Cash dairy prices saw some ups and downs the first full week of May but closed mostly higher.

Block cheese climbed to $1.7075 per pound last Tuesday, the highest since March 28, but closed at $1.68, up a half-cent on the week and 4 3/4-cents above a year ago.

The barrels hit $1.74 Tuesday, the highest since Nov. 10, 2017, but finished the week at $1.71, up 4 3/4-cents, 9 cents above a year ago, and 3 cents above the blocks.

The barrels plunged 7 1/4-cents Monday and lopped off 3 3/4-cents Tuesday, dropping to $1.60.

The blocks were down 1 1/4-cents Monday and lost three-quarters Tuesday, dipping to $1.66, 6 cents above the barrels.

Cheese demand reports remain mixed in the Central U.S., according to Dairy Market News. Some pizza cheese producers report that sales are slower than expected but are ahead of last year. Spot milk prices remained steady as milk inventories have yet to meet flush levels of previous years. DMN says the average spot milk price was $2.50 under one year ago and $4.50 under two years ago during this week. Central cheese inventories are generally under control while national stocks remain long.

Western cheese output continues to run at or near capacity, as there’s plenty of milk available. Domestic demand is solid, but prices at a few trading venues are making it challenging to compete in some international markets. Without export assistance or price concessions, U.S. cheese sellers face headwinds to make large sales overseas.

Cash butter closed Friday at $2.34 per pound, up 6 3/4-cents on the week and a half-cent above a year ago.

Monday’s butter headed up 2 cents, then gave back a penny Tuesday, slipping to $2.35 per pound.

The flow of cream to Central churns continued to slow last week. Many are “micro-fixing” (thawing frozen blocks into consumer ready blocks or sticks), according to DMN, but “there are a few producers willing to pay the increased price for cream in order to catch up on building stocks after some longer-than-expected plant closures during the prime churning season, mainly due to weather-related closures.”

Buying interest is steady to slower while meeting most expectations and butter market tones remain steady. Some contacts are bullish, bracing for a market spike in the fall, akin to 2014 and 2015. Others suggest recent history would show us butter markets are hesitant to dramatically shift in any direction.

Cream availability in the West is a bit tighter compared to last year. Butter processors may be finding the loads of cream needed for day-to-day churning but they are not getting them at discounted prices. Butter output is steady and sales to the retail sector and restaurants have maintained their solidity of the past few weeks but demand is not enough to absorb all the output.

Grade A nonfat dry milk closed Friday $1.0675 per pound, after hitting $1.0725 on Thursday, highest CME price since Oct. 5, 2015. That’s 21 3/4-cents above a year ago.

Monday’s powder was down three-quarters and it surrendered another quarter-cent Tuesday, slipping to $1.0575.

Spot dry whey was unchanged all week, holding at 34 3/4-cents per pound for 7 consecutive sessions, 2 1/4-cents above a year ago, with no sales reported.

The whey was down three-quarters Monday and stayed there Tuesday at 34 cents per pound.

The market won’t have a lot to feed on this week. The USDA’s Livestock, Dairy, and Poultry Outlook on Thursday is the only report scheduled that we regularly monitor.

Projections lowered

The Agriculture Department lowered its 2019 milk production estimate for the sixth time in Friday’s World Agricultural Supply and Demand Estimates (WASDE) report, blaming declining milk cow inventories and slow growth in milk per cow.

2019 production and marketings are now estimated at 218.7 billion and 217.7 billion pounds, respectively, down 800 million pounds on production from last month’s estimate and 900 million pounds lower on marketings. If realized, 2019 production would be up just 1.1 billion pounds or 0.5% from 2018.

The report provided the first view of what is expected for 2020, projecting milk output to hit 222.7 billion pounds, which would be up 4 billion pounds from 2019.

Dairy herds are expected to begin to expand as producers respond to higher milk prices and lower feed costs, according to the WASDE. Milk per cow is expected to continue increasing, plus the forecast reflects the one extra day due to leap year.

Cheese, butter, and nonfat dry milk prices were forecast higher than the previous year on robust demand expectations.

However, the whey price forecast was slightly lower on continued softness in export demand.

The Class III milk price is forecast to increase as stronger cheese prices more than offset the expected weaker whey price. Look for a 2019 average at around $16.05 per hundredweight, up 70 cents from last month’s estimate and compares to $14.61 in 2018 and $16.17 in 2017. The 2020 average is projected at $16.55.

The Class IV price is expected to increase due to higher NDM and butter prices. It’s projected at around $16.20, up 15 cents from last month’s projection, and compares to $14.23 in 2018 and $15.16 in 2017.

March fluid down

Woes continue in U.S. fluid milk sales. The latest data report 3.9 billion pounds of packaged fluid sales in March, down a hefty 4.7% from March 2018.

Conventional product sales totaled 3.7 billion pounds, down 4.5% from a year ago. Organic products, at 202 million pounds, were down 8.1% but still represented about 5.2% of total sales for the month.

Whole milk sales hit 1.2 billion pounds, down 3.6% from a year ago and made up 31.8% of total fluid sales in the month. Sales for the three-month period totaled 28.8 billion pounds, virtually unchanged from a year ago.

Skim milk sales, at 294 million pounds, were down 11.6% and made up 7.5% of total milk sales for the month.

Total packaged fluid milk sales for the three-month period totaled 11.8 billion pounds, down 2.4% from a year ago.

Conventional products year-to-date totaled 11.1 billion pounds, down 2.2%. Organic products, at 631 million pounds, were down 4.5% and represented about 5.4% of total fluid milk sales for the period.

The figures represent consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92% of total fluid milk sales in the U.S.

Columnist Lee Mielke wraps up the week's dairy industry news.

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