Cash dairy prices were lower in the shortened Fourth of July holiday Week.
The Cheddar blocks hit $1.8650 per pound last Monday, the highest CME price since Nov. 22, 2016, but closed Friday at $1.8475, down a penny on the week, ending six weeks of gain, but were 30 1/2-cents above a year ago.
The barrels, after closing at $1.79 on Friday, June 28, highest level since Nov. 9, 2016, found themselves the following Friday at $1.78, a penny lower on the week, but a whopping 53 1/2-cents above a year ago.
The blocks lost three-quarters Monday but were unchanged Tuesday, holding at $1.84. The barrels lost a penny, both Monday and Tuesday, slipping to $1.76, 8 cents below the blocks.
Traders won’t have much to feed on this week in the way of USDA reports but Thursday’s World Agricultural Supply and Demand Estimates report will give us the latest forecast on U.S. milk production for the year and milk prices.
Dairy Market News reports that Midwestern cheese demand was generally unchanged week to week. Some cheesemakers, particularly mozzarella and provolone producers, are still seeing positive ordering trends. Curd and barrel producers also reported stronger sales with outside festivities in full swing. Cheese output has picked up some as spot milk is available at discounts.
Looking westward, cheese exports were reported to be mixed while domestic demand was unchanged. Inventories are balanced to a bit tight. With declining milk components and supplies, Western cheese output “fluctuates,” says DMN.
Cash butter saw a July 5 close at $2.4050, down a half-cent on the week but 23 1/2-cents above a year ago.
Monday’s butter was down 1 1/4-cents but regained a quarter-cent Tuesday, inching back to $2.3950.
The strong U.S. price is a magnet to imports, and while imports may act somewhat as a governor on how high the U.S. price goes, it’s not likely we will return to a price below $2 any time soon. The last time U.S. butter was below $2 was Nov. 15, 2016. The all-time high was $3.1350 on Sept. 25, 2015.
Some Midwest butter plant managers reported finding cream at prices “within their reach,” at least during the holiday week. Cream was more available within the region and from the West, as butter/other production plants took time off for the holiday. But, as rising temperatures hit large areas of the region, cream is predicted to tighten. Butter demand is steady.
Western butter orders were “not so good compared to the previous week,” according to DMN. Churning activities had slowed because several plants prepared to close for the holiday, thus cream was more available.
Spot Grade A nonfat dry milk closed Friday at $1.04 per pound, down a penny on the week but 26 3/4-cents above a year ago.
The powder was unchanged Monday but slipped a quarter-cent lower Tuesday, to $1.0375.
CME dry whey saw a Friday finish at 32 3/4-cents per pound, down three-quarter cents on the week and 6 1/4-cents below a year ago.
Monday’s whey inched a quarter-cent lower then lost a half-cent Tuesday, dipping to 32 cents per pound.
FC Stone’s Dave Kurzawski wrote in his Tuesday Early Morning Update: “Our read on the spot markets is that prices ‘around’ current levels seem appropriate for now.” He added that “stability in butter/powder is still the trade de jour.”
The Agriculture Department announced the June Federal order benchmark Class III milk price at $16.27 per hundredweight, down 11 cents from May but $1.06 above June 2018 and is $1.84 above what California’s 4b cheese milk price was in June 2018.
The $16.27 price equates to $1.40 per gallon, up from $1.31 a year ago, and put the 2019 Class III average at $15.25, up from $14.41 at this time a year ago and compares to $16.12 in 2017.
Monday’s Class III futures settlements portended a July price at $17.33; August, $17.83; with a peak at $17.98 in October before heading back down.
The June Class IV price is $16.83, up 54 cents from May, $1.92 above a year ago, and the highest Class IV price since November 2015. Its 2019 average stands at $15.98, up from $13.67 a year ago and $15.08 in 2017.
More to the vat
The Agriculture Department’s July 3 Dairy Products report shows more May milk was moved to the cheese vat and less to butter and powder. Total cheese output climbed to 1.10 billion pounds, up 1.5% from April and 1.6% above May 2018. Year-to-date cheese output stands at 5.4 billion pounds, up 0.7% from a year ago.
Wisconsin produced 287.8 million pounds of the May total, up 2.2% from April and virtually unchanged from a year ago. California produced 211.3 million pounds, down 0.4% from April and 2.6% below a year ago. Idaho contributed 78.2 million pounds, down 6.7% from April but 1.0% above a year ago.
Italian cheese totaled 471.5 million pounds, down 1.1% from April but 2.3% above a year ago. YTD Italian stands at 2.36 billion pounds, up 2.5%.
Mozzarella output was at 370.5 million pounds, up 3.2% from a year ago, with YTD at 1.86 billion pounds, up 4.4%.
American type cheese totaled 440.7 million pounds, up 2.1% from April but 0.5% below a year ago, with YTD at 2.14 billion pounds, down 1.9%.
Cheddar output, the cheese traded at the CME, climbed to 319.4 million pounds, up 11.8 million pounds or 3.8% from April and 0.2% above a year ago. YTD Cheddar hit 1.54 billion pounds, down 3.0% from 2018.
Butter output slipped. U.S. churns produced just under 163 million pounds, down 1.7 million pounds or 1.0% from April and 7.1 million pounds or 4.2% below a year ago, the fourth consecutive month output was below a year ago. YTD butter is now at 855.4 million pounds, down 2.5% from 2018.
Revisions lowered the April total 2 million pounds, down 6% from a year ago, compared to the originally reported 4.8% shortfall.
Dry whey totaled 78.8 million pounds, up 5.1% from April but 8.2% below a year ago, with YTD at 386.3 million pounds, down 12.8%. Whey stocks totaled 64.7 million pounds, down 14.2% from April and 5.7% below those a year ago.
Nonfat dry milk production totaled 173.9 million pounds, up 5.3% from April and 5.0% above a year ago. YTD powder is at 829.4 million pounds, virtually unchanged from 2018. Stocks grew to 281.8 million pounds, up 6.4 million pounds or 2.3% from April and 11.3 million pounds or 4.2% above the 2018 level.
Skim milk powder output fell to 30.1 million pounds, down 14.9 million pounds or 33.1% from April and 20.3 million or 40.2% below a year ago. YTD skim hit 197.2 million, down 11.9% from a year ago.