Columnist Lee Mielke wraps up the week’s dairy industry news.
By: Lee Mielke
Source: Capital Press
Records were broke in last week’s cash dairy markets. CME block Cheddar fell to $1.4450 per pound on Dec. 12 but then rallied and closed Friday at $1.53, up 5 1/2-cents on the week and reversed six weeks of decline, but was 27 cents below a year ago.
The barrels closed at $1.66, down a penny, 4 cents below a year ago, and 13 cents above the blocks after setting a record inverted spread of 22 1/2-cents last Tuesday. They also set a record single day volume Monday, selling 36 cars, highest since daily trading started Sept. 1, 1998 and surpassed the previous high of 35 loads set June 18, 2010, according to FC Stone. A total of 97 cars were sold last week at the CME and just 7 of block.
The blocks lost 4 cents Monday, as traders anticipated Tuesday morning’s Global Dairy Trade auction and the afternoon’s November Milk Production report. They gave up another 4 cents Tuesday, dipping to $1.45, the lowest block price since March 29, 2017.
The barrels lost 8 cents Monday and plunged a dime Tuesday, to $1.48, lowest barrel since July 27, 2017, but narrowed the spread to 3 cents above the blocks, a spread that typically runs 3-5 cents below the blocks.
Dairy Market News reports that milk remains readily available to Midwestern cheese plants and some cheese producers warned that only heavily discounted milk offers will be considered for the remainder of 2017.
Western cheese output is ongoing as milk is also plentiful. Processors are hesitant to take on additional milk due to the weakness of cheese prices and ample supplies.
Cash butter slipped to $2.19 per pound last Monday, then reversed gears and slowly climbed to $2.26 Thursday, but saw a Friday close at $2.2450, up 2 1/2-cents on the week and 5 1/2-cents above a year ago when it jumped 12 1/2-cents. 40 cars traded hands last week at the CME.
The butter was down 4 1/2-cents Monday but gained a penny Tuesday, inching back to $2.21 per pound.
Central region butter producers report that orders are back in line with expectations following a slow start to the month. Cream remains abundant but the market tone remains resilient.
Western butter makers report that demand is following typical seasonal patterns. Inventories have been drawn down, but cream is becoming less expensive and readily available.
Cash Grade A nonfat dry milk also set a record last week, unfortunately a record low of 65 3/4-cents per pound, down 2 1/2-cents on the week and 36 1/4-cents below a year ago.
The powder inched three-quarter cents lower Monday and a quarter-cent Tuesday, sliding to another record low of 64 3/4-cents per pound.
November milk up
November milk output was up for the 47th consecutive month in the U.S., totaling 16.2 billion pounds in the top 23 states, according to preliminary USDA data, up just 1.1 percent from November 2016. The 50-state total at 17.3 billion pounds, was up 1.0 percent. Revisions lowered the original October 23-state estimate by 27 million pounds, now put at 16.7 billion pounds, up 1.3 percent from a year ago.
Milk cow numbers totaled 8.73 million head in the 23 states, unchanged from October but 57,000 more than a year ago. The 50-state total, at 9.4 million head, was unchanged from October but 53,000 above a year ago. Output per cow averaged 1,861 pounds in the 23 states, up 9 pounds.
California output trailed its year ago data for the 11th consecutive month, down 34 million pounds or 1.1 percent, due to 14,000 fewer cows milked and a 5 pound loss per cow. Wisconsin was up just 0.9 percent, on a 20-pound gain per cow but cow numbers were down 1,000 head from a year ago.
New York edged out Idaho for the No. 3 slot, though output was off 0.3 percent, due to a 20-pound loss per cow. Cow numbers were up 5,000. Idaho was down 0.6 percent on a 15-pound drop per cow and cow numbers were up 100. Pennsylvania was up 2.1 percent, thanks to a 35-pound gain per cow. Cow numbers were unchanged. Minnesota was up 1.5 percent, on a nice 40-pound gain per cow offsetting a 4,000 cow loss.
Michigan was up 2.2 percent on a 20-pound gain per cow and 5,000 more cows. New Mexico was up 2.0 percent on 6,000 more cows and a 5-pound gain per cow. Texas was up 5.9 percent, thanks to 25,000 more cows and a 15-pound gain per cow. Washington state was off 0.8 percent on a 5-pound loss per cow and 1,000 fewer cows. Analysts see the report feeding the bulls.
Hemorrhaging in the Global Dairy Trade auction was back Tuesday, the last GDT of 2017. All products offered suffered losses, with the weighted average plunging 3.9 percent, after inching up 0.4 percent on Dec. 5, reversing a 3.4 percent drop Nov. 21 and 3.5 percent on Nov. 7.
Cheddar led the declines, down 7.9 percent after dropping 3.9 percent Dec. 5. Anhydrous milkfat was down 6.7 percent, after inching 0.6 percent lower last time. Skim milk power was down 4.8 percent, after leading the gains last time with a 4.7 percent uptick. Whole milk powder was down 2.5 percent, following a 1.7 percent gain, and butter fell 2.3 percent after an 11.1 percent meltdown last time.
HighGround Dairy equated the GDT butter price to $2.03 per pound U.S. CME butter closed Tuesday at $2.21. GDT Cheddar cheese equated to $1.54 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.45. GDT skim milk powder averaged 76 cents per pound and whole milk powder averaged $1.25 per pound U.S. CME Grade A nonfat dry milk price closed Tuesday at 64 3/4-cents per pound.