Cash dairy prices continue to slide like an overloaded sleigh.
Traders, awaiting Friday afternoon’s November Milk Production report, reversed earlier week declines on cash block Cheddar cheese Friday morning, upping the price 3 cents, to close the day and the week at $1.44 per pound, still down a half-cent on the week and 17 cents below a year ago.
Anticipating Tuesday afternoon’s November Cold Storage report, they left the blocks unchanged Monday but lopped off 3 cents Tuesday, sliding the blocks to $1.41, the lowest level since Jan. 10, 2011.
The barrels were bid up 4 cents Friday, closing at $1.45, up 2 3/4-cents on the week but a dime below a year ago. They were unchanged Monday but also lost 3 cents Tuesday and slipped to $1.42.
Nineteen cars of block were sold last week at the CME and 10 of barrel. Seven loads of block and five of barrel made their way to Chicago Tuesday.
Dairy Market News says, “Continuing high milk supplies are a big factor driving high cheese production. If you run a cheese plant, you make cheese. If you also have high milk availability at a favorable cost, you make more cheese.”
Milk was ample last week and even more will be looking for a home this week and next when DMN says, “prevailing fluid milk retail and school sales patterns are altered for the holiday weeks. Something must be done with the milk, and cheese continues to be among the most profitable uses.”
Western cheese makers also have plenty of milk and production remains steady. Processors expect some downturn in demand after the holidays but anticipate good requests for cheese through Super Bowl weekend. Storage remains a concern in some areas.
Cash butter grabbed a tree branch on its way down last week. After dropping 70 cents the week before and another 13 cents last Monday, it inched up three-quarter cents Wednesday, but plenty of product found its way to Chicago (26 loads) and pulled the spot to $2.06 per pound Friday, down 14 cents on the week, but 45 cents above a year ago when it plunged 28 cents. It’s the lowest spot butter price since Aug. 13, 2015.
The bleeding continued Monday, losing 4 1/4 cents, but stopped Tuesday and recovered 1 3/4 cents, inching back to $2.0350 per pound. Seventeen loads traded hands already this week.
Central butter production is steady to higher as cream demand from Class II needs is declining, according to DMN. “Churn operators expect the next few weeks will bring additional cream. Although butter production right now is generally destined for storage, some butter makers indicate the recent sharp decline in prices has made those increases in holdings more palatable than if prices were closer to $2.90 per pound. Butter demand is light from the retail sector and generally steady from food service.”
By the way, Canada has joined Japan in experiencing a butter shortage so 8.8 million pounds has been approved to be imported by our neighbor to the North. Product will come from the U.S., New Zealand, Ireland, Belgium, and Uruguay, according to the website www.munchies.vice.com
Cash Grade A nonfat dry milk ended last week at 76 1/2-cents per pound, down three-quarter cents, and 22 1/2-cents below a year ago. Ten bids at 75 cents per pound went unfilled Friday. Fifteen cars were sold last week at the CME.
The powder was down a half-cent Monday and unchanged Tuesday, pausing at 76 cents per pound.
U.S. milk production barely remains above year-ago levels. The Agriculture Department reported preliminary November output in the top 23 states at 15.6 billion pounds, up 0.6 percent from November 2014. The 50-state output totaled 16.6 billion pounds, also up 0.6 percent. Revisions added 30 million pounds to the preliminary October total, now put at 16.1 billion pounds, up 0.3 percent.
November cow numbers in the 23 states totaled 8.64 million head, unchanged from October but 37,000 head above a year ago. Output per cow averaged 1,808 pounds, up 2 pounds from a year ago.
Output continues to lag in California, down 4.4 percent from a year ago, due to an 80-pound drop per cow and 4,000 fewer cows. The Golden State was down 5.5 percent last month and November is the 11th consecutive month that output is below a year ago. Wisconsin milk output, meanwhile, was up 4.3 percent, thanks to 65 pounds more per cow, 7,000 more cows, and mild Midwest weather. It was up 4.2 percent last month.
Michigan had the second highest gain, up 6.4 percent, thanks to 70 pounds more per cow and 11,000 more cows, second to South Dakota’s 13.1 percent increase which came on 11,000 more cows and a 35-pound-per-cow gain.
Checking other states of interest: Idaho was up 1.9 percent on 8,000 more cows and 10 pounds more per cow. Minnesota was up 2.4 percent on a 40-pound gain per cow. New Mexico was down 3.3 percent, on a 65 pound loss per cow. New York was up 3.3 percent, thanks to a 45-pound gain per cow and 5,000 more cows in the string.
Pennsylvania was unchanged across the board. Texas was down 1.7 percent on 8,000 fewer cows milked. Washington state was down 0.4 percent on a 5-pound drop per cow. All of the negatives were west of the Mississippi except Virginia. The report is viewed as bearish by most analysts.