Benchmark down 88 cents
The Agriculture Department announced the June Federal order Class III milk price at $24.33 per hundredweight, down 88 cents from May but $7.12 above June 2021. That put the 2022 Class III average at $22.95, up from $16.96 at this time a year ago, $16.09 in 2020, and $15.25 in 2019.
Friday’s futures settlements portended a July price at $22.42; August, $22.42; September, $22.70; October, $23.01; November, $22.90; and December $22.62.
The June Class IV price set another new record high at $25.83, up 84 cents from May, and $9.48 above a year ago. Its average sits at $24.67, up from $14.84 a year ago, $13.78 in 2020, and $15.98 in 2019.
The May All Milk Price set another record high but feed, fuel, and fertilizer prices continue to consume much of the increased income. The USDA’s latest Ag Prices report has the May milk feed price ratio at $1.98, down from $2 in April, but compares to $1.69 in May 2021.
The index is based on the current milk price in relationship to feed prices for a ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk would only purchase 1.98 pounds of dairy feed of that blend.
The U.S. All Milk Price averaged a record $27.30 per cwt., up 20 cents from April, ninth consecutive increase, and is $8.20 above May 2021.
The May national average corn price hit $7.26 per bushel, up 18 cents from April, after jumping 52 cents the previous month, and was $1.35 above May 2021.
Soybeans averaged $16.10 per bushel, up 30 cents from April, after gaining 40 cents the previous month, and were $1.30 per bushel above May 2021.
Alfalfa hay averaged a record $244 per ton, up $1 from April, and $50 per ton above a year ago.
The May cull price for beef and dairy combined averaged $86.70 per cwt., down $1.40 from April, but $15.90 above May 2021, and $15.10 above the 2011 base.
U.S. milk production continues below that of a year ago, with May being the seventh consecutive month. Preliminary data shows output at 19.7 billion pounds, down 0.7% from May 2021, and follows a 1% drop in April.
Output in the top 24 states totaled 18.8 billion pounds, down 0.6%. Revisions lowered the 50-State April estimate 3 million pounds to 19.1 billion, still 1.0% below a year ago.
While dairy farmers have added 38,000 cows to the milking string since the first of the year, they only added 2,000 in May, putting the herd at 9.41 million head, 102,000 less than a year ago. The April tally was revised up 1,000 head.
May output per cow averaged 2,096 pounds, up 8 pounds from May 2021.
California output totaled 3.7 billion pounds, down 63 million pounds or 1.7% from a year ago. The Golden State added 3,000 cows but output per cow dropped 40 pounds. Wisconsin, at 2.8 billion pounds, was up 23 million or 0.8%. Cow numbers were down 1,000 but output per cow was up 20 pounds from a year ago
Idaho was off 0.3% on 1,000 fewer cows and a 5 pound drop per cow. Michigan was down 1.7% on 18,000 fewer cows, but output per cow was up 55 pounds. Minnesota was down 1.0% on a 9,000 cow loss, while output per cow was up 20 pounds. New Mexico was down 10.5% on 38,000 fewer cows although output per cow was up 25 pounds. The biggest losses were in Florida and Georgia, down 11.9% and 11.6% respectively.
New York was unchanged despite a 10,000 cow loss, offset by output per cow being up 35 pounds. Oregon was up 1.3% on 2,000 more cows. Output per cow was unchanged. Pennsylvania was down 1.1%, on 8,000 fewer cows, though output per cow was up 10 pounds.
South Dakota posted the biggest increase, up 15.2%, milking 23,000 more cows and got 5 extra pounds per cow than a year ago.
Texas was up 5.8% thanks to 21,000 more cows and a 50 pound gain per cow. Washington state was down 6.4% on 14,000 fewer cows and a 30 pound drop per cow.
Speaking in the June 27 Dairy Radio Now broadcast, Matt Gould, editor and analyst with the Dairy and Food Market Analyst newsletter, called the Milk Production report “a big deal.”
The industry is watching the monthly reports, wondering when dairy farmers will “turn it on or ramp it up,” he said, referring to milk output, and this report did not give any indication that is happening. He said it’s a global occurrence, citing lower output in New Zealand and Europe, calling it; “good news for American dairy farmers as that will keep support in the market for the foreseeable future.”
