That put the three month average at $15.98, down from $16.77 at this time a year ago, and compares to $14.30 in 2019.
Monday’s Class III futures settlements portended an April price at $17.60; May, $18.57; June, $18.70; July, $18.72; August, $18.75; September, $18.75; October, $18.70; November, $18.34; and December at $18.00.
The March Class IV price is $14.18, up 99 cents from February, 69 cents below a year ago, and the highest Class IV price since March 2020.
Margins still slipping
Falling milk prices and rising feed costs, thanks to China’s purchases, continue to take a toll on dairy farm profitability. The USDA’s latest ag prices report shows the February milk feed ratio at 1.78, down from 1.98 in January, down from 2.35 in February 2020, and the lowest since May 2020’s 1.77.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk could only purchase 1.78 pounds of dairy feed of that blend in February.
The U.S. All-Milk price averaged $17.10 per hundredweight, down 40 cents from January and $1.80 below the February 2020 average.
The national average corn price jumped to $4.75 per bushel, up 51 cents per bushel from January, which followed a 27 cent rise the month before, and was priced a whopping 97 cents per bushel above February 2020.
Soybeans averaged $12.70 per bushel, up an astounding $1.80 per bushel from January, which followed a 40 cent rise from December. Soybeans were at an unbelievable $4.10 per bushel above February 2020.
Alfalfa hay averaged $175 per ton, up $4.00 from January and $7 above a year ago.
The February cull price for beef and dairy combined averaged $65.60 per cwt., up $5.90 from January, 20 cents below February 2020, and $6.00 below the 2011 base average of $71.60 per cwt.
Plantings less than expected
The Agriculture Department’s Prospective Plantings report showed 2021 corn plantings at an estimated 91.1 million acres, up less than 1%, or an increase of just 325,000 acres from a year ago.
Soybeans were estimated at 87.6 million acres, up 5% from last year. The figures were less than expected for both crops, considering the prices they’re bringing, but it remains to be seen how much of that report will become reality.
Meanwhile, USDA’s Grain Stocks report showed shrinking supplies. March 1, 2021 corn totaled 7.70 billion bushels, down 3% from March 1, 2020. The December 2020 to February 2021 period indicated disappearance at 3.59 billion bushels, compared with 3.38 billion during the same period last year.
Soybeans totaled 1.56 billion bushels, down 31% from 2020. Disappearance for the December 2020 to February 2021 quarter totaled 1.38 billion bushels, up a hefty 39% from the same period a year earlier.
Lots of product produced
You’ll recall February milk output was up 2.0% from February 2020, after adjusting for the Leap Day. The latest Dairy Products report shows where the milk went.
Cheese output totaled 1.04 billion pounds, down 8.1% from January but a hefty 4.7% above February 2020, when adjusted for the Leap Day. Output for the first two months of 2021 totaled 2.18 billion pounds, up 1.7% from 2020.
Italian type cheese totaled 444.3 million pounds, down 7.6% from January but 2.4% above a year ago. YTD Italian was at 925.3 million pounds, down 0.9%.
American type cheese totaled 425.4 million pounds, down 10.3% from January but 5.2% above a year ago. YTD American hit 899.7 million pounds, up 5.1%.
Mozzarella output, at 347.5 million pounds, was up 1.9% from a year ago. YTD mozzarella was at 722.4 million pounds, down 1.7% from 2019.
Cheddar output fell to 301.6 million pounds, down 45.3 million pounds or 13.1% from the January level which was revised up 9.3 million, but was 9.6 million pounds or 3.3% above a year ago. YTD Cheddar is at 648.5 million pounds, up 4.3% from 2019.
Churns produced 185.6 million pounds of butter, down 24 million pounds or 11.5% from January’s total, and was up 4 million pounds or 2.2% above a year ago. Butter output for the first two months totaled 395.3 million pounds, up 3.6% from 2020.
Yogurt production totaled 381.7 million pounds, up 5.4% from a year ago, with the YTD total at 767.3 million pounds, up 6.1%.
Dry whey totaled 77.0 million pounds, down 7 million or 8.3% from January but 3.1 million or 4.2% above a year ago, with YTD at 161 million pounds, up 0.2%.
Dry whey stocks grew to 70.4 million pounds, up 4.5% from January but 5.5% below those a year ago.
Nonfat dry milk output slipped to 186.3 million pounds, down 11.7 million pounds or 5.9% from January but 32.7 million or 21.2% above a year ago. Powder production YTD stands at 384.3 million pounds, up 14.6% from 2020.
