Powder and cheese lifted Tuesday’s Global Dairy Trade auction, ending four consecutive declines.

The weighted average of products offered jumped 2.7%, following a 0.4% loss on July 2. Sellers brought 55.1 million pounds of product to the market, up from 54.5 million in the last event and the highest since Feb. 19.

All products traded were in the black, led by skim milk powder, up 3.8%, following a 3.2% rise last time.

Whole milk powder was up 3.6%, after holding steady last time. GDT Cheddar was up 3.3%, following three consecutive events of loss, down 1.5% on July 2.

Butter and anhydrous milkfat were both up 1.7%, following losses of 4.8 and 1.9%, respectively.

FC Stone equated the GDT 80% butterfat butter price to $1.9199 per pound U.S., up 3 cents from the July 2 event. CME butter closed Tuesday at $2.4350.

GDT Cheddar cheese equated to $1.7548 per pound, up 5.1 cents from the last event and compares to Tuesday’s CME’s block Cheddar at $1.7750.

GDT skim milk powder averaged $1.1365 per pound, and compares to $1.1020 last time. Whole milk powder averaged $1.3944, up from $1.3465 last time. CME Grade A nonfat dry milk closed Tuesday at $1.0250 per pound.

CME relapses

While the earth shook a bit in Seattle and the Pacific Northwest on Friday, cheese prices at the Chicago Mercantile Exchange did a little shaking as well. The Cheddar blocks closed at $1.7850 per pound, down 4 1/2-cents on the day and 6 1/4-cents on the week, but were still 22 1/2-cents above a year ago.

The barrels finished at $1.74, 4 cents lower on the week, 31 3/4-cents above a year ago, and at a more typical 4 1/2-cents below the blocks.

Monday saw the blocks lose 2 1/4-cents and then regain 1 1/4-cents Tuesday, hitting $1.7750. The barrels were down 2 3/4-cents Monday and lost 2 1/4-cents Tuesday, slipping to $1.69.

FC Stone in its July 15 Early Morning Update said, “The surge of buying in June and early July is subsiding (or at least subsided last week), setting up what appears to be a healthy correction for futures prices.” That, as Midwest cheesemakers suggest the milk supply may be tightening, according to Dairy Market News.

While there is still plenty of milk for cheese vats, there does not seem to be an abundance of spot milk offers and holiday offers were less available than in previous years. Cheesemakers understand milk intakes and components may slide lower as heat and humidity issue into the Upper Midwest. Crop and forage concerns, and the exodus of more dairy farms from the industry, may compel manufacturers to work harder in finding extra milk later in the year.

Manufacturers are running facilities at or near full schedules with cheese orders to fill. Cheese stocks are adequate to meet most needs, but processors want to stay ahead of late season demand.

The grilling season is on in the West as temperatures rise and cheese sales remain active. Contacts report that with current strong domestic prices, it’s harder to attract more international buyers.

Butter started last week with some slippage but ended at $2.4125 per pound, up three-quarter cents and 18 3/4-cents above a year ago.

It ticked up 1 3/4-cents Monday and gained another half-cent Tuesday, rising to $2.4350, the highest since May 22, 2018.

Butter manufacturing in the Central region is steadily slowing as cream volumes are less available, according to DMN. Cream pulls from Class II, especially ice cream makers are strong. With summer season in full swing and milk butterfat levels at the lowest level of the year, the butter market is expected to firm, according to processors.

Butter manufacturing in the West has returned to normal following the holiday week. Churning is proceeding with the available cream, but some butter makers say production is lower than expected.

Spot nonfat dry milk closed 1 1/4-cents lower last week, at $1.0275, 27 1/4-cents above a year ago.

Monday’s powder was unchanged but it inched a quarter-cent lower Tuesday, sliding to $1.0250, lowest since April 24, 2019.

Interestingly, while U.S. cheese and butter prices are the highest in the world, U.S. powder is the lowest.

Dry whey closed Friday at 32 1/4-cents per pound, down a half-cent on the week and 9 1/2-cents below a year ago.

The whey inched down a quarter-cent Monday but regained it Tuesday.

Estimate unchanged

The Agriculture Department left its 2019 milk production estimate in last week’s World Agricultural Supply and Demand Estimates report unchanged from last month, ending seven consecutive reductions. It did reduce the 2020 forecast due to slower expected growth in milk per cow.

2019 production and marketings remain estimated at 218.2 billion and 217.2 billion pounds, respectively. If realized, 2019 production would be up just 600 million pounds, or 0.3%, from 2018.

2020 production and marketings are estimated at 221.8 billion and 220.8 billion pounds, respectively, down 100 million pounds on both from last month. If realized, 2020 milk production would be up 3.6 billion pounds or 1.6% from 2019.

The 2019 Class III milk price forecast was raised as a higher expected cheese price more than offset a lower whey price. Look for the Class III to average about $16.05 per cwt. in 2019, up 15 cents from last month’s projection, and compares to a 2018 average of $14.61 and $16.17 in 2017. The 2020 average was put at $16.65, unchanged from last month’s projection, as the fractionally higher cheese price is offset by a lower expected whey price.

The Class IV price was raised as an expected higher nonfat dry milk price more than offsets the lower butter price. It is expected to average $16.45 per cwt. up a nickel from last month’s estimate and compares to $14.23 in 2018 and $15.16 in 2017. The 2020 Class IV forecast was lowered a dime to $16.75, reflecting a lower butter price.

EPA vs. dairy

Dairy producers in Washington State got some undeserved treatment from the Environmental Protection Agency. I talked about it in the July 15 Dairy Radio Now broadcast with Gerald Baron, executive director of Save Family Farming, headquartered in Bellingham, Wash.

Baron said farmers across the country have had their issues with the EPA but this problem in Region 10, which includes Washington, Oregon, Idaho, and Alaska, has been a major problem for a long time.

It focuses on an EPA nitrate study completed in 2013 that Baron says “points the finger at current dairy operations for nitrate in ground water that we know has been there for many years, based upon previous farm practices.”

The EPA sought to place the blame on dairy farmers, Baron said, with a study that every science expert who has looked at it, and there have been 15 to 20 nationally recognized experts, have called the study “false.”

“Worse than that,” added Baron, “many of the experts said the study was intentionally false.” He said the experts believe the study “set about to prove that dairy farmers were responsible (for the nitrates) when the data simply does not show that.”

Baron said they hope President Trump’s new regional administrator to the district will be helpful in resolving the issue and has showed promise that he might, however, Baron says the administrator’s staff has “overwhelmed him.” “The administrator is unwilling to allow a peer review, a real science review that this study never had and that’s what we’re complaining about.”

Other national farm groups are taking interest in the case, Baron says, especially in the dairy community, and are working with the Washington State Dairy Federation to “get the EPA to take action on this. We want them to retract the study and call in a peer review for this study that never occurred,” he concluded. More details can be found at www.savefamilyfarming.org.

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

Recommended for you