CME cheese prices ended on the first day of summer at the highest levels in the world as traders anticipated the afternoon’s May Cold Storage report.

The Cheddar blocks finished at an impressive $1.8250 per pound, up 4 1/4-cents on the week and 33 1/2-cents above a year ago. The barrels closed at $1.7375, up 13 1/4-cents, a whopping 45 1/4-cents above a year ago, and the highest since May 7, 2019.

Monday’s block price ticked up 1 1/2-cents while the barrels rolled 1 3/4-cents lower. The blocks inched a half-cent higher Tuesday, to $1.8450, highest CME price since Nov. 23, 2016. The barrels held at Monday’s close of $1.72, an unsustainable 12 1/2-cents below the blocks.

CME traders have pretty much ignored the slippage of the recent GDT auctions as a domestic shortage of milk and fresh Cheddar currently rules the thought process. Cheese demand remains “somewhat positive,” according to Dairy Market News. Cheese production has increased and some cheesemakers are reporting deeper discounts on spot milk, with prices 50 cents to $3 under Class. Production schedules are fairly busy, with some at 7-day workweeks for the near term.

Western contacts are trying to scrutinize the rise in cheese prices. Buyer interest has improved and supplies may be tightening. Retail accounts, foodservice and export demand have been steady or better than average. Many cheese facilities are running at or near full production and milk supplies are adequate but “There is still enough unease in the market to remind many that until trade issues are fully resolved and stocks are held in balance, volatility and recidivism could take cheese prices back down,” warns DMN.

Cash butter closed at $2.39 per pound Friday, up 2 1/2-cents on the week and 10 cents above a year ago.

The butter was up 1 1/4-cents Monday and another 1 1/2-cents Tuesday, hitting a globally high $2.4175, highest since May 30, 2018.

Butter prices had shied away from the $2.40 mark but market sentiment remained resolute, according to DMN. Cream is expected to soon reach its annual peak on tightness, though loads in parts of the Midwest and elsewhere in the region are still to be had. Ice cream demand and thus production has been delayed by wet, cool weather but butter demand remains steady.

Western butter plants are running steady to slow because cream is more difficult to get as ice cream producers are taking a big chunk of the cream. Butter supplies are balanced with the needs of the market. Retail demand is solid but, with some schools out for the summer, sales might decline a bit.

Grade A nonfat dry milk saw a Friday close at $1.0450 per pound, three-quarter-cents lower on the week but 28 1/4-cents above a year ago.

Monday’s powder gave back Friday’s half-cent gain and lost another half-cent Tuesday, slipping to $1.0350, lowest since May 2, 2019.

Spot dry whey ended last week at 34 1/4-cents per pound, down 2 cents and 5 1/2-cents below a year ago.

The whey gained a penny Monday and inched a quarter-cent higher Tuesday, creeping back to 35 1/2-cents per pound.

Stock drop

U.S. cheese consumption is doing well as evidenced in current prices and the USDA’s latest Cold Storage report issued Friday afternoon.

Total stocks on May 31 amounted to 1.386 billion pounds, down an attention-grabbing 12.8 million pounds or 1% from April and were only fractionally above those in May 2018.

The Daily Dairy Report says this is the first time since 2012 and only the fourth time in history that U.S. cheese inventories declined from April to May, a time typically used for inventory building. Furthermore, the DDR says this was the largest April to May drawdown on record.

Breaking it down, American stocks totaled 784.8 million pounds, up 2.2 million pounds or 0.3% from April but 19.3 million or 2.4% below a year ago.

Stocks in the other cheese category slipped to 576.5 million pounds, down 11.5 million pounds or 2% from April but were up 27.1 million or 4.9% from a year ago.

May butter stocks climbed to just under 314 million pounds, up 23.2 million pounds or 8% from April but were 24.5 million or 7.2% below those a year ago.

Class I up

The Agriculture Department announced the July Federal order Class I base milk price at $17.18 per hundredweight, up 11 cents from June and $1.82 above July 2018. It is the highest Class I price since January 2017 and the equivalent to $1.48 per gallon, up from $1.32 a year ago. The seven-month Class I average stands at $16.12, up $1.52 from a year ago but 20 cents shy of the 2017 seven-month average.

Culling increases

Dairy cow culling dropped in May from April but remained above May 2018. The latest Livestock Slaughter report shows an estimated 258,100 head were slaughtered under federal inspection, down 10,400 head from April but 13,000 head or 5.3% above a year ago. The five-month period saw 1.4 million head retired from the dairy business, up 75,100 or 5.6% from 2018.

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

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

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