Stocks, at 345.6 million pounds, were up 40.6 million pounds or 13.3% from January and a bulging 27.3 million pounds or 8.6% above a year ago, as shipping issues, including blockage of the Suez Canal, likely backed up exports.
That ship was finally freed. The canal is a busy one. About 30% of the world’s shipping container volume moves through the 120 mile canal daily, according to Maersk, a Danish integrated shipping company that has been the world’s largest since 1996.
Skim milk powder production dropped to 29.6 million pounds, down 6.4 million pounds or 17.8% from January and 7.5 million pounds or 20.2% below a year ago. YTD skim milk powder hit 65.6 million pounds, down 16.5% from 2020.
GDT up 0.3%
Tuesday’s Global Dairy Trade auction reversed gears again. The weighted average inched back up 0.3%, after dropping 3.8% on March 16.
Buttermilk powder led the gains, up 17.6%. It did not trade in the last event. GDT Cheddar was up 2.2% and butter was up 2.0%, after falling 2.8% last time. Anhydrous milkfat inched 0.8% higher, following a 3.7% rise. Skim milk powder was up 0.6%, after inching 0.7% higher, and lactose was down 6.5%, after shooting up 8.6% last time.
StoneX Group says the GDT 80% butterfat butter price equates to $2.5558 per pound U.S., up 5.2 cents, and compares to CME butter which closed Tuesday at $1.8325. GDT Cheddar, at $1.9928 per pound, compares to Tuesday’s CME block Cheddar at $1.7850. GDT skim milk powder averaged $1.5272 per pound, up from $1.5197, and whole milk powder averaged $1.8531 per pound, up from $1.8521. CME Grade A nonfat dry milk closed Tuesday at $1.1825 per pound.
Cash dairy prices moved higher in the Good Friday holiday shortened week. The Cheddar blocks closed Thursday at $1.7750 per pound, up 5.50 cents on the week and 62.50 cents above a year ago when the blocks saw the second largest week to week plunge ever, losing 44 cents.
The barrels finished Thursday at $1.5125, up 5 cents on the week and 37.50 cents above a year ago when the barrels lost 20.25 cents. Sales last week amounted to 11 cars of block and 4 loads of barrel.
First day of trading following the long weekend saw the blocks hold at Thursday’s close but then ticked up a penny Tuesday, hitting $1.7850.
The barrels were up 1.75 cents Monday and stayed there Tuesday at $1.53, 25.50 cents below the blocks.
Central cheesemakers tell Dairy Market News that regional dairy farmers are seeing increases in day to day milk output. Cheese demand has remained steady on the retail side and food service orders have picked up. Cheese market tones are “holding somewhat steady, although some contacts view them more bullishly than not,” says DMN.
Western retail cheese demand was slightly lower last week, while food service demand continued to increase. Export demand was also strong. There is plenty of milk available for cheese as plants continue to run at or near capacity. Inventories are mixed as some inventories grow, others are committed to surging food service sales. Plenty of Cheddar style cheese is available, though much is currently contracted.
Butter climbed to a Thursday close of $1.8450 per pound, 7 cents higher on the week and the highest since June 19, 2020. It was 56.50 cents above a year ago when the butter fell 20.75 cents to $1.28. 19 cars found new homes last week.
Monday’s butter was down 0.75 cents and it lost 0.50 cents Tuesday, slipping to $1.8325.
The last trading day in February saw butter at $1.47 per pound but, as food service demand continues its upswing, butter producers say the push into the $1.80s at the end of March is not surprising. Retail orders have continued to outdo expectations, but food service customers refilling pipelines have definitely given the market tones some life. That said, contacts question the longevity as butter prices push higher, which could offset some of the recent international luster. Cream availability remains somewhat tight.
Some western butter makers are producing additional 82% unsalted butter to keep up with steady export interest. Inventories are up year-over-year but much of it is already on contract, and butter makers expect to work through the stock over the next few months. Contacts hold varying opinions on how responsive consumers will be to retail holiday promotions; changes in grocery shopping habits and in-home gatherings pose challenges to accurate forecasting. However, as spring weather returns and vaccination rates increase, consumers are venturing out more, and food service demand is burgeoning, says DMN.
Grade A nonfat dry milk closed Thursday at $1.19 per pound, up 2 cents on the week and the highest it has been since Jan. 20, 2021, and was 32.75 cents above a year ago. 8 cars were traded on the week.
The powder lost a penny Monday but was up 0.25 cents Tuesday, to $1.1825 per pound.
CME dry whey set another CME record high last Wednesday and stayed there Thursday to close at 66 cents per pound, up 3.25 cents on the week and 33 cents above a year ago. There were 4 sales recorded for the week.
The whey was unchanged both Monday and Tuesday.