Dairy prices mixed as more milk goes to cheese vats

Lee Mielke

Cash CME dairy prices weakened in the Good Friday holiday-shortened week.

The 40-pound Cheddar blocks closed Thursday at $1.49 per pound, unchanged on the week but 5 cents below a year ago. The 500-pound Cheddar barrels ended three weeks of gains, finishing at $1.45, down 5 cents on the week and 9 1/2-cents below a year ago. Only six cars of barrel were traded last week.

The blocks lost a penny both Monday and Tuesday, slipping to $1.47 per pound. The barrels were down three-quarters Monday but were unchanged Tuesday, holding at $1.4425.

With schools closed for the Easter-Passover holiday, more milk was flowing into the cheese vat, plus spring flush is increasing the amount of milk coming to the plants, and slowed dairy exports are all putting pressure on prices.

Dairy Market News reports that many plants are operating full schedules to handle milk intakes. “Some reports of cheese sales slowing are heard, both due to buyers having fuller storage facilities, and due to buyers opportunely watching price movements which they can comfortably do, being well stocked already. The market undertone remains resigned to heavy milk and full inventories.”

Western manufacturers continue to report good retail demand for natural cheese but supplies are outpacing demand for process cheese and cheese entering manufacturing lines, according to DMN. “Many contacts perceive cheese inventories are already long and growing. Cheese production is very active. Some additional milk is being diverted into cheese vats as area educational institutions go on spring break though milk supplies are currently in fairly good balance. But, as the region more fully enters into spring flush, some contacts are concerned that growing milk intakes could further translate into heavy cheese inventories.”

Cash butter ended Easter week at $1.9225 per pound, down 2 3/4-cents but still 17 cents above a year ago. Sixteen carloads traded hands at the Exchange. The USDA-surveyed butter price average slipped to $1.9940, first time it’s been below $2 per pound since August 2015.

The spot butter was unchanged Monday, with a bid at Thursday’s price going unfilled, but then jumped 2 3/4-cents Tuesday, as five cars traded hands, and clawed its way back to $1.95 per pound.

Heavy cream volumes in the Central region continue clearing to the churn, according to DMN. Some manufacturers continue to run at full capacity and inventories are “steady to building.”

Western butter output is active and steady. Cream supplies are “plentiful,” but butter makers are “selective on purchasing additional loads.” “Demand is steady and good but unable to keep up with production and inventories are building.”

Cash Grade A nonfat dry milk inched higher early last week but then retreated and closed Thursday at 72 1/2-cents per pound, down a half-cent on the week and 25 cents below a year ago, with five loads finding new homes on the week.

The cash price was steady Monday and inched a quarter-cent higher Tuesday, hitting 72 3/4-cents per pound.

For comparison, USDA’s latest surveyed powder price averaged 74.3 cents per pound, down 1.9 cents, while California’s latest surveyed price averaged 74.43 cents, down 4.4 cents.

USDA announced the April Federal order Class I base milk price at $13.74 per hundredweight, down 4 cents from March and $1.76 below April 2015. It is the lowest April Class I price since 2010 and equates to about $1.18 per gallon.

The four month average stands at $14.30, down from $16.47 at this time a year ago and compares to $22.70 in 2014.

The two-week USDA surveyed butter average used in calculating the Class I value was $1.9969 per pound, down 16.5 cents from March. Nonfat dry milk averaged 75.04 cents per pound, down 1.8 cents. Cheese averaged $1.5148, down fractionally, and dry whey averaged 25.02 cents per pound, up 0.8 cent from March.

Dairy farmers culled fewer cows in February than in January, according to USDA’s latest Livestock Slaughter report. An estimated 256,400 head were slaughtered under Federal inspection in the month, down 9,100 head from January but 14,100 or 5.8 percent more than February 2015.

Culling in the first two months of 2016 totaled 521,900 head, up 4,200 or about .8 percent from the same period a year ago.

Culling in February was highest in the West: Arizona, California, Idaho, Oregon and Washington. They were followed by the Midwest: Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin.

Region 3 followed, including Delaware-Maryland, Pennsylvania, Virginia and West Virginia, with Region 6 right behind, which includes New Mexico and Texas, states most affected by winter storm Goliath.

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