Strength remained in the Global Dairy Trade auction where Tuesday’s weighted average jumped 4.3%, following a 2.2% advance Oct. 19.

Traders brought 66.0 million pounds of product to market, up from 61.4 million on Oct. 5, and the most since the Jan. 5 event.

Cheddar cheese led the gains, soaring 14.1%, after a 2.9% gain on Oct. 19. Skim milk powder was up 6.6%, following a 2.5% gain. Whole milk powder was up 2.7%, which follows a 1.5% increase. GDT butter was up 4.7%, duplicating the gain last time, and anhydrous milkfat was up 4.2%, following a 2.5% advance last time. Lactose was up 1.6% after gaining 5.9%.

Buttermilk powder was the only product in negative territory, down 3.8%.

StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.3674 per pound U.S., up 10.6 cents, after gaining 10.3 cents last time, and compares to CME butter which closed Tuesday at a cheap $1.98.

GDT Cheddar, at $2.2941, was up 28.7 cents, and compares to Tuesday’s CME block Cheddar at a bargain $1.6750.

GDT skim milk powder averaged $1.6450 per pound, up from $1.5426. Whole milk powder averaged $1.7785 per pound, up from $1.7248. CME Grade A nonfat dry milk closed Tuesday at $1.5650 per pound.

CME cheese falling

Cash dairy product prices at the Chicago Mercantile Exchange ended October with cheese heading lower and butter, powder and whey climbing.

The Cheddar blocks closed the last Friday of October at $1.6750 per pound, down 13.50 cents on the week, lowest since Aug. 8, 17.50 cents lower than they were on Oct. 1, and $1.1075 below that week a year ago.

The barrels saw their Friday finish at $1.82 per pound, down 4.25 cents on the week, 7.50 cents above their Oct. 1 perch, 71 cents below a year ago, and an inverted 14.50 cents above the blocks.

There were 4 sales of block last week and 22 for the month of October, up from 18 in September. The week saw 11 cars of barrel trade places and 49 for the month, down from 69 in September.

Monday’s and Tuesday’s trading left the 40-pound blocks at Friday’s close, as traders weighed Tuesday morning’s GDT and awaited the September Dairy Products report on Thursday afternoon.

The 500-pound Cheddar barrels dropped 6.75 cents Monday, on 2 uncovered offers, and plunged 9.25 cents Tuesday on a trade, to $1.66, lowest CME price since Sept. 28, and a more normal 1.50 cents below the blocks.

Midwest cheesemakers are busy according to Dairy Market News. “Plant managers report existing employees working overtime to fulfill needs is the strategy, and even then there are shifts not being staffed.” Cheese customers have also been very busy. Demand for all varieties is strong. Spot milk prices ranged from Class III to $1 over. Even with plant outages in the region and growing milk output, milk usage kept offers quieter last week, according to DMN.

Looking westward, food service cheese demand remains steady and retail sales are even, year over year. Export interest is healthy, says DMN, but ports are still congested and shipping is not without difficulties. Production at some plants is limited by staffing shortages, but other facilities are able to operate at capacity and work through ample milk supplies. Cheese inventories are plentiful and growing, although block availability was said to be looser than barrels. Some contacts believe tighter barrel supplies may have contributed to the inversion.

CME butter had a good week, closing Friday at $1.94 per pound, up 10.50 cents, up 19.25 cents for the month, and 55 cents above a year ago. There were 14 sales on the week and 25 for the month, down from 121 in September.

The butter was up a penny Monday and added 3 cents Tuesday, hitting $1.98 per pound, highest since June 4, 2020.

Butter producers say cream remains tight, if not tighter. Production schedules are reportedly stunted, due primarily to plant employee and driver shortages. There have been recent improvements in hiring, but the timeframe for a more normal production situation is unpredictable, according to plant managers. As manufacturing geared for holiday retail order surges, bulk butter availability has declined and prices have done the opposite. Butter market tones are notably bullish, says DMN. Some believe this shift could be short-lived while others are “viewing 2022 through a different lens.”

Cream has been available and is meeting demand in recent weeks in the West but stakeholders are trying to find a home for it after the fire at an Idaho plant. Food service butter demand is holding steady, says DMN, but contacts report retail demand has softened.

Retailers are looking to stock coolers in anticipation of strong holiday demand. Fresh inventories of butter are tight, though older stocks are available. Labor shortages are causing producers to run shortened schedules but are running busy schedules when able, to fulfill purchases. CME butter prices are increasing but contacts report that tighter fresh butter availability and limited production contributed to the higher prices.

Cash Grade A nonfat dry milk closed the week at $1.5575 per pound, 2 cents higher on the week, 16 cents above the Oct. 1 posting, and 45 cents above a year ago. Sales for the week totaled 13 loads and 17 for the month, down from 69 in September.

Traders took the powder down 0.25 cents Monday but it was bid back up a penny Tuesday, to $1.5650 per pound, highest since Aug. 6, 2014.

CME dry whey closed Friday at 63 cents per pound, up 1.25 cents on the week, up 5 cents on the month, and 23 cents above a year ago. There were 6 sales on the week and 16 for the month, up from 13 in September. Domestic and international whey demand is good.

Monday’s whey was unchanged but added 1.50 cents Tuesday, hitting 64.50 cents per pound, highest since May 26.

Margin turns upward

One of the measures of dairy farm profitability appears to have turned the corner. A small rise in the September All Milk Price and some relief in corn and soybean prices moved the September milk feed ratio in a positive direction for the first time since November 2020. The USDA’s latest Ag Prices report has the ratio at 1.69, up from 1.50 in August, but down from 2.27 in September 2020.

The index is based on the current milk price in relationship to feed prices for a ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, 1 pound of milk would only purchase 1.69 pounds of dairy feed of that blend.

The U.S. all milk price averaged $18.40 per cwt., up 70 cents from August and 70 cents above Sept. 2020.

The California all milk price, at $18.80, was up 70 cents from August and $1.50 above a year ago. Wisconsin’s, at $18.30, was up 90 cents from August and 40 cents above a year ago.

The national average corn price slipped to $5.45 per bushel, down 87 cents per bushel from August, but still $2.04 per bushel above Sept. 2020.

Soybeans averaged $12.20 per bushel, down $1.50 from August after falling 40 cents the previous month, but were still $2.96 per bushel above Sept. 2020.

Alfalfa hay averaged $209 per ton, up $3 from August and $41 above a year ago.

Looking at the cow side of the ledger, the September cull price for beef and dairy combined averaged $72.90 per cwt., down $3.10 from August, $6.30 above Sept. 2020, and $1.30 above the 2011 base average of $71.60 per cwt.

Quarterly milk cow replacement prices averaged $1,340 per head in October, down $40 from July and even with October 2020. Cows averaged $1,300 per head in California, down $50 from July and down $50 from a year ago. Wisconsin’s average, at $1,450 per head, was down $30 from July but $30 above October 2020.

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