The Agriculture Department announced the February Federal order Class III milk price this week at $23.35 per hundredweight (cwt.), up $2.20 from January , $6.10 above February 2013, $2.21 above the California 4b cheese milk price, and equates to $2.01 per gallon. It tops the previous high of $21.67 in August 2011. The two month 2014 Class III average stands at $22.25, up from $17.70 at this time a year ago and compares to $16.56 in 2012 and $15.24 in 2011.
Looking ahead, the March Class III futures contract settled Friday at $22.65; April, $21.25; May, $20.25; and June, $20.01 per cwt.
The February Class IV price is a record high $23.46, up $1.17 from January and $5.71 above a year ago. The Class IV average is now at $22.88, up from $17.69 a year ago, $16.24 in 2012, and $17.41 in 2011.
The four-week, NDPSR-surveyed cheese price averaged $2.2864 per pound, up 20.3 cents from January. Butter averaged $1.8320, up 18.5 cents. Nonfat dry milk averaged $2.0783, up 4.5 cents, and dry whey averaged 63.14 cents per pound, up 2.9 cents from January.
California’s February 4b cheese milk price is a record high $21.14 per cwt., up 83 cents from January, and $5.73 above February 2013. That put the two-month 4b average at $20.73, up from $15.63 in 2013, $13.83 in 2012, and $14.71 in 2011.
The 4a butter-powder milk price is $23.08 per cwt., up 95 cents from January, $5.07 above a year ago, and the highest price since September 2007. The 4a two-month average stands at $22.61, up from $17.55 a year ago, $15.85 in 2012, and $17.19 in 2011.
Cash cheese prices strengthened the first week of March on the block side, slumped on the barrels, but then rallied. The 40-pound block Cheddar closed Friday at $2.2925 per pound, up 7 cents on the week and 69-1/4-cents above a year ago. The 500-pound barrels, after dipping to $2.1275, rebounded and closed at $2.25, up 5 cents on the week and 67 cents above a year ago. Only three cars of barrel traded hands on the week in the cash market. The lagging National Dairy Product Sales Report (NDPSR)-surveyed U.S. average block price fell 2.5 cents, to $2.2303, while the barrels averaged $2.2069, down 4.4 cents.
Jerry Dryer, editor of the Dairy and Food Market Analyst speaking in the March 7 DairyLine, said cheese demand is very strong here and around the world and supply is a little bit snug. He believes $2 cheese will be around through the end of March and said it’s looking more likely to be here well into the Second Quarter.
He explained that international buyers took a lot of cheese out of the U.S. last year, and in October and November, before the markets starting advancing. They hedged their purchases through the first half of the year, Dryer said, and he speculates that it sold in the $1.85 per pound range “so that’s what they’re paying for the cheese despite these higher prices at the Exchange.”
The lowered cheese prices a couple weeks ago cleared inventories and returned the market to a firming undertone, according to USDA’s Dairy Market News (DMN), but demand remains good with buyers looking to purchase on signs of price weakness. Buyers who held off on purchases and were looking to increase inventories, were having a harder time sourcing spot cheese. DMN adds that export demand is good though the high prices had market participants unsure about the price direction and some were showing resistance.
Butter held all week at $1.88 per pound following last Friday’s 10-cent jump, 25 cents above a year ago. Fifteen cars sold on the week. NDPSR butter averaged $1.8092, down 1.4 cents.
DMN reports that butter makers are busy producing at steady to higher rates with extra cream supplies available and active export contracts being filled. Retail orders are picking up, improving domestic demand but inventories are growing.
Cash Grade A nonfat dry milk closed Friday at $2.04, unchanged on the week. NDPSR powder averaged $2.0855, up 0.4 cent, and dry whey averaged 64.25 cents per pound, up 0.8 cent. ❖