The Agriculture Department announced the July Federal order Class III benchmark milk price Wednesday at $21.60 per hundredweight, up 24 cents from June, $4.22 above July 2013, and equates to about $1.86 per gallon. While the uptick reversed two months of decline, Class III futures portend a turnaround in August. The August contract settled Friday, August 1, at $21.47; September, $21.57; October, $20.82; November, $19.92; and December at $19.48. That would portend a 2014 average of $21.74 per cwt, up from $17.99 in 2013 and $17.44 in 2012.
The July Class IV price is a record high $23.78 per cwt., up 65 cents from June and $4.88 above a year ago. The Class IV seven month average stands at $23.19, up from $18.27 at this time a year ago and $14.84 in 2012. The Class III average now stands at $22.52, up from $17.69 a year ago and $16.01 in 2012.
California’s July Class 4b cheese milk price is $18.69 per cwt., down 38 cents from June, $3.04 above July 2013, $2.91 below the comparable Federal order Class III price, and is the lowest it has been since December 2013. The 4b average now sits at $20.35, up from $15.99 at this time a year ago, $14.02 in 2012, and $16.20 in 2011.
The 4a butter-powder milk price is a record high $23.58/cwt., up 39 cents from June, $4.97 above a year ago, and compares to the Federal order Class IV price of $23.78. The 4a, seven month average now stands at $23.03, up from $18.03 a year ago, $14.55 in 2012, and $19.10 in 2011. The state mandated milk price enhancements have ended and these prices reflect that termination.
Meanwhile, cash cheese is back to $2 while butter is in a meltdown. The Cheddar blocks closed Friday at $2.00 per pound, up 3 cents on the week and 22-1/2-cents above that week a year ago. The barrels, after plunging almost 12 cents the previous week, also closed at $2 Friday, up 4-1/4-cents on the week and 22-3/4-cents above a year ago. Ten cars of block traded hands on the week and six of barrel. The lagging NDPSR-surveyed U.S. average block price slipped to $2.0083 per pound, down 0.1 cent. Barrels averaged $2.0606, up 2-1/2 cents.
Midwest cheese buyers motivated by declining CME Group cheese prices during the second half of last week had mixed results finding cheese not already committed, reports Dairy Market News. Many cheese makers have already booked orders through August. Inventories are tight in many plants. Plants with committed buyers are sensitive to preserving inventory levels sufficient to meet already booked future commitments, factoring anticipated production capabilities. Some plants were able to find surplus milk to boost last week’s cheese production. Others used condensed skim and nonfat dry milk to improve vat yields and production schedules. Seasonally declining milk production is limiting cheese manufacturing. Manufacturers of mozzarella are increasing production to fill building demand from school lunch buyers ordering pizza, college students returning to the pizza nutrition program, and football viewers adding to the mix. With barrels being at nearly the lowest closing prices of July during recent days, manufacturers who use process cheese have been active in seeking extra loads.
Western cheese production is steady to lower as milk receipts continue to move seasonally lower. Hot weather is affecting milk volumes. Some plants are running near capacity as milk is being moved to keep production up. Retail demand is good as wholesale prices continue to move up and down within a rather narrow range. Process cheese demand is picking up as summer grilling is ongoing. Some increased demand from foodservice accounts for fall orders is also noted. Export demand has slowed and manufacturers are busy filling contract and spot orders for domestic needs. Cheese stocks are in balance for current orders.
Cash butter, after gaining 11 cents last week and 10-3/4-cents the week before that, suffered a summer meltdown this week, plunging 19 cents, to $2.40, still 96 cents above a year ago. Twenty six loads traded hands on the week. NDPSR butter averaged $2.4109, up 2-1/2 cents.
The Central butter market tone remains firm, according to Dairy Market News. Several manufacturers noted the last few weeks of historical high prices have not affected demand enough to catch up on Fourth Quarter stock building. Churn operators note decreasing competition from ice cream manufacturers for cream and some were able to secure additional cream at lower levels, while a few took advantageous returns by selling cream after fulfilling butter commitments.
Production rates are mostly steady. 82 percent butter production is minimal as few new export orders come in. International prices are significantly lower than the U.S. A few buyers/resellers are beginning to look at import opportunities. Retail butter sales are mostly steady as some sellers suggest promotions are down seasonally and due to higher prices.
Cash Grade A nonfat dry milk finished Friday at $1.65 per pound, down 2-1/2-cents on the week after holding steady for seven consecutive sessions and is at the lowest level since April 11, 2013. NDPSR powder averaged $1.8371, down 3.2 cents, and dry whey averaged 68.86 cents per pound, up 0.2 cent. ❖