Lee Mielke: Monthly Milk Prices 9-16-13
October 8, 2013
The August Federal order benchmark milk price has reversed two months of decline and was announced by USDA at $17.91 per hundredweight (cwt.), up 53 cents from July, 18 cents above August 2012, $1.59 above California's comparable 4b cheese milk price, and equates to about $1.54 per gallon. The 2013 Class III average now stands at $17.72, up from $16.23 a year ago and compares to $18.18 in 2011, $13.80 in 2010, and $10.29 in 2009.
Looking ahead; Class III futures settled Friday as follows: September, $18.06; October, $17.86; November, $17.37; and December at $16.83. If they hold true, the peak would be $18.52 in May. Those remaining futures prices, combined with the announced Class III prices, would result in a 2013 average of $17.66 per cwt., up from $17.44 in 2012 and compares to $18.37 in 2011, $14.41 in 2010, and $11.36 in 2009.
The August Class IV price is $19.07, up 17 cents from July and $3.31 above a year ago. The Class IV average now stands at $18.37, up from $14.95 a year ago and compares to $19.48 in 2011, $14.44 in 2010, and $9.92 in 2009.
The cheese price average used in calculating the prices was $1.7731 per pound, up 5.9 cents from July. Butter averaged $1.4187, down 4.9 cents. Nonfat dry milk averaged $1.7706, up 4.3 cents, and dry whey averaged 57.78 cents per pound, down fractionally from July.
The California Department of Food and Agriculture announced its August 4b cheese milk price at $16.32 per cwt., up 67 cents from July but 25 cents below August 2012, and again $1.59 below the FO Class III price. The 2013 4b average now stands at $16.03, up from $14.34 at this time a year ago and compares to $16.50 in 2011 and $17.72 in the FO. The 4a butter-powder milk price is $18.70, up 9 cents from July and $3.30 above a year ago. The 2013 4a average now stands at $18.12, up from $14.66 a year ago and compares to $19.24 in 2011.
Cheese prices at the Chicago Mercantile Exchange have firmed but the market has been within a 10 cent spread for the bulk of the summer, according to USDA's Dairy Market News (DMN). "Most participants are content to stay the course at current prices," DMN said. Cheese production levels are above year ago with adequate inventory in cold storage.
Cash block cheese, after three sessions of inactivity, was bid higher Friday to close the Labor Day holiday-shortened week at $1.81 per pound, up 2-3/4-cents on the day and the week and just 2 cents below a year ago. Barrel closed at $1.80, up 3 cents on the week and 2-1/2-cents above a year ago. No cheese was traded on the week. The lagging AMS-surveyed U.S. average block price slipped 0.2 cents lower, to $1.7742. Barrel averaged $1.7438, down 5.3 cents.
Hot weather across much of the country the last week of August reduced milk intakes in addition to seasonally lower production. Demand is reported to be good with buyers looking for price breaks to purchase above immediate needs. Export demand is good with prices competitive with the international market.
Cash butter, following small declines Tuesday, Wednesday, and Thursday, regained a penny Friday and closed at $1.43, down 3/4 cents on the week and 43-1/2-cents below a year ago. Eight cars were sold on the week, seven on Friday. AMS butter averaged $1.3730, up 1-1/2-cents.
Many buyers appear ready to increase butter inventories ahead of the fall season, according to DMN. Cream supplies are seeing increased cream cheese demand competing with butter churns. Retail demand has substantially improved for print butter accounts with churns in the West and parts of the Northeast operating busy schedules to fill orders. Export demand has also improved with some Eastern butter makers focusing on 82 percent production to fill export orders. Butter stocks remain heavy, but increased demand is helping move product out of cold storage.
USDA's weekly update shows butter stocks for the week ended September 2, fell 15.8 million pounds, down 2.8 percent but 38.8 percent above that week a year ago. Cheese stocks were up 0.3 percent to 109.5 million pounds, but are down 12.3 percent from a year ago.
Some of that butter literally "melted away," reports the September 3 DDR. "A cold storage facility in Delanco, N.J., burned for two days and an undisclosed amount of butter has gone up in smoke," the DDR stated.
Cash Grade A nonfat dry milk closed Friday $1.8150, up a penny and a half on the week. Extra Grade held at $1.78. AMS powder averaged $1.7839, up a penny, and dry whey averaged 54.7 cents per pound, down 0.9 cent. ❖