He doesn’t see a milk shortage, like we did on toilet paper, but says the pandemic resulted in “long effects.” Expansions, both at the farm and processor level, were delayed. “Farmers are now getting the economic signal to expand but how long will that take? Normally it takes six months of profitability to trigger a meaningful increase in cow numbers and milk output.” If that holds true, Gould said we should see that indication this summer. “The longer it takes for the supply response, the longer prices are going to stay high,” he concluded.
U.S. butter stocks climbed higher in May but remained well below a year ago. The Agriculture Department’s latest Cold Storage report shows the May 31 inventory at 321.6 million pounds, up 23.3 million pounds or 7.8% from April but 92.3 million or 22.3% below a year ago, the eighth consecutive month stocks were below the previous year. The April tally was revised down 1.3 million.
American type cheese stocks hit 857.9 million pounds, up 22.2 million pounds or 2.6% from April, and up 29.9 million or 3.6% above those a year ago. The “other” cheese category crept up to 628.3 million pounds, up 7.1 million or 1.1% from April, and 19.8 million pounds or 3.3% above a year ago.
The total cheese inventory hit a bearish record high 1.512 billion pounds, up 31.1 million pounds or 2.1% from April, and 53.6 million or 3.7% above a year ago.
The CME Cheddar blocks shot higher the last week of June, ending five weeks of loss, and closed the first Friday of July at $2.1725 per pound, as traders anticipated the afternoon’s May Dairy Products report and the long Fourth of July holiday weekend. The price was up 8.25 cents on the week, 7.50 cents below its June 1 stand, but 61.75 cents above a year ago.
The barrels finished at $2.2050, up 5.75 cents on the week, 9.75 cents below its June 1 perch, 70.50 cents above a year ago, and an inverted 3.25 cents above the blocks.
There were two sales of block on the week and 22 for the month of June, down from 34 in May. Barrels totaled nine for the week and 57 for the month, down from 61 in May.
Milk was widely available to Midwestern cheesemakers, with discounts as low as $6 under at midweek and expected to continue. Cheese sales were “variant,” says Dairy Market News, but production at fully running plants was at capacity.
Western cheese demand continued to decline in food service last week, though contacts were hopeful for increased purchasing during the holiday weekend. Demand for cheese is steady to lower in retail markets. Export demand remains strong with Asian purchasers steadily buying loads for shipment in late first quarter 2023. Record levels of cheese are available according to the latest Cold Storage report. Milk continues to be available in the region, allowing busy schedules, if plants have the labor and production supplies needed, says DMN.
Cash butter saw its Friday, July 1, finish at $3.01 per pound, up 9.50 cents on the week, highest CME price since Sept. 28, 2015, 12 cents above the June 1 post, and $1.27 above a year ago. There were 28 sales on the week and 112 for the month of June, down from 116 in May.
Butter producers were clearing cream from regional sources, as the holiday weekend approached. Butter sales were seasonally quieter, but generally meeting expectations. Contacts are looking at export growth but there continues to be uncertainty over fall demand availability. Early-to mid-week churning was increasing due to cream loosening up due to the holiday, according to DMN.
Cream was available last week in the West as some plants prepared for downtime during the weekend. Cream demand has been strong from butter and ice cream makers in recent weeks and they expect strong demand to remain after the holiday. Butter output is steady, though labor shortages are still preventing some plants from running full schedules. The Cold Storage report showing inventories down 22% from a year ago has contributed to increased demand. Food service demand continues to decline in the West and retail sales are lagging due to higher grocery store prices, according to DMN.
Grade nonfat dry milk closed Friday, July 1, at $1.8025 per pound, up 1.25 cents, 6.50 cents below its June 1 level, but 54.50 cents above a year ago. There were 12 sales on the week and 40 for the month, down from 57 in May.
CME dry whey closed the week at 50 cents per pound, 0.25 cents higher, 5 cents below where it was on June 1, and a nickel below a year ago. Sales totaled nine for the week and 47 for the month of June, same as in May.
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