Dairy prices strengthened the second week of December as traders awaited the last Global Dairy Trade auction of 2018 on Tuesday, plus Wednesday afternoon’s November Milk Production report.

Cheddar block cheese, after falling to $1.33 per pound last Monday, lowest CME level since May, 2016, rallied and closed Friday at $1.4075, up 5 3/4-cents on the week but 12 1/4-cents below a year ago. The barrels finished at $1.31, up 8 3/4-cents on the week and 35 cents below a year ago. Five cars of block were sold on the week and 27 of barrel.

The blocks inched up a quarter-cent Monday and stayed there Tuesday at $1.41. The barrels were up a penny Monday, hitting $1.32, and held there Tuesday, 9 cents below the blocks.

Demand reports are on the slower side ahead of the end-of-year holidays, says Dairy Market News, though cheese output saw some upticks. The spot milk price range widened from $3 under to $2.50 over Class III. Some plant managers suggest production upticks will last until the last week of December, then drop off through Jan. 1. Midwestern cheese inventories are generally heavy, but some managers relay that their stocks are intentionally “scant.” Cheese markets are far from healthy, says DMN.

Cheese production is very active in the West with most facilities at full capacity or close to it. Inventories surpass demand but end of the year buying interest is stable to up a bit. The low price trends are enhancing sales but buyers are closely monitoring prices and limiting purchases as they have enough inventory. The U.S. market tone is weaker, but remains competitive, according to DMN.

Butter fell to $2.1750 per pound last Thursday, lowest CME price since July 6, 2018, but closed Friday at $2.19, still 1 3/4-cents lower on the week and 5 1/2-cents below a year ago. Only 1 sale was reported last week.

The butter was down a half-cent Monday but gained a penny and a half Tuesday, hitting $2.20, with 7 cars trading hands.

Churns have begun to run actively in the Central region, according to DMN. “As cream prices continue their seasonal declivity, butter plants are building stocks for the spring holiday demand push early in 2019.”

Western butter makers say retail orders are still coming in and while print sales normally trail off after Thanksgiving, so far, they have been relatively steady. Bulk buyers seem willing to make purchases for first and second quarter needs as the market price eases. Inventories are shrinking along seasonal patterns.

Spot Grade A nonfat dry milk closed Friday at 94 cents per pound, up 5 1/2-cents and 28 1/4-cents above a year ago; 23 carloads found new homes last week at the CME.

Monday’s trading took the powder a half-cent lower but raised it three-quarters Tuesday, to 94 1/4-cents per pound, highest CME price since June 1, 2017.

Cash dry whey saw a Friday close at 45 cents per pound, up 1 1/4-cents on the week, with 4 sales reported for the week at the CME.

Whey was unchanged Monday but jumped 2 1/4-cents Tuesday, to 47 1/4-cents per pound, highest price since October 25, 2018.

GDT up

The last Global Dairy Trade auction of 2018 ended on an up note. Traders took the weighted average of products offered up 1.7 percent, following the 2.2 percent rebound on Dec. 4, ending seven sessions of decline. Sellers brought 79.8 million pounds to market Tuesday, down from 80.4 million in the December 4 session. The last weighted average of 2017 fell 3.9 percent.

The gains were led Tuesday by butter, up 4.9 percent, following a 2.7 percent rise last time. Anhydrous milkfat was up 4.0 percent, after a 3.9 percent rise last time. Skim milk powder was up 3.4 percent, after it inched 0.3 percent higher last time, and Cheddar cheese was up 2.2 percent, after dropping 2.2 percent last time. Lactose was up 1.6 percent and whole milk powder inched up 0.3 percent, after it jumped 2.5 percent.

Rennet casein showed the only loss, down 2.1 percent.

FC Stone equates the GDT 80 percent butterfat butter price to $1.7381 per pound U.S., up 8.1 cents from the last session. CME butter closed Tuesday at $2.20. GDT Cheddar cheese equated to $1.4799 per pound, up 3.6 cents from the last event and compares to Tuesday’s CME block Cheddar at $1.41. GDT skim milk powder averaged 92.63 cents per pound, up from 89.35 cents last time, and whole milk powder averaged $1.2129, up from $1.2095. CME Grade A nonfat dry milk closed Tuesday at 94 1/4-cents per pound.

Fluid sales slip

Americans drank more milk in October than September but not quite as much as a year ago. The USDA’s latest tracking data shows October sales at 4.1 billion pounds, down just 0.3 percent from October 2017.

Conventional product sales totaled 3.9 billion pounds, down 0.6 percent from a year ago; organic products, at 228 million pounds, were up 4.7 percent and represented about 5.5 percent of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, up 3.6 percent from a year ago, up 1.5 percent year to date, and made up 31.1 percent of total fluid sales in the month and 31.8 percent for the year so far.

Skim milk sales, at 313 million pounds, were down 8.4 percent from October 2017, down 9.9 percent year to date, and made up 8.0 percent of total milk sales for the year so far.

Total packaged fluid milk sales in the 10-month period climbed to 38.9 billion pounds, down 2.2 percent from the same period a year ago.

Conventional products year to date totaled 36.8 billion pounds, down 2.4 percent; organic products, at 2.2 billion pounds, were up 0.7 percent. Organic represented about 5.5 percent of total fluid milk sales January through October.

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

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

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