Cheese prices increase third straight week
By LEE MIELKE
For the Capital Press
Cash cheese prices saw a third week of gain but the roller coaster may head down again soon, according to Ron O’Brien, risk management consultant at INTL FCStone.
O’Brien warned in his Sept. 10 eDairy Insider Opening Bell that “Lackluster retail sales have been reported in cut-and-wrap operations and production is strong in the Midwest. We have seen some weather events in July and it’s hot, but we haven’t seen any dramatic reduction in milk supply in the Midwest.”
The block Cheddar price closed Sept. 13 at $1.84 per pound, up 3 cents on the week and the highest it has been since May 10 but is 3 1/4-cents below a year ago. The barrels closed at $1.8125, up 1 1/4-cents on the week and the highest they have been all year but are a penny and a half below a year ago. Fourteen cars of block traded hands on the week and just two of barrel. The lagging AMS-surveyed U.S. average block price lost 2.5 cents and dipped to $1.7489. Barrel averaged $1.7577, up 1.4 cents.
Milk available for cheese making is tightening seasonally across much of the country, according to USDA’s Dairy Market News (DMN), and limited spot milk loads for cheese production are available at premiums above Class. Cheese plants that want to run at highest efficiencies are looking for milk or additional solids to bolster production. Demand is good with fall orders increasing and plants are filling orders from stocks. I would add that schools have reopened and holiday demand is just around the corner for both butter and cheese.
Export aid approved
Export demand is also described as good and additional assistance from the Cooperatives Working Together (CWT) program is aiding sales. Twenty-one requests for export assistance were received this week to sell 8.15 million pounds of Cheddar, Gouda and Monterey Jack cheese and 220,462 pounds of butter to customers in Asia, Europe, the Middle East and North Africa.
DairyBusiness Update (DBU) reports that the value of U.S. dairy product exports hit $619 million in July, the second time it has topped $600 million in three months, and the second-highest monthly total ever. It marked the 28th time in the past 29 months that exports topped $400 million, according to USDA’s Foreign Ag Service (FAS). July exports were up 4 percent from June and up 54 percent from the July 2012 total of $402 million.
July imports totaled $245 million, down 4 percent from June and down about 11 percent from July 2012, leaving a dairy trade surplus of about $374 million.
Fiscal year 2013 — October 2012 through July 2013 — exports now total $5 billion, up about 13 percent from the same period in record-setting FY 12. FY 13 imports total $2.7 billion, up about 2 percent from the same period in FY 12. The FY 13 dairy trade surplus stands at $2.3 billion.
July cheese imports, at $91 million, were up 7 percent from June and about 4 percent above July 2012. FY 13 cheese imports total $953 million, up 9 percent from the same period in FY 12.
Cattle exports rise
U.S. dairy exports aren’t just dairy products. July female dairy cattle exports topped 8,000 head for a second consecutive month, adding up to what is likely the highest two-month total in history, according to USDA’s FAS. At 8,396 head, July exports bring the 2013 total to 37,971, surging well ahead of the 30,285 total for January-July 2012. Record-setting 2011 still holds the top spot, with 42,131 female dairy cattle exports during the first seven months of the year.
Cash butter was busy and also saw strength this week, closing at $1.53 per pound, up 10 cents on the week but 32 cents below a year ago. A whopping 47 cars traded hands on the week, biggest single week trading since late November 2011 when 56 cars found new home. AMS butter averaged $1.3748, up 0.2 cent.
Cash Grade A nonfat dry milk closed Friday at $1.83, up 1 1/2-cents on the week and Extra Grade held all week at $1.78. AMS powder averaged $1.7950, up 1.1 cents, and dry whey averaged 57.82 cents per pound, up 0.4 cent.
Seasonal declines in farm milk production and strong demand from bottling plants are the common themes across the country, according to USDA’s weekly update and this week’s World Agricultural Supply and Demand Estimates report shows a reduced 2013 milk production forecast from last month, reflecting recent slower growth in production. The production forecast for 2014 was unchanged.
