CME Cheddar block cheese closed the second Friday of March at $1.5350 per pound, down 7 1/2-cents on the week, ending five weeks of gain, and 3 1/2-cents below a year ago.

The barrels climbed to $1.45 Wednesday, highest price since September, but closed Friday at $1.3650, down 4 1/2-cents on the week and 13 1/4-cents below a year ago. Six cars of block traded hands on the week at the CME and 38 of barrel.

The blocks dropped a penny and a half Monday, as plenty of fresh cheese appears to be available and traders anticipated Tuesday afternoon’s January Milk Production report. They were unchanged Tuesday, holding at $1.52.

The barrels inched up a quarter-cent Monday and gained 3 1/2-cents Tuesday, hitting $1.4025, shrinking the spread to 11 3/4-cents.

Dairy Market News reports that some Midwest cheesemakers say that orders have been slow since early February and seasonally, expectations are not particularly high for certain producers.

That said, some plants have picked up production as milk remains discounted week over week. Continued winter weather in the upper Midwest caused some closures at Class III facilities, pushing extra milk onto the spot market. Cheese inventories are long nationally, though regionally, a number of contacts suggest respective inventories are “in balance.”

Western cheese continues to move well through existing contracts and some manufacturers report “pockets of strong demand.”

Most in the cheese industry suggest that demand is good, but not great. Cheese facilities continue to operate at or near full capacity and processors are happy to push off extra loads of milk into other channels, especially as parts of the region enter spring flush. Cheese stocks are plentiful, and cheese makers want to keep tabs on inventories.

Spot butter started last week jumping 5 1/4-cents, a likely reaction to the CME’s new crop rule, according to insiders, but the markets reacted Tuesday and the gains were short-lived. Butter closed Friday at $2.2675 per pound, down 2 cents on the week but 6 1/4-cents above a year ago, with 29 cars selling on the week.

Monday’s butter was unchanged but it gained 1 1/4-cents Tuesday, climbing to $2.28.

FC Stone dairy broker Dave Kurzawski wrote in his March 8 Early Morning Update: “What we find more and more interesting is that the butter price is able to maintain a $2.20ish price level despite increased fat production by U.S. dairy producers. Forget about aged USDA data, the little nugget you ought to be paying attention to is that fat demand continues to gain ground every day. More people are eating higher fat items in the U.S. for any number of reasons.”

DMN says seasonally available cream is flowing into butter plants with some weather-related exceptions in the upper Midwest but plant managers continue to store butter for the spring and fall demand.

Bulk and print butter sales are “lively” in the West in preparation for the upcoming holiday.

Cream is in good supply and churning is active, despite bad weather and road conditions in some parts of the West. Butter inventories continue to grow at seasonal levels.

Grade A nonfat dry milk saw Friday’s close at 97 1/2-cents per pound, down a penny from the previous week but 26 3/4-cents above a year ago.

The powder was unchanged Monday but lost 1 1/4-cents Tuesday, slipping to 96 1/4-cents per pound, lowest since Jan. 2.

Spot dry whey, which celebrates its one year anniversary at the CME this week, closed Friday at 34 cents per pound, down 2 cents on the week.

Monday’s whey held at Friday’s close and stayed put on Tuesday.

January milk up

Increased output in milk per cow pushed January production above January 2018, the 62nd consecutive month that output topped the year before.

Preliminary USDA data in the top 23 producing states shows output at 17.5 billion pounds, up a bearish 1.3% from 2018, with the 50-state total, at 18.6 billion pounds, up 0.9%. Revisions added 2 million pounds to the initial 50-state December estimate, putting it at 17.1 billion pounds, up 0.8% from 2017.

Finalized data puts total 2018 milk output at 218 billion pounds, up 99 million pounds from last month’s estimate and 1.0% above 2017 output. The 2017 total was revised up 61 million pounds from a month ago. The USDA reported that annual U.S. milk output has increased 15.0% from 2009.

Cow numbers totaled 9.4 million head in 2018, down 0.1% from 2017 but have increased 2.1% from 2009. Output per cow averaged 23,149 pounds in 2018, up 235 pounds from 2017, an average that has increased 12.6% since 2009.

January cow numbers in the 50 states totaled 9.36 million head, down 83,000 from a year ago, the seventh time that cow numbers were below a year ago since May 2016. Output per cow averaged 1,988 pounds, up 35 pounds from the year before and the 39th consecutive month of gain.

California output was up 0.8% from a year ago, thanks to a 25-pound gain per cow outweighing 8,000 fewer cows. Wisconsin was up 2.9% on a 65-pound gain per cow but cow numbers were down 5,000 head.

Idaho was up 3.6%, thanks to 10,000 more cows and a 40-pound gain per cow. New York was up 3.4%, on a 60-pound gain per cow and 2,000 more cows. Pennsylvania was down for the 11th consecutive month, dropping 5.5% on 25,000 fewer cows and 15 pounds less per cow. Minnesota was up 1.6%, on a 50-pound gain per cow offsetting 5,000 fewer cows.

Michigan ended six consecutive months of declines, jumping 1.1% on a 55-pound gain per cow offsetting 6,000 fewer cows. New Mexico was down 3.5%, on a 10-pound drop per cow and 10,000 fewer cows milked. Texans put 77 million pounds more in the tank than a year ago, a 7.3% increase, thanks to 18,000 more cows and a 75-pound per cow increase.

Vermont crept up 0.9%, on a 45-pound per cow increase offsetting 2,000 fewer cows milked. Florida was down 4.5% on 8,000 fewer cows though output per cow was up 35 pounds. Washington state was up 3.4% on a 40-pound gain per cow but cow numbers were down 4,000 head.

Butter stocks down

Jan. 31 butter stocks totaled 211.1 million pounds, according to preliminary data in USDA’s latest Cold Storage report, 31.8 million pounds, or 17.7%, more than December but an unexpected 15.6 million pounds or 6.9% below January 2018 and the second time stocks fell below a year ago since February 2018.

American type cheese, which includes Cheddar, climbed to 805.3 million pounds, up 5 million pounds, or 0.6%, from December but 63.5 million, or 8.6%, above a year ago.

The other cheese category hit 525.3 million pounds, up 10.6 million pounds, or 2.1%, from December and 17.2 million, or 3.4%, above a year ago.

The total cheese inventory stood at 1.36 billion pounds, up 15.2 million pounds, or 1.1% from December but 81.4 million pounds or 6.4% above a year ago and the 51st consecutive month stocks topped a year ago.

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

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