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Benchmark Drops 80 cents

The Agriculture Department announced the November Federal order Class III benchmark milk price at $21.01 per hundredweight (cwt.), down 80 cents from October but $2.98 above November 2021. That put the 11 month average at $22.09, up from $16.96 a year ago and $18.39 in 2020.

Friday’s Class III futures settlements had December at $20.29, which would result in a 2022 average of $21.94, up from $17.08 in 2021 and $18.16 in 2020.

StoneX Dairy Group says “A mixed spot trade and a uncertain short term outlook for demand continue to push Class III futures lower in front month contracts through about second quarter of next year.” 



The November Class IV price is $23.30 per cwt., down $1.66 from October, $4.51 above a year ago, and the lowest Class IV since January. Its average now stands at $24.68, up from $15.74 a year ago and $13.50 in 2020.

U.S. milk production continues to recover. The USDA’s latest data is for October and shows output at 18.85 billion pounds, up 1.2% from Oct. 2021, and the fourth consecutive month to best that of the previous year. Revisions lowered the 50-State September total by 13 million pounds to 18.3 billion, up 1.4% from a year ago instead of the 1.5% increase originally reported.



Cow numbers totaled 9.418 million, up 1,000 head from September numbers which were revised 6,000 head higher. The October herd was up a hefty 31,000 from a year ago and 51,000 more than we had in January. The 24-State count was up 42,000 head from a year ago. 

Output per cow averaged 2,001 pounds, up 17 pounds or 0.9% from Oct. 2021. September output per cow was revised down 3 pounds, to 1,940 pounds.

California cows produced 3.4 billion pounds, down 18 million pounds or 0.5% from a year ago. Cow numbers were up 4,000 but output per cow was down 15 pounds. Wisconsin put 2.7 billion pounds in the tank, up 17 million or 0.6%. Cow numbers were down 7,000 but output per cow was up 25 pounds.

Idaho was up 3.2% on a 35 pound gain per cow and 10,000 more cows. Michigan was up 0.3% despite a loss of 7,000 cows. Output per cow was up 45 pounds. Minnesota was unchanged thanks to a 35 pound per cow gain offsetting an 8,000-cow drop. New Mexico was down 4.2% on a 14,000 cow drop, though output per cow was up 10 pounds. 

New York was up 1.7%, thanks to a 45 pound gain per cow offsetting a loss of 3,000 cows. Oregon was unchanged across the board. Pennsylvania was up 1.0%, on a 25 pound per cow gain offsetting 2,000 fewer cows. 

South Dakota was up 14.1%, thanks to 24,000 more cows but output per cow was down 10 pounds again. Texas was up 7.0% on 30,000 more cows and a 45 pound gain per cow. Washington State was down 1.7% on 6,000 fewer cows, though output per cow was up 15 pounds.

The October milk feed price ratio climbed a little higher for the second month in a row, thanks to a higher All Milk price and lower corn and soybean prices.

The USDA’s latest Ag Prices report shows the ratio at 1.92, highest since June, up from 1.74 in September, and compares to 1.84 in Oct. 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, 1 pound of milk would only purchase 1.92 pounds of dairy feed of that blend.

The All Milk Price average advanced to $25.90 per hundredweight, up $1.50 from September, and $6.30 above Oct. 2021.

California’s price climbed to $26.60 per cwt., also up $1.50 from September and $7.30 above a year ago. Wisconsin’s, at $24.40, was up $2.30 from September and $4.70 above a year ago.

The October national average corn price was $6.50 per bushel, down 59 cents from September, after falling 15 cents the previous month, but is still a budget busting $1.48 per bushel above October 2021. 

Soybeans, fell to $13.50 a bushel, down 60 cents from September, after dropping $1.20 the previous month, but still $1.60 per bushel above Oct. 2021.

Alfalfa hay jumped $4 per ton, after gaining $2 the previous month, and averaged $281 per ton in October, another record high, and $62 per ton above a year ago.

