Benchmark jumps $1.97 | TheFencePost.com
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Benchmark jumps $1.97

The Agriculture Department announced the April Federal order Class III milk price at $24.42 per hundredweight, up $1.97 from March, $6.75 above April 2021, highest Class III since July 2020, and 18 cents shy of the record high in Sept. 2014.

Friday, May 6, Class III futures portended a May price at $25.01, which would be a new record high, June at $24.46; July at $24.10; August, $23.55; September, $23.22; October, $23; November, $22.65; and December at $22.06. If realized, the 2022 average would be $23.02, up from $17.08 in 2021, and compares to USDA’s latest predicted average of $22.75.

The four month Class III average stands at $22.04, up from $16.40 at this time a year ago, and compares to $15.84 in 2020 and $14.71 in 2019.



The April Class IV price set another new record at $25.31 per cwt., up 49 cents from March, and $9.89 above a year ago. Its four month average is at $24.31, up from $14.14 a year ago, $14.78 in 2020, and 15.69 in 2019.

The high farm milk prices are not giving dairy producers much comfort. While the March All Milk Price hit a record high and jumped $1.20, rising feed prices and fuel, particularly diesel, and fertilizer are eating up the milk returns.



The USDA’s latest Ag Prices report shows the March milk feed price ratio at 2.06, down from 2.07 in February, but compares to 1.76 in Mar. 2021.

The U.S. All Milk Price averaged a record high $25.90 per cwt., up $1.20 from February, seventh consecutive increase, and was $8.60 above March 2021. California’s price hit $26.20, up $1.30 from February and $9.50 above a year ago. Wisconsin’s, at $25.30, also up $1.30 from February, was $7.60 above a year ago.

The national average corn price jumped to $6.56 per bushel, up 46 cents from February, after gaining 53 cents in February, and was $1.67 per bushel above Mar. 2021.

Soybeans averaged $15.40 per bushel, up 60 cents from February, after shooting $1.90 higher in February, and $2.20 per bushel above Mar. 2021.

Alfalfa hay averaged $221 per ton, up $7 from February and $44 above a year ago.

The March cull price for beef and dairy combined averaged $84.70 per cwt., up $6.80 from February, $17.60 above March 2021, and $13.10 above the 2011 base.

Quarterly milk cow replacements averaged $1,570 per head in April, up $190 from January, and $200 above April 2021.

Cows averaged $1,440 per head in California, up $110 from January, and $40 above a year ago. Wisconsin’s average, at $1,710, was up $240 from January, and $220 above April 2021.

Dairy economist Bill Brooks of Missouri-based Stoneheart Consulting said, “The milk margin over feed costs will be above the maximum coverage of $9.50 per cwt. every month in 2022 with a range of $10.70 in December to $12.35 in April.”

The latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC, reports; “Diesel costs are up 70% from a year ago to an all-time high of $5.29 per gallon while natural gas prices have nearly doubled since the beginning of the year. Feed prices likewise remain at very elevated levels, and slow corn planting progress has supported prices,”

Fat provided the biggest pull on the May 3 Global Dairy Trade auction, which saw its fourth consecutive decline. The weighted average plunged 8.5%, biggest drop since Aug. 4, 2015, and follows the 3.6% drop on April 19. Traders brought 55.5 million pounds to the market, up from 48.9 million on April 19.

HighGround’s Lucas Fuess, in the May 9 Dairy Radio Now broadcast, said Fonterra increased its offer volumes Tuesday as it attempted to clear inventories before the start of the next new milk production season.

All products offered again lost ground, led by butter, down 12.5%, following a 3.7% dip on April 19. Anhydrous milkfat dropped 12.1%, after slipping 1.3%. GDT Cheddar was down 8.6%, following a 3.9% loss, and the powders followed. Whole milk powder and skim milk powder were both down 6.5%, following respective 4.4% and 4.2% drops last time buttermilk powder was down 6.1%

StoneX says the GDT 80% butterfat butter price equates to $2.5698 per pound U.S., down 36.9 cents, after dropping 11 cents in the last event, and compares to CME butter which closed Friday at $2.64, 7 cents above the GDT. GDT Cheddar, at $2.5635, was down 24.2 cents after losing 13 cents last time, and compares to Friday’s CME block Cheddar at $2.35. GDT skim milk powder averaged $1.8731 per pound, down from $1.9995, a drop of 12.6 cents. Whole milk powder averaged $1.7764 per pound, down from $1.9083, a loss of 13.2 cents. CME Grade A nonfat dry milk closed Friday at $1.74 per pound.

Nate Donnay, StoneX director of Market Intelligence, warn in last week’s ‘Udder Intelligence’ report that China’s imports in March were much lower than forecast, down 28.6% from 2021, and “When the largest buyer in the world is down 20-30%, we have a significant global demand problem.”

Thankfully, this week’s GDT saw a bit of an uptick from China, according to StoneX. “The slowdown came from the Middle East. We don’t know if that was related to Ramadan or if there is something else driving the weaker demand.”

The global market is vital for U.S. farmers and processors and March provided confirmation. Cheese exports totaled a record 91.9 million pounds, up 12.9% from Mar. 2021. HighGround Dairy points out that volume was driven by product moving to Mexico, up 26%, and the second largest monthly figure on record.

Butter exports totaled 13.5 million pounds, up 47.4%, highest since April 2014, thanks to Canada which imported a record amount for the month, up 26%.

Nonfat dry milk shipments totaled 176.7 million pounds, down 7.4%, but was measured against a strong year in 2021. Exports were the highest of any month since June 2021, according to HGD, but a 98% decline in product moving to Egypt, negatively impacted the total. Powder moving to Mexico improved from the prior year and recent months, reaching the highest monthly volume since August 2021, up 9%, according to HGD. Dry whey totaled 43.3 million pounds, down 17.9% and down 23.2% year to date.

Even as the U.S. experiences a baby formula shortage, CME dairy prices saw little reaction to Tuesday’s GDT fall or the Dairy Products report, buoyed perhaps by the strong export data. The Cheddar blocks closed Friday at $2.35 per pound, down 2 cents on the week but 60.25 cents above a year ago.

The barrels saw a Friday finish at $2.38, up 4 cents on the week, 65.25 cents above a year ago, and 3 cents above the blocks, as America puts cheeseburgers on the grill again. There were 7 sales of block on the week and 18 of barrel.

Cheese producers continue to report logistical issues to Dairy Market News, but more on the supply side. Shortfalls included production and packaging equipment but no shortness in milk. Spot prices mid-week were around $2 under Class III. Demand remains robust, according to Midwest cheese plants, and some expect demand to remain healthy through second quarter and beyond.

Domestic cheese demand was steady to lower in the West. Contacts report that purchases have begun to slow as schools approach summer break. Retail demand is steady