Cash cheese prices continued to strengthen in the Valentine’s Day week as traders anticipated Tuesday’s Global Dairy Trade auction and the shortened President’s Day holiday week.

This week we will also get Milk Production reports for December and January, the Ag Prices report, Slaughter report, announcement of the March Class I base milk price, and December Cold Storage data.

The Cheddar blocks climbed to $1.5925 per pound last Wednesday, highest CME price since mid-October 2018, but they closed Friday at $1.58, up 5 1/4-cents on the week and 4 cents above a year ago.

The barrels finished at $1.4350, up 6 1/4-cents on the week, highest since Sept. 13, 2018, but 4 1/2-cents below a year ago. Sales last week included 6 cars of block and 20 of barrel.

The markets were closed Monday for Presidents’ Day. The blocks were up a penny and a half Tuesday, hitting $1.5950, while the barrels backtracked a quarter-cent, to $1.4325, 16 1/4-cents below the blocks.

The West has seen its own vortex of Arctic weather with cold, wind, and snow causing more than the usual challenges and the loss of over 1,800 dairy cows in the Yakima Valley.

Trade trouble

Meanwhile, the Feb. 12 Daily Dairy Report points out that “the increase in U.S. cheese prices has been augmented by the dollar, which continues to gain ground against the Euro, New Zealand dollar and Mexican peso. The strong dollar makes U.S. cheese more expensive when the price is converted to importers’ currency.

Tariffs put U.S. cheese at a further disadvantage in Mexico and China,” according to the DDR.

Those tariffs drew sharp criticism from the Wisconsin-based American Dairy Coalition: “Mexico imports nearly a quarter of the U.S. dairy industry’s exports annually. It’s a critical $1.4 billion marketplace. And it’s one that President Trump continues to risk damaging permanently and unnecessarily. Locked in a trade war since May, Mexican leaders are setting aside American business connections that took decades to build as our neighbors to the south find new sources of cheese, butter and other products.”

Weather worries

Winter weather remains the topic of discussion among Midwest cheesemakers, according to Dairy Market News. Cheese production remains slower as plants work on inventories and weather-related production stoppages have slowed or stopped production in some cases.

Contacts suggest cold weather and snow in the upper-Midwest were affecting both milk and cheese deliveries.

Western cheese makers stated that new business deals are harder to come by and demand for American style blocks and barrels is slow. “Buyer interest seemingly ebbs and flows as the market price for cheese rises and falls.”

As to the strength in cheese prices, some contacts suggest that fourth quarter consumption was better than expected and the industry is seeing a refill from the winter holidays and Super Bowl.

Others say marketers are getting prepared for upcoming export tenders while others believe more cheese is moving into aging programs. They agree that inventories are long and “demand does not seem to be at levels hoped for.”

Cash butter saw its Friday price at $2.25 per pound, down 4 1/2-cents on the week but still 15 cents above a year ago; 24 cars exchanged hands on the week.

The butter was unchanged Tuesday.

Sales stunted

Central contacts suggest that butter sales have been stunted while others maintain sales are seasonally slower, but meeting expectations.

Cream is readily available and butter producers are taking advantage of it and “booking loads well ahead of time, indicating what they suggest may be a sign of near to mid-term oversupplies.”

Western processors are proactively running churns to clear ample supplies of cream. Cream is plentiful and some distressed loads are moving out of the region at discounted prices. Bulk butter is being stored for use later in the year.

Retail and club store butter sales are generally good, according to DMN, and while producers would prefer to make more sales now, they are content with current inventory levels.

Grade A nonfat dry milk saw last week’s closing at 98 3/4-cents per pound, down three-quarter cents but 28 1/4-cents above a year ago; 30 cars exchanged hands on the week, 23 on Thursday alone, the highest single day total since April 25, 2018.

Tuesday’s powder held at Friday’s close.

Dry whey closed Friday at 35 1/4-cents per pound, down 1 1/4-cents, with 42 cars finding new homes on the week, a single-day record 15 on Wednesday.

The whey inched a quarter-cent higher Tuesday, to 35 1/2-cents per pound, with 10 cars unloaded.

GDT climb slows

The rapid rise of the previous five Global Dairy Trade auctions slowed Tuesday as the weighted average of products offered inched up just 0.9 percent, following jumps of 6.7 percent on Feb. 6, 4.2 percent on Jan. 15 and 2.8 percent on Jan. 2 but is the sixth consecutive session of gain.

All products offered saw gains except lactose, which was down 2.9 percent. The gains were led by Cheddar cheese, up 2.9 percent, following a1.4 percent boost in the last event. Skim milk powder was up 2.8 percent after jumping 3.9 percent last time, and rennet casein was up 2.7 percent.

Butter was up 1.2 percent, following a 4.2 percent advance, and anhydrous milkfat was up 0.7 percent, following a 5.8 percent rise. Whole milk powder inched 0.3 percent higher, after jumping 8.4 percent last time.

FC Stone equates the GDT 80 percent butterfat butter price to $1.9892 per pound U.S., up 2.2 cents from the last session. CME butter closed Tuesday at $2.25. GDT Cheddar cheese equated to $1.6634 per pound, up 4.6 cents from the last event and compares to Tuesday’s CME block Cheddar at $1.5950. GDT skim milk powder averaged $1.1702 per pound, up from $1.1494 last time.

Whole milk powder averaged $1.3706 and compares to $1.3731 last time. CME Grade A nonfat dry milk closed Tuesday at 98 3/4-cents per pound.

Fluid down

As the debate continues over plant-based beverages calling themselves “milk,” U.S. cow milk sales took another dip in the final month of 2018. The Agriculture Department’s latest data puts December sales at 4.0 billion pounds, down 2.1 percent from December 2017, following a 0.1 percent slip in November.

Conventional product sales totaled 3.8 billion pounds, down 2.4 percent from a year ago. Organic products, at 219 million pounds, were up 2.0 percent and represented about 5.4 percent of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, up 0.8 percent from a year ago, up 1.6 percent year to date, and made up 32.5 percent of total fluid sales in the month and 31.8 percent for the year so far. Skim milk sales, at 303 million pounds, were down 10.5 percent from December 2017, down 9.8 percent year to date, and made up just 7.9 percent of total milk sales for the year so far.

Total packaged fluid milk sales for the year fell to 47.1 billion pounds, down 2.0 percent from 2017. Conventional products year to date totaled 44.5 billion pounds, down 2.2 percent. Organic products, at 2.6 billion pounds, were up 0.6 percent and represented about 5.5 percent of total fluid milk sales for the year.

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

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