2013 output is now pegged at 201.8 billion pounds, down 300 million pounds from last month’s estimate and compares to 200.3 billion in 2012. Look for 2014 production to hit 204.5 billion, unchanged from last month’s projection.
Product price forecasts were mostly higher, with strong export demand and tightening supplies supporting increases for nonfat dry milk (NDM), butter and cheese prices in 2013 and 2014. The whey price forecast was unchanged for 2013 but was raised for 2014.
The 2013 Class III average was put at $17.90-$18.10 per cwt., up a dime from last month’s expectation and compares to $17.44 in 2012. The 2014 average was put at $17.05-$18.05, up 50 cents from last month’s report.
The 2013 Class IV average was projected at $18.60-$18.90, up 35 cents from a month ago, and compares to $16.01 in 2012. Look for it to average $18.45-$19.55 in 2014, up 80 cents from last month’s prediction.
Corn price forecast lower
With input from September’s Crop Production report, the projected season-average farm price for corn was lowered 10 cents at both ends of the range, to $4.40-$5.20 per bushel. The season-average soybean price for 2013/14, forecast at $11.50-$13.50 per bushel, is up $1.15 on both ends, DBU reports. Soybean meal prices, projected at $360-$400 per ton, are up $55 per ton at the midpoint.
The report forecasts 2013 corn production at 13.8 billion bushels, a new U.S. record. Yields are expected to average 155.3 bushels per acre.
Area harvested for grain was forecast at 89.1 million acres, unchanged from the August forecast but up 2 percent from 2012. Soybean production was forecast at 3.15 billion bushels, the fourth largest harvest on record. Area for harvest is forecast at 76.4 million acres, the second largest harvested area on record. Yields are expected to average 41.2 bushels per acre.
Cotton production was forecast down 1 percent from last month and 26 percent below last year. As a result, the cottonseed harvest was estimated at 4.29 million tons, down about 2 percent from the August estimate and the smallest cottonseed harvest since 2009.
California’s October Class I milk price was announced by the California Department of Food and Agriculture (CDFA) at $20.79 per cwt. for the north and $21.06 for the south, up 51 and 50 cents respectively from September and both are 24 cents above October 2012.
That brought the 2013 Class average to $20.00 for the north, up from $18.25 at this time a year ago and compares to $20.72 in 2011 and $16.66 in 2010. The south average now stands at $20.27, up from $18.52 a year ago and compares to $20.99 in 2011 and $16.93 in 2010. The announced prices include temporary increases resulting from a May 20 public hearing and will continue to do so until December 31, according to CDFA. The Federal order Class I base price is announced by USDA on Sept. 18.
Back to the futures
The Fourth Quarter 2013 pack average was at $17.35 per cwt. on Sept. 6, down 24 cents from the previous week, and was trading around $17.50 late morning Sept. 13.
Meanwhile, Wisconsin lawmakers were told for the second time in three years to reject efforts allowing sales of raw milk directly to consumers in the nation’s second-largest dairy state. In a letter sent Sept. 10 to Wisconsin state senators, the National Milk Producers Federation (NMPF) and the International Dairy Foods Association (IDFA) said that “the risks inherent in raw dairy products are not worth any purported benefits to either consumers or producers of unpasteurized milk products.”
Traceability best practices
Drawing from a pilot study of dairy processors, the Innovation Center for U.S. Dairy released voluntary best practices for enhanced dairy traceability. The practices were designed by processors, for processors, to increase global competitiveness, help satisfy future requirements of the Food Safety Modernization Act (FSMA) and, in the rare event of a safety issue, quickly isolate products to protect public health and prevent brand damage.
Five processors, accounting for more than 20 percent of U.S. milk production, have committed to the practices. They are Darigold, Glanbia Foods, Hilmar Cheese Co., Leprino Foods and Michigan Milk Producers Association.
In the coming months, all processors will be asked to make the U.S. Dairy Traceability Commitment stating they will voluntarily adopt and apply the practices. For complete details; visit the Innovation Center’s traceability best practices page at usdairy.com or contact Vikki Nicholson at email@example.com or call 703-469-1522.