Cash block cheddar cheese sank to $1.51 per pound last Wednesday but closed the President’s Day holiday-shortened week at $1.5750, still down a half-cent on the week but 9 1/2-cents above a year ago, as traders absorbed Thursday’s January Cold Storage data.
The barrels finished at $1.5175, down 10 1/4-cents, 8 3/4-cents above a year ago, and ended the inversion, dropping 5 3/4-cents below the blocks. Ten cars of block traded hands last week and a whopping 35 of barrel.
The blocks dropped 3 cents Monday but inched up a quarter-cent Tuesday, to $1.5475.
The barrels were also down 3 on Monday but jumped 3 1/4-cents Tuesday, to $1.5250, with 14 cars trading hands.
FC Stone’s Dave Kurzawski wrote in Tuesday’s Early Morning Update that “with grilling season and weather worries safely months away, talk of U.S. milk ‘flush’ is adding to bearish pressures. Keep in mind that as the bearish talk mounts and prices fall, end-users are inclined to pull back on orders and stand on the sidelines to ‘wait out’ this move.”
Milk is abundant for cheesemakers in the Midwest, reports Dairy Market News. Cheese production is active as producers try to balance inventories while maintaining production to coincide with the surplus milk. Some cheese manufacturers reported fluctuations in demand week by week, inconsistent with past years. Others report a general slowdown, characteristic of this time of year, but inventories are long.
Western cheese output is steady and active. Demand is seasonally lower but many processors are seeing a steady pull of cheese stocks, though stocks are rising.
Spot butter fell to $2.1175 per pound Wednesday but rallied some and closed Friday at $2.13, 2 3/4-cents lower on the week but 15 1/4-cents above a year ago. Only two cars were sold last week at the CME.
The spot price added 3 cents Monday and 2 cents Tuesday, climbing back to $2.18 per pound, possibly driven by Easter-Passover holiday demand.
DMN says cream remains readily available in the Central U.S. but cream interest from Class II operations is beginning to increase, so competition for cream may escalate. With the current cream surplus, however, butter production is active. Demand reports vary. Inventories are building but the market tone is steady.
Western butter makers also report plentiful cream. Butter production is active and domestic butter demand is steady.
Cash Grade A nonfat dry milk closed the week at 82 1/4-cents per pound, down 4 3/4-cents but three-quarters above a year ago. Ten cars exchanged hands last week.
The powder was unchanged Monday and inched up a quarter-cent Tuesday, to 82 1/2-cents per pound.
FC Stone says, “The loss of export business to Mexico due initially to less expensive powder in Europe and now, perhaps due to more political wrangling with Mexico, has pummeled the nonfat dry milk market this month.”
U.S. butter stocks started 2017 in abundance, according to USDA’s latest Cold Storage report. Preliminary data pegged the Jan. 31 inventory at 223.1 million pounds, up 57 million pounds or 34.4 percent from December and 31 million or 16.1 percent above January 2016.
American type cheese hit 760.7 million pounds, up 34.3 million pounds or 4.7 percent from December and 44.3 million pounds or 6.2 percent above a year ago. The total cheese inventory stood at 1.23 billion pounds on January 31, up 34.3 million pounds or 2.9 percent from December and 54.4 million or 4.6 percent from a year ago.
The Agriculture Department announced the March Federal order Class I base milk price at $16.90 per hundredweight, up 17 cents from February, driven by a higher dry whey price, and is $3.12 above March 2016. It equates to about $1.45 per gallon, up a penny from February. The Quarter’s average was nudged to $17.03, up from $14.49 at this time a year ago and compares to $16.79 in 2015.
The USDA-surveyed butter price used in calculating the month’s Class I value averaged $2.1887 per pound, down 6.3 cents from February. Nonfat dry milk averaged 98.75 cents per pound, down 3.2 cents. Cheese averaged $1.6889, down 1.4 cents, and dry whey averaged 48.76 cents per pound, up a nickel and a half.
U.S. dairy cow culling jumped in the first month of 2017 and topped a year ago, according to USDA’s latest Livestock Slaughter report. An estimated 269,000 head were slaughtered under federal inspection in January, up 16,000 head or 6.3 percent from December and 3,500 head or 1.3 percent above January 2016.