Cash cheese prices soared last week, pulling Class III futures sharply higher as well. The Cheddar blocks closed Friday at $1.78 per pound, up a whopping 47.5 cents on the week, the fourth consecutive week of gain, and 10.75 cents above a year ago.

The barrels finished at $1.72, 45 cents higher on the week and 9.5 cents above a year ago. Five cars of block exchanged hands last week at the CME and 15 of barrel.

Traders took the blocks up 3.5 cents Monday on 3 unfilled bids, as they anticipated Tuesday’s Global Dairy auction and awaited April’s Milk Production report on Wednesday and Cold Storage and Slaughter reports on Thursday.

The blocks tacked on 3.5 cents Tuesday, again on unfilled bids, and hit $1.85, highest since March 19.

The barrels were up 1.75 cents Monday and 4.5 cents Tuesday, reaching $1.7825, 6.75 cents below the blocks.

A lot of eyes will be on Wednesday’s April Milk Production report, which won’t likely show much, if any, decrease yet in milk output on the farm from farmers cutting back. That will likely be seen in the May data but the April Cold Storage report will be closely viewed to get a read on what demand looked like.

Cheese market tones were “resolutely more positive” last week, according to Dairy Market News. Midwest cheese manufacturing is busy and plant managers have increased output as foodservice orders have shifted much higher in recent weeks. Retail orders remain steady to stronger.

Milk availability has begun to reflect upward production trends and spot milk Class plus price overages have been reported for only the second time this year but are expected to continue, says DMN, while contacts say “discounts may be nowhere to be found. “

Western cheese sales were a bit more active last week. U.S. prices have indeed strengthened but are below usual levels and competitive, when compared to the rest of the world, so that has motivated international purchases. The market continues to recuperate from the effect of COVID.

Cheese intakes from restaurants and food service were more active last week as a few of them reopened after being closed for a couple of months. Retail demand was steady compared to the previous week but higher than normal. Cheese supplies are plentiful and storage continues to tighten while cheese production was unchanged to lower.

Butter shot higher to a Friday close at $1.6450 per pound, up 35.5 cents on the week but still 69.5 cents below a year ago, with 39 cars sold.

Monday’s butter was offered down 4 cents and stayed put Tuesday, at $1.6050.

Meanwhile, butter market tones are strengthening, according to DMN, but butter producers report more changes are afoot. Cream availability has tightened notably, though cream prices currently remain within reach for churning but that’s changing. Retail butter demand is strong and while foodservice demand is lighter when compared to previous years, it has definitely grown, in some cases multiplied, when compared to previous weeks.

Butter plant managers are concerned about fourth quarter supplies, says DMN, and are preparing to manage production and inventories accordingly.

Grade A Nonfat dry milk closed Friday at 93.50 cents per pound, up 11 cents on the week but 11.25 cents below a year ago, on 27 sales.

The powder inched a half-cent higher Monday and jumped 4.5 cents Tuesday, to 98.50 cents per pound, highest since March 25.

Dry whey inched up to 40.25 cents per pound last Monday, the highest since January 2019, but closed Friday at 39 cents, down 0.75 cents on the week but 5 cents above a year ago on 11 sales for the week.

Whey lost 1.75 cents Monday and gave up a penny Tuesday, slipping to 36.25 cents per pound.

GDT up 1.0%

Lactose and skim milk powder lifted Tuesday’s Global Dairy Trade as the weighted average was up 1.0%, after slipping 0.8% on May 5 and 4.2% April 21. Some 37 million pounds of product was offered, up from 36.2 million last time.

Lactose led the gains, up 15.6%, which followed a 7.9% gain last time. Skim milk powder was up 6.7%, after inching 0.1% higher, and anhydrous milkfat was up 2.7%, after falling 2.4% in the last event.

Losses were led by GDT Cheddar, down 6.0% following a 6.8% drop last time. Rennet casein and butter were both down 1.9%, after the butter fell 5.8% last time, and whole milk powder was off 0.5%, following a 0.1% increase last time.

FC Stone equated the GDT 80% butterfat butter price to $1.6831 per pound U.S., down 2.8 cents from the last event. CME butter closed Tuesday at $1.6050.

GDT Cheddar cheese equated to $1.7527 per pound, down 11.4 cents, and compares to Tuesday’s CME block Cheddar at $1.85. GDT skim milk powder averaged $1.1563 per pound, up from $1.0763, and whole milk powder averaged $1.2141, down from $1.2452.

CME Grade A nonfat dry milk closed Tuesday at 98.50 cents per pound. 

Culling processors

COVID-19 infections of animal processing plant labor forces have disrupted beef, pork, broiler and turkey production in the U.S. since early April, according to the USDA’s latest Livestock, Dairy and Poultry Outlook.

The Outlook notes that each federally inspected meat category showed a year-over-year decline. Estimated pork production in April, at 2.3 billion pounds, was more than 11% below a year earlier, as hog processing plants in several states reduced output, with some plants shutting down temporarily, due to COVID-related labor shortages.

Estimated beef production, at about 1.8 billion pounds, was almost 21% lower, and COVID-19 contagion of poultry processing plant employees caused year-over-year reductions in broiler and turkey production in April, as well.

Estimated April broiler production, at 3.27 billion pounds, was down 2% and turkey was down 8.3%, to 420 million pounds, according to the Outlook.

The slaughter plant slowdown may have resulted in delayed dairy cow culling. Thursday’s April Slaughter report might shed some light on that issue.

Poised for a hit

March dairy product commercial disappearance was looking promising; however, the onslaught of COVID-19 and the resulting collapse in restaurant demand promises a different story in the April data.

March total cheese disappearance climbed higher versus prior year for the first time since October, according to HighGround Dairy, but year-to-date disappearance remained below a year ago. The increase was driven by domestic demand, says HGD, as total exports were lower into the month for the second consecutive monthly decline.

Butter shined as disappearance surged to the strongest March disappearance on record and the highest year over year gain since January 2019.

Nonfat dry milk disappearance remained below a year ago for the third month in a row, pulled down by sharply lower domestic demand, says HGD, even as exports were slightly higher versus the previous year.

Dry whey disappearance was up in March after February’s decline. Domestic disappearance was similar versus the prior year, down just 0.2% year over year and up 32.2% from January, according to HGD.

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

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