Some call it a September surprise. Others call it fodder for the bears.
Monday’s Milk Production report showed preliminary output at 17.6 billion pounds, up 1.3% from September 2018. Output in the top 24 states totaled 16.8 billion pounds, up 1.6%.
Revisions added 10 million pounds to the original 50 state August total, now put at 18.29 billion pounds, up just 0.2% from August 2018. Revisions added 32 million pounds to the top 24 states total.
Cow numbers continued to slip. The head count in the 50 states totaled 9.315 million, down 2,000 from August, which was revised lower by 1,000 cows, and 53,000 head below a year ago.
Output per cow averaged 1,891 pounds, down 72 pounds from August but 34 pounds above a year ago.
California output was up 1.6%, thanks to a 35-pound gain per cow offsetting 5,000 fewer cows milked. Wisconsin was up 0.6%, on a 20-pound gain per cow. Cow numbers were down 6,000 from a year ago.
Virginia had the biggest loss, down 7.3% on 8,000 fewer cows, followed by Arizona, down 4.9% on 11,000 fewer cows.
Texas showed the biggest increase, up 9.3%, thanks to 30,000 more cows and a 70-pound gain per cow.
Idaho was up 3.6%, thanks to 17,000 more cows and a 15-pound gain per cow. New York was up 1.7%, on 6,000 more cows and a 15-pound gain per cow and Minnesota was up 1.1% on a 40-pound gain per cow offsetting 5,000 fewer cows.
Michigan was up 3.8% on a 50-pound gain per cow and 6,000 more cows. New Mexico was up 2.0%, on a 40-pound gain per cow. Oregon was up 3.4% on a 15-pound gain per cow and 3,000 more cows.
Pennsylvania continues to struggle, down 3.8% on a drop of 32,000 cows from a year ago, though output per cow was up 40 pounds.
Washington state was 1.8% on 4,000 more cows and a 10-pound gain per cow.
Monday’s September Milk Production report fed the bears. Tuesday’s September Cold Storage report may add a little more fodder.
September butter stocks totaled 302.1 million pounds, down 2.2 million pounds, or 0.7%, from August but were 19.8 million pounds, or 7.0%, above September 2018.
American cheese stocks totaled 771.4 million pounds, up 5.5 million pounds, or 0.7%, from August but were 32.3 million, or 4.0%, below a year ago.
Stocks in the “other” category climbed to 571.6 million pounds, up 2.1 million pounds, or 0.4%, from August but were up 26.5 million, or 4.9%, from a year ago.
The total cheese inventory crept up to 1.369 billion pounds, up 6.4 million pounds from August but 10.5 million pounds, or 0.8%, below September 2018.
Prices fall, then soar
The CME cheese price roller coaster headed down last week as traders awaited this week’s September Milk Production and Cold Storage reports. The Cheddar blocks closed Friday at $1.9675 per pound, down 13.25 cents on the week but 47 cents above a year ago, when they fell 11.25 cents.
The barrels finished at $2.00, down 2.25 cents on the week, 73.25 cents above a year ago, and 3.25 cents above the blocks, the first inversion since May 10, 2019.
Monday saw the blocks jump 10.25 cents, then tack on another 3.25 cents Tuesday, hitting $2.1025, irrespective of the bearish milk production data and before seeing the cold storage numbers.
The barrels advanced 5.25 cents Monday and did it again Tuesday, hitting $2.1050, a quarter-cent above the blocks. Head scratching started Monday morning.
Dairy Market News reports that Midwestern cheese producers blame $2-plus cheese for sliding sales but cheese output is steady. Milk flowing to the Southeast has kept spot milk at a premium, typically around $1 over Class the past two weeks. Cheesemakers continue to use nonfat dry milk to standardize and fortify and cheese inventories were termed “balanced to tighter.”
The Western market has gone through ups and downs the past few weeks and customers are resistant to current price trends. Production is active.
The higher prices are affecting international requests, however, under the recent US-Japan trade deal that might take effect by Jan. 1, the U.S. will see the elimination of Japan’s tariffs on cheese, its largest dairy product export to Japan, says DMN.
Cash butter closed Friday at $2.1150 per pound, up 2 cents on the week but 14.25 cents below a year ago. 49 cars exchanged hands last week.
The butter inched up a half-cent Monday but lost 3 cents Tuesday, slipping to $2.09.
Central butter output is steady and butter demand is generally steady regionally, says DMN, with some upticks due to the upcoming holidays. Cream is as available as it has been in recent weeks, both regionally and in the West, but cream suppliers are getting more calls from Class II and III producers. Some even warn that there could be a seasonal shortage in the next few weeks.
Western butter contacts believe many end users have fourth quarter needs covered and buyers seem to be holding back on the normal holiday purchase fervor. There is plenty of cream available and butter Inventories, while getting drawn down seasonally, are thought to be heavy, says DMN.
Grade A nonfat dry milk climbed to $1.17 per pound last week, highest since Feb. 18, 2015, up a half-cent on the week, and 29.75 cents above a year ago.
Monday’s powder backed down a half-cent and stayed there Tuesday at $1.1650.
Dry whey saw a Friday close at 28.5 cents per pound, down 1.75 cents on the week, lowest CME price since April 4, 2018, and 29 cents below a year ago. There were 62 trades reported on the week, down from 71 the previous week and 80 the week before.
The whey was unchanged Monday, though 14 trades were recorded. It inched up a quarter-cent Tuesday, to 28.75 cents per pound, with 10 more loads exchanging hands.