Looking at the cow side of the ledger; the October cull price for beef and dairy combined averaged $84.10 per cwt., down $7.10 from September, $20.60 above Oct. 2021, and $12.50 above the 2011 base average.

Quarterly milk cow replacements averaged $1,730 per head in October, up $20 from July, and $390 above October 2021. Cows averaged $1,850 per head in California, up $100 from July, and $550 above a year ago. Wisconsin’s average, at $1,840 per head, was down $30 from July, and $390 above Oct. 2021.

Dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo., says “October’s gain in the income over feed calculation moved to the highest level since June. Income over feed costs in October were above the $8 per cwt. level needed for steady to increasing milk production for the 13th month.”

The CME Cheddar blocks fell to $2.0650 per pound Wednesday but closed the first Friday in December at $2.10, down a nickel on the week but still 24.25 cents above a year ago. They also ended November 10.50 cents higher than where they started the month at.

After dropping 24.50 cents the previous two weeks, the barrels slipped to $1.80 per pound Tuesday, lowest since Aug. 8, but rallied to finished Friday at $1.8975, up 8 cents on the week, 29.50 cents above a year ago, and 20.25 cents below the blocks. They ended November 14.25 cents lower than their Nov. 1 perch.

Sales totaled seven cars of block for the week and eight for the month of November, down from 18 in October. Barrel sales totaled nine for the week and 28 for the month, down from 43 in October.

StoneX Nov. 30 Early Morning Update stated that cheese demand is “Quiet right now. Buyers seem to, by and large, have what they need. On the flip side, we don’t get the sense that sellers are panicked either.”

Cheesemakers tell Dairy Market News that milk was still plentiful after the Thanksgiving holiday. Last week’s reported spot milk discounts were not as substantial mid-week as the previous week but most were below Class. Some cheesemakers say current demand slowdowns have kept them from seeking extra milk. Some say it’s the seasonal slowdown, as retailers have filled their holiday pipelines while others suggest market price declines are keeping customers on the sidelines. Cheese production is somewhat steady. 

Cheese demand is steady in western retail markets while food service demand is slightly higher following Thanksgiving. Export demand is strong, though lower prices in other countries may soften this demand in the coming weeks, warns DMN. Asian purchasers continue to buy loads for second quarter 2023 and are reportedly paying a healthy premium to secure them. Barrel inventories are more ample than blocks currently. Cheese makers say milk is available in the region, allowing them to run busy schedules but they are still hindered by labor shortages and delayed deliveries of production supplies.

CME butter fell to $2.88 per pound Thursday but closed Friday, Dec. 2, at $2.90, down 4.75 cents on the week but 89.75 cents above a year ago. There were six sales on the week and 63 for November, up from 58 in October.

Holiday related cream access continues to keep Midwest butter churning active, says DMN, and plants were turning away cream offers because they were at capacity. Demand remains despite prices over $2.90 per pound and the late timeframe in regards to the holiday season. Market tones continue to maintain support and contacts view the markets as stable, if not slightly bullish, says DMN.

Western cream is becoming more available as milk production is improving in the region. Cream availability is outpacing strong demand and contributing to lower cream multiples. Some processors say tanker and labor shortages are making it difficult to obtain and process increased volumes of cream. Butter makers say they are actively churning but labor shortages are preventing some from operating full schedules. Butter demand is strong in the West from both food service and retail. Inventories are available but some tightness persists. Contacts note they are booking loads of butter to ship into first and second quarter 2023.

Grade A nonfat dry milk fell to $1.3475 per pound Thursday, lowest since Sept. 16, 2021, but finished Friday at $1.36, 3.75 cents lower on the week and 20.25 cents below a year ago. Sales totaled 10 for the week and 41 for the month, up from 29 in October.

Dry whey saw its Friday finish at 45 cents per pound, up a penny on the week but 24.75 cents below a year ago. There were two sales on the week and 16 for the month of November, up from six in October.

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