 1.1 percent, and whole milk powder was off 0.8 percent, following a 0.3 percent rise in the last event.
Gains were led by skim milk powder, up 5.5 percent, after it dropped 3.0 percent last time. Cheddar cheese was up 1.7 percent, after dropping 1.3 percent.
FC Stone equates the GDT 80 percent butterfat butter price to $2.3366 per pound U.S. CME butter closed Tuesday at $2.2325. GDT Cheddar cheese equated to $1.7051 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.6025. GDT skim milk powder averaged 93.04 cents per pound and whole milk powder averaged $1.4659. CME Grade A nonfat dry milk price closed Tuesday at 64 3/4-cents per pound.
Benchmark hits bottom
The Federal order benchmark milk price looks to have hit bottom. The Agriculture Department announced the February Class III price at $13.40 per hundredweight, down 60 cents from January, $3.48 below February 2017, and the lowest Class III since June 2016. The price equates to $1.15 per gallon, down from $1.45 a year ago.
Monday’s Class III futures settlements portended a March price at $14.15; April, $14.19; and May, $14.30, with a peak of $15.95 in October.
The February Class IV price is $12.87, down 26 cents from January, $2.72 below a year ago, and the lowest Class IV price since April 2016.
California’s Class 4b cheese milk price is $13.38 per cwt., up a penny from January, $2.43 below a year ago, and just 2 cents below the Federal order Class III price. That is the lowest differential between the two since November 2016 when the 4b topped the Class III by 69 cents.
The February 4a butter-powder price is $12.72, down 21 cents from January and $2.68 below a year ago and the lowest 4a price since May 2016.
More milk, more product
USDA’s latest Dairy Products report shows January cheese production at 1.08 billion pounds, down 1.0 percent from December but 3.4 percent above January 2017.
Italian cheese output totaled 469.6 million pounds, up 0.5 percent from December and 3.4 percent above a year ago. Mozzarella, at 363.1 million pounds, was up 3.1 percent.
American type cheese production totaled 428.9 million pounds, down 1.0 percent from December but 2.7 percent above a year ago. Cheddar output, the kind traded at the CME, totaled 312.4 million pounds, down 1.5 percent from December but 0.3 percent above a year ago.
U.S. churns produced 185.5 million pounds of butter, up 9.0 percent from December and 4.3 percent above a year ago.
Dry whey totaled 87.1 million pounds, up 9.1 percent. Stocks totaled 87.1 million pounds, down 11.7 percent from December but 28.6 percent above those a year ago.
Nonfat dry milk production totaled 161.7 million pounds, down 1.2 percent from December but 5.4 percent above a year ago. Stocks hit 340.2 million pounds, up 20.1 million or 6.3 percent from December and a hefty 113.4 million pounds or 50.0 percent above a year ago.
Skim milk powder production totaled 45.8 million pounds, down 8.3 percent from December and 17.2 percent below a year ago.
Milk-feed ratio drops
A sharp drop in the U.S. All Milk price average, plus higher corn and hay prices, pulled the January milk feed price ratio lower again. The latest Ag Prices report puts the January ratio at 2.19 down from 2.38 in December and 2.71 in January 2017.
The January Margin Protection Program milk-feed margin was at $8.11 per cwt., lowest level since July 2016 and a drop from December’s $9.36 margin.
The U.S. All-Milk price averaged $16.10 per cwt., down $1.10 from December and $2.80 below January 2017. Michigan showed the lowest at $14.90, with California at $15.06, and Wisconsin at $16.30
January corn averaged $3.29 per bushel, up 6 cents from December, after rising 8 cents in December, but is 11 cents per bushel below January 2017. Soybeans averaged $9.30 per bushel, unchanged from December and 41 cents per bushel below a year ago. Alfalfa hay averaged $152 per ton, up $4 from December, and $26 per ton above a year ago.
The January cull price for beef and dairy combined averaged $63.30 per cwt., up $1.30 from December but is 70 cents below January 2017 and $8.30 below the 2011 base average of $71.60.