Mielke: Federal benchmark milk price down, California up | TheFencePost.com
Lee Mielke
lMielke@Juno.com

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Mielke: Federal benchmark milk price down, California up

The April Federal order benchmark Class III milk price is $15.22 per hundredweight, down 59 cents from March but $1.59 above April 2016 and equates to $1.31 per gallon. It is the lowest Class III price since October 2016 but may be the bottom for 2017. The May contract settled May 5 at $15.58; June, $15.87; July, $16.33; and August at $16.76, with a peak of $17.01 in September. The Class III average is now at $16.17, up from $13.72 a year ago and $15.75 in 2015.

The April Class IV price is $14.01, down 31 cents from March, $1.33 above a year ago, but the lowest Class IV since November 2016. Its four-month average is at $15.03, up from $13.06 a year ago and $13.59 in 2015.

California's April Class 4b cheese-milk price is $14.30 per cwt., up 54 cents from March, first move to the upside since November 2016, and is $1.59 above April 2016 but is 92 cents below the comparable FO Class III price. The four-month 4b average is at $14.97, up from $13.02 a year ago and $13.93 in 2015.

The 4a butter powder price is $13.73, down 23 cents from March, $1.19 above a year ago, but the lowest 4a price since November 2016. The 4a average is now at $14.69, up from $12.87 a year ago and $13.33 in 2015.

The bulls got fed again at the latest Global Dairy Trade auction where the weighted average for all products offered advanced for the fourth consecutive event, up 3.6 percent, following a 3.1 percent jump April 18.

The only negative move was in skim milk powder, down 0.9 percent, after it led the gains last time with a 7.1 percent rise.

Buttermilk powder led the gains this time, jumping 21.8 percent. It was not traded in the last event. Rennet casein was up 10.4 percent. Whole milk powder was up 5.2 percent, after rising 3.5 percent. Anhydrous milkfat was up 4.7 percent, after it inched 0.5 percent lower, and GDT Cheddar was up 4.6 percent, following a 6 percent advance. Lactose and butter were both up 1 percent, following respective gains of 1.2 and 2.9 percent last time. The butter price is a GDT record high, according to the Daily Dairy Report.

FC Stone equated the average 80 percent butterfat GDT butter price to $2.1733 per pound. U.S. CME butter closed May 6 at a globally competitive $2.1075 per pound. GDT Cheddar cheese equated to $1.6628 per pound U.S. and compares to the May 5 CME block Cheddar at $1.60. GDT skim milk powder was 89.89 cents per pound and whole milk powder averaged $1.4665 per pound U.S. CME Grade A nonfat dry milk price closed May 6 at 84 1/2-cents per pound.

Most dairy prices moved higher despite a lot of product moving to Chicago. Cash Cheddar blocks closed the first Friday of May at $1.60 per pound, up 12 cents on the week and 29 1/2 cents above a year ago. The barrels finished at $1.45, up 3 1/4 cents on the week, 15 cents above a year ago when they plunged 11 1/4 cents, but are much higher than normal 15 cents below the blocks. Four cars of block traded hands on the week at the CME and a whopping 54 cars of barrel.

FC Stone's May 4 Early Morning Update stated; "It's not shocking that heavier volume is being brought to the exchange as heavy milk flows and ramped-up cheese production are testing capacity levels and have pushed inventories into record territory."

Dairy Market News echoed that sentiment, reporting that milk remains readily available for cheese producers in the Midwest. Spot milk prices range $3 to $6 under Class, so cheese producers are taking advantage of the market, whereas up until recent weeks, they were unable or unwilling. Cheese inventories are generally reported as long. However, some manufacturers report steady ongoing orders have kept stocks in balance. Retail and food service demand is generally steady but the market tone is "uncertain."

Looking west, ample supplies of milk are placing pressure on some cheese manufacturers. Western output is active and cheese makers are trying to figure out how best to balance cheese making with available milk intakes. Inventories are also heavy, especially for barrels, but cheese demand is "satisfactory."

Butter closed May 5 at $2.1075 per pound, up a quarter-cent on the week and 5 3/4-cents above a year ago when it lost 7 cents, with 43 cars sold this week.

Class II manufacturers' interests in cream have risen noticeably, according to DMN, yet cream remains available for churns in the Central region. Some have slowed production slightly, others are churning abundant cream and storing butter for late summer and fall. Butter demand is generally steady, the market tone is fair, but butter inventories are building.

Western contacts suggest that sales have flattened out since the spring holidays. Butter demand is steady, however buyers do not feel compelled to make additional purchases. Inventories are building seasonally and in some cases, are already heavy. There is plenty of cream available for churning, warns DMN.

Spot Grade A nonfat dry milk closed the week at 84 1/2-cents per pound, down 2 1/4-cents but 7 cents above a year ago. Thirteen cars exchanged hands.❖