The Agriculture Department announced the December Federal order Class III milk price at $18.36 per hundredweight, up 33 cents from November, $2.64 above December 2020, and the highest Class III price since May. That put the year’s average at $17.08, down from $18.16 in 2020, and compares to $16.96 in 2019.
Monday’s Class III futures settlements portended a January price at $20.27; February, $21.55, and March at $21.53 per cwt.
The December Class IV price is $19.88, up $1.09 from November, $6.52 above a year ago, and the highest Class IV price since October 2014. The 2021 Class IV average is $16.09, up from $13.49 in 2020, and compares to $16.30 in 2019.
Cheese retreats, butter soars
CME cheese and butter started 2022 skyrocketing and saw some expanded trading limits, but then cheese traders reversed gears following the November Dairy Products report.
After jumping 10.75 cents the previous week, the Cheddar blocks marched to $2.0650 per pound last Wednesday, highest since Nov. 12, 2020, but were offered lower Thursday, the first slippage since Dec. 20, dropped 5.50 cents Friday, and closed the morning at $1.9950, still 1.50 cents higher on the week and 7.75 cents above a year ago when they jumped 26.75 cents to $1.9175.
The barrels climbed to $1.8725 last Wednesday, highest since Nov. 12, 2020, but finished Friday at $1.8650, up 15.50 cents on the week and 21.25 cents above a year ago. They also narrowed the spread to 13 cents. CME sales for the week totaled 5 cars of block and 4 of barrel.
The blocks were unchanged Monday with no activity, but they jumped 5.25 cents Tuesday on 3 trades, hitting $2.0475.
The barrels lost 3.50 cents on 2 trades Monday and stayed put Tuesday, holding at $1.83, 21.75 cents below the blocks.
Dairy Market News says cheese demand requests have already met contacts' recent expectations, as customers return to the fold. Midwestern cheesemakers say orders are strengthening but production rates vary from plant to plant as employee numbers range from adequate to short. Spot milk was still priced at holiday level accessibility, and similar to previous week discounts, although several contacts expected those discounts to dissipate this week.
Cheese demand is steady in western retail markets, while food service demand is, reportedly, increasing. Educational institutions' purchasing is picking up as schools reconvene.
International demand is unchanged. Port congestion and a shortage of truck drivers continues to cause delays. Severe weather in parts of the West was causing further delays, both to loads of cheese and supplies. Milk availability is increasing in the region, though some cheese makers report that snow was slowing delivery of production supplies. Cheese output is steady to lower as delays to those supplies and ongoing staffing shortages are preventing plants from running full schedules.
After gaining 36 cents the previous two weeks, CME butter soared to $2.7425 per pound last Thursday and stayed there Friday, up 29 cents on the week and $1.3625 above a year ago; 26 cars were sold last week.
The butter added 3.75 cents Monday on 5 unfilled bids and pole vaulted 6.25 cents Tuesday on 8 trades, hitting $2.8425 per pound, highest CME price since Dec. 7, 2015. The highest CME price ever was $3.1350 per pound on Sept. 25, 2015.
Butter churners tell DMN that cream availability has slimmed down, and quickly. Multiples climbed roughly 10 points week to week in some cases, and haulers are tight as well. Butter churning is expected to slow if this trend continues, which is likely while cream cheese producers and other cream end users play catchup and siphon cream from the pool. Bulk butter is very tight, says DMN, and domestic butterfat values are increasing rapidly.
Cream has become more available in the West in recent weeks, but some processors were having difficulty getting it due to severe weather and a shortage of truck drivers. Demand for cream is increasing in the region. Butter demand is unchanged in retail and food service and international demand remains steady despite port congestion delays.
Spot availability is limited; unsalted butter is more difficult to obtain than salted. Contacts cite strong demand and tight inventories for the higher prices. Butter output is steady, though some butter makers say that delayed deliveries of production supplies are limiting their output.
Grade A nonfat dry milk closed Friday at $1.71 per pound, up 5.50 cents on the week and 52 cents above a year ago, with 21 sales reported.
Monday’s powder was bid up 1.25 cents and added 1.75 cents Tuesday, climbing to $1.74 per pound on 6 trades, highest since July 9, 2014.
CME dry whey closed Friday at 75.75 cents per pound, up 0.75 cents on the week and 25.75 cents above a year ago, on 1 sale.
The whey was unchanged Monday, with 4 bids going unfilled, but gained 0.50 cents Tuesday on a trade, and set another new record at 76.25 cents per pound.
Cheese vats got the milk
You’ll recall November milk production totaled 18.0 billion pounds, down 0.4% from Nov. 2020. The November Dairy Products report shows where the milk was used.
Cheese output totaled 1.119 billion pounds, down 2.9% from October but 1.6% above November 2020 and the highest November ever. Year to date cheese output hit 12.5 billion pounds, up 3.0% from the same 11-month period in 2020. Revisions added 6.2 million pounds to October’s total cheese output.
Italian style cheese totaled 482.9 million pounds, down 1.3% from October but 6.2% above a year ago. YTD Italian cheese is at 5.3 billion pounds, up 3.0%.
American type cheese, at 437.8 million pounds, was down 4.6% from October and 2.7% below a year ago. YTD American was at 5.1 billion pounds, up 3.9%.
Mozzarella totaled 373.7 million pounds, up 4.1% from a year ago, with YTD at 4.1 billion pounds, up 1.3% from 2020
Cheddar, the cheese traded daily at the CME, totaled 307.4 million pounds, down 13 million pounds or 4.1% from October and 14.2 million pounds or 4.4% below a year ago. YTD Cheddar stands at 3.6 billion pounds, up 2.6% from 2020.
Butter churns produced 156.3 million pounds, down 4.7 million pounds or 2.9% from October, and 16.6 million pounds or 9.6% below a year ago. YTD butter output stands at 1.9 billion pounds, down 2.8% from 2020.
Yogurt output totaled 349.5 million pounds, up 7.0% from a year ago, with YTD at 4.3 billion pounds, up 4.1%.
Dry whey production totaled 74.6 million pounds, down 6.9 million pounds or 8.4% from October, but 5.9 million pounds or 8.7% above a year ago. YTD dry whey output was at 846.8 million pounds, down 2.6% from a year ago.
Dry whey stocks inched up to 61.6 million pounds, up 3.5 million or 6.0% from October but were 5.9 million pounds or 8.7% below those a year ago.
Nonfat dry milk output totaled 132.2 million pounds, up 9 million pounds or 7.3% from October but down 23.2 million or 14.9% below a year ago. Powder YTD totaled 1.8 billion pounds, up 2.2%.
Stocks fell to 196.5 million pounds, down 29.2 million pounds or 12.9% from October and were down 52.4 million pounds or 21.0% below those a year ago.
Skim milk powder production amounted to 49.1 million pounds, down 19.6 million pounds or 28.5% from October’s level, which was revised up 10.4 million pounds, and was down 15.9 million pounds or 24.5% below a year ago. YTD SMP, at 527.1 million pounds, is down 18.2% from 2020.
U.S. dairy exports saw large gains in November. Cheese totaled 73.9 million pounds, up 39.9% from November 2020, strongest November on record, according to HighGround Dairy, driven by cheese moving to a variety of countries. Product to Mexico was especially impressive, up 65%.
Butter exports totaled 7.3 million pounds, up 142.8%.
Nonfat dry milk-skim milk powder totaled 168.5 million pounds, a record high for November, up 24.7%. Mexico remained the No. 1 destination, up 6%, though Mexico's market share fell to 35.5% versus 41% last year, according to HGD.
Dry whey exports totaled 39.6 million pounds, up 7.7%.