Cheese prices rebound slightly; butter down

Lee Mielke

Mid-October dairy prices at the Chicago Mercantile Exchange were down across the board as traders awaited Friday afternoon’s September Milk Production report. The cheddar blocks closed Friday at $1.67 per pound, down 3 cents on the week but 2 cents above a year ago, with 13 cars selling on the week.

The barrels finished at $1.64, down 3 3/4-cents on the week but 7 cents above a year ago, on 27 sales for the week.

The blocks jumped 4 1/4-cents Monday, as traders absorbed the slightly bullish Milk Production report and awaited the afternoon’s September Cold Storage data, but were unchanged Tuesday, holding at $1.7125.

The barrels were up 2 cents Monday and jumped 4 cents Tuesday, hitting $1.70.

Midwest cheese producers report continuing declines in milk availability, says Dairy Market News. Western cheese supplies are mixed. Some processors have lower inventories while others have plentiful supplies. Most manufacturing plants are running close to full.

Spot butter closed Friday at $2.35 per pound, down 2 1/2-cents on the week but 59 cents above a year ago when it hit the bottom for 2016 at $1.76.

Monday’s butter dropped 3 cents and it plunged 6 1/2-cents Tuesday, to $2.2550, lowest price since May 11, 2017.

The global market for milk fat continues to be tight, according to the latest Livestock, Dairy and Poultry Outlook and DMN says retail butter orders remain robust.

FC Stone says, “It’s a bit of a Catch-22 at the moment for butter, we’re nearly past our peak seasonal demand and international prices are falling but the marketplace remains bullish heading into 2018 with futures holding above $2.40.”

Western butter makers say production is ramping up for the holiday push but a few say cream is “a little tight.”

Cash Grade A nonfat dry milk closed Friday at 74 cents per pound, down 3 1/4-cents on the week, lowest price since April 19, 2016, and is 14 cents below a year ago.

The powder gained a penny and a half Monday but gave back three-quarters Tuesday, slipping to 74 3/4-cents per pound.

September milk output was up for the 45th consecutive month, but not as much as expected. Preliminary data show output in the top 23 producing states at 16.2 billion pounds, up 1.2 percent from September 2016, with the 50-state total at 17.2 billion pounds, up 1.1 percent. Revisions added 8 million pounds to the August 23-state estimate, now put at 17.0 billion pounds, up 2.2 percent from a year ago.

Milk cow numbers totaled 8.74 million head in the 23 states, down 3,000 from August but 73,000 more than a year ago. The 50-state total, at 9.4 million head, is down 4,000 from August but 69,000 above a year ago. Output per cow averaged 1,851 pounds in the 23 states, up just 6 pounds.

California output was below year ago levels for the ninth consecutive month and down considerably, at 3.4 percent, due to 12,000 fewer cows milked and a 50 pound loss per cow. Wisconsin was up just 0.8 percent, on a 15-pound gain per cow. Cow numbers were unchanged.

Texas took top honor with the biggest increase, up 10.0 percent, thanks to 30,000 more cows and a 65-pound gain per cow. Idaho was up 0.2 percent, on 4,000 additional cows, but output per cow was off 10 pounds. Michigan was up 3.4 percent, thanks to a 40-pound gain per cow and 6,000 more cows. Minnesota was up 3.2 percent on a 70-pound gain per cow, but cow numbers were down 4,000 head. New Mexico was up 4.0 percent, thanks to 13,000 more cows milked. Output per cow was unchanged. New York was off 0.4 percent on a 20-pound loss per cow but cow numbers were up 4,000. Pennsylvania saw a 1.7 percent increase, thanks to 35 pounds more per cow offsetting a loss of 2,000 cows. Washington state was down 0.7 percent on a 15-pound loss per cow. Cow numbers were unchanged.

Dairy cow culling took a dip in September but was slightly above a year ago. USDA’s latest Livestock Slaughter report shows an estimated 249,600 head were slaughtered under Federal inspection, down 16,000 head from August but 4,500 above a year ago. Culling in the first nine months of 2017 totaled 2.24 million head, up 84,100 from a year ago or 3.9 percent.

Bullish sentiment from the Milk Production report was countered somewhat by the latest Cold Storage report. While Americans continue to chew through U.S. butter and cheese supplies, it wasn’t as much as expected and cheese stocks remain well above a year ago.

September 30 butter stocks stood at 256.9 million pounds, down 23.3 million or 8 percent from August and 12.2 million pounds or 4.5 percent below September 2016.

American type cheese, at 777.8 million pounds, was down 23.2 million pounds or 3.0 percent from August but 35 million or 4.7 percent above a year ago. The “other” cheese category showed stocks of 502.4 million pounds, down 3.3 million pounds or 1 percent from August but 35.8 million or 8 percent above a year ago.

The total cheese inventory stood at 1.31 billion pounds, down 27.8 million pounds or 2.0 percent from August but 70.2 million or 6.0 percent above a year ago. Pundits view the report as bearish on butter and neutral on cheese.

The November Federal order Class I base milk price is $16.41 per hundredweight, down 3 cents from October but $1.63 above November 2016. It is the lowest Class I since June 2017 and equates to about $1.41 per gallon, up from $1.27 a year ago.

The 11-month average stands at $16.41, up from just $14.61 a year ago.

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