Columnist Lee Mielke wraps up the week’s dairy industry news.
The block cheddar closed Friday at $1.7450 per pound, up 7 1/2-cents on the week and 1 1/2-cents above a year ago. The barrels finished at $1.7050, up 6 1/2-cents on the week and 10 3/4-cents above a year ago.
Only 16 cars of block traded hands last week at the CME and 10 of barrel.
The blocks inched up a half-cent Monday and gained a penny on Halloween Day, hitting $1.76 per pound.
The barrels were also up a half-cent Monday and ticked up 2 1/4-cents Tuesday, to $1.7325.
Midwestern cheese contacts tell Dairy Market News that mozzarella and provolone sales are meeting or exceeding expectations, while cheddar and traditional cheesemakers report that demand is steady to slightly higher. Milk is available for cheese processing, according to DMN, and some contacts report that cheesemakers are using nonfat dry milk to fortify cheese and “that is putting some pressure on milk prices. Cheese inventories remain long, but there seems to be some relief in sight, as strong demand and discounts on aging inventories have helped clear a bit of storage space.”
“Western cheesemakers say year-to-date sales have been strong and holiday orders are providing support to current price levels,” according to DMN. “There is solid demand for mozzarella due to the pizza season, the time when schools are in session and football games are played out each week. Although inventories are a bit heavy, they do not appear to be a major concern for the industry right now and demand is keeping pace with cheese production. It appears the current domestic appetite for cheese, coupled with interest from international markets, may be able to pull stocks a bit lower. There is hope this will continue through the major fall holidays.
Cash butter fell to $2.2550 per pound last Tuesday, the lowest price since May 11, 2017, then climbed back to $2.31 Thursday, but closed Friday at $2.3025, down 4 3/4-cents on the week but 37 3/4-cents above a year ago, when it jumped 16 1/2-cents to $1.9250. Forty-four cars exchanged hands last week at the CME.
Monday’s trading took the butter down 3 1/4-cents and then lopped off another 2 cents Tuesday, dipping to $2.25 per pound, the lowest level since May 11, 2017.
Retail butter reports were mixed last week, according to DMN. Some producers reported that demand continues to be robust, while others say sales are slightly under expectations. Butter production remains active, but some producers have been selling excess cream instead of churning butter. Cream is available for Central butter makers and cream offers from South and Mid-East sellers are noticeably up. Cream supply seems adequate, butter output remains active ahead of the holidays, and demand is generally solid, according to DMN.
CME Grade A nonfat dry milk closed Friday at 75 cents per pound, up a penny on the week but 10 1/2-cents below a year ago.
The powder was unchanged Monday but gave up 1 3/4-cents Tuesday and slipped to 73 1/4-cents per pound, lowest powder price since April 15, 2016.
October California and Federal order Class milk prices are announced Wednesday and the September Dairy Products report is issued Thursday.
Milk feed ratio slips
A lower All Milk price and higher hay and soybean prices served to pull the September milk feed price ratio down a bit. The September ratio, at 2.45, is down from 2.49 in August and 2.49 in September 2016, according to the Agriculture Department’s latest Ag Prices report.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, 1 pound of milk today purchases 2.45 pounds of dairy feed containing that blend.
The U.S. average All-Milk price was $17.80 per cwt., down 20 cents from August but 40 cents above September 2016. California showed the lowest, at $16.45 per cwt., down 62 cents from August, but 51 cents above a year ago. Wisconsin’s averaged $18.30, up a dime from August, 30 cents above a year ago, and $1.85 above California’s.
September corn averaged $3.27 per bushel, unchanged from August but a nickel per bushel above September 2016. Soybeans averaged $9.35 per bushel, up 11 cents from August but 6 cents per bushel below a year ago. Alfalfa hay averaged $149 per ton, up $2 per ton from August and $13 per ton above September 2016.
Looking at the cow side of the ledger; the report shows the September cull price for beef and dairy combined averaged $69.90 per cwt., down $6.40 from August, after dropping $1 the previous month, and is $4.60 per cwt. below September 2016, and $1.70 below the 2011 base average of $71.60.
Dairy Farmers of America points out this is the 15th consecutive month the milk feed margin is above any payout in the Margin Protection Program.