Cash dairy prices solidified last week after some hesitancy.
CME block Cheddar backed down to $1.4575 per pound last Tuesday but closed Friday at $1.5275, up 2 3/4-cents on the week and 1 3/4-cents above a year ago.
The barrels finished at $1.3725, up 7 1/4-cents on the week and 1 1/4-cents above a year ago. Six cars of block were sold last week and 27 of barrel.
Traders took the blocks up 3 1/4-cents Monday and stayed there Tuesday at $1.56 per pound, as the morning’s headlines reported that lawmakers had agreed in principle to fund border security, including a “wall” of sorts, thereby avoiding another government shutdown.
The barrels were up 3 cents Monday and gained a penny Tuesday, hitting $1.4125, a still too high 14 3/4-cents below the blocks.
Some Midwestern cheesemakers suggest that demand is seasonally slow, says Dairy Market News. “Plant breakdowns and weather-related issues caused some extra milk to move into cheese production, below Class price in most cases. Reported spot milk prices ranged from flat Class to $2 under.
“Cheese inventories have become burdensome in slower moving varieties, but a number of contacts suggest their inventories are balanced. Overall cheese production mirrors milk availability, but in some cases production schedules have been pared down in order to manage inventories,” says DMN.
Western cheese inventories, like most of the country, remain long yet industry contacts say domestic retail and food service demand is relatively steady. While buyer interest has picked up due to lower prices, exports have yet to take off. Market participants hope the lower prices will generate buyer activity and draw down cheese stocks though a few cheese makers say their inventories are in balance. Many manufacturers are running full schedules but some are starting to ease back on production and divert milk toward Class IV uses.
Analyzing the markets, FC Stone’s Dave Kurzawski asked: “Is it a milk production concern or a weather concern or is demand that good? Maybe a bit of all three. Nevertheless, it will take some time to piece this together, but for now we’d say that U.S. market participants are going to have to marry up a ho-hum domestic trade for most dairy products with fairly impressive global dairy product price strength.”
Butter fell to $2.2775 per pound last Tuesday but closed Friday at $2.2950, up a half-cent on the week and 26 3/4-cents above a year ago, with 18 cars selling.
The butter backed down 2 1/2-cents Monday and gave up a penny and a half Tuesday, slipping to $2.2550.
DMN says Central region butter churning is on par with cream availability. Plants continue to build stocks for later in the year and cream supplies are readily available with more offers coming from the West. Demand is also on par with last year, meeting expectations, but the butter remains range-bound and steady.
Western churns continue to run busy schedules. Contracted cream supplies are still strong, whereas some reports suggest that spot offers have dropped slightly. Butter manufacturers are content with their stocks as they have a lot to offer potential and existing buyers. Sales of butter are good in the retail sector but backed off somewhat in food service. Wet and snowy weather in some areas of the West have impacted sale activities. Export interest is stable and in line with expectations but butter prices are surprisingly higher than usual.
Dry whey fell to 36 cents per pound last Monday but climbed back to 39 cents Wednesday, only to close Friday at 36 1/2-cents per pound, up a quarter-cent on the week, with a whopping 41 cars sold last week at the CME.
Monday’s whey was down a penny and inched a half-cent lower Tuesday, to 35 cents per pound, lowest CME price since May 16, 2018.
Cash Grade A nonfat dry milk fell to 98 cents per pound last Tuesday, lowest since Jan. 7, but closed Friday at 99 1/2-cents per pound, three-quarter cents lower on the week but 26 cents above a year ago.
The powder inched a quarter-cent higher both Monday and Tuesday, crawling back to $1 per pound.
Last Wednesday’s Global Dairy Trade auction saw yet another boost in its weighted average of products offered, jumping 6.7 percent, following a 4.2 percent rise Jan. 15 and 2.8 percent on Jan. 2, and became the fifth consecutive session of gain.
All products offered except buttermilk powder were in the black, led by rennet casein, up 10.9 percent. Whole milk powder was up 8.4 percent, following a 10.3 percent boost in the last event. Anhydrous milkfat was up 5.8 percent, following a 3.2 percent gain last time, and butter was up 4.2 percent after seeing a 4.6 percent gain. Skim milk powder followed, up 3.9 percent after it led the gains last time with a 10.3 percent boost.
GDT Cheddar was up 1.4 percent, following a 4.2 percent rise, and Lactose brought up the bottom, up 1.3 percent.
FC Stone equates the GDT 80 percent butterfat butter price to $1.9669 per pound U.S., up 8.1 cents from the last session. CME butter closed Tuesday at $2.2550. GDT Cheddar cheese equated to $1.6170 per pound, up 2.8 cents from the last event and compares to Tuesday’s CME block Cheddar at $1.56. GDT skim milk powder averaged $1.1494 per pound, up from $1.0907 last time.
Whole milk powder averaged $1.3731, up from $1.2597. CME Grade A nonfat dry milk closed Tuesday morning at $1.00 per pound.
The USDA released its latest World Agricultural Supply and Demand Estimates report on Friday. The report was not issued in January due to the government shutdown. The 2018 milk production estimate was lowered, based on available data through December and the 2019 forecast was reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow.
2018 production and marketings were projected at 217.6 billion and 216.6 billion pounds respectively, down 200 million pounds from the December estimate. If realized, 2018 production would still be up 2.1 billion pounds or 0.97 percent from 2017.
2019 production and marketings were estimated at 220.1 billion and 219.1 billion pounds respectively, down 500 million pounds on both. If realized, 2019 production would be up 2.5 billion pounds or 1.1 percent from 2018.
The projected 2019 Class III milk price average was unchanged from the December estimate but the Class IV projection was raised over $1 per cwt.
Dairy product prices for 2018 were adjusted to reflect available December price data. The 2019 cheese price forecast was lowered while butter, nonfat dry milk, and whey price forecasts were raised from December.
Look for a 2019 Class III milk price average of about $15.05 per cwt., unchanged from the December estimate, and compares to $14.61 in 2018 and $16.17 in 2017.
The Class IV price was projected to average around $15.95, up $1.10 from the December estimate and compares to $14.23 in 2018 and $15.16 in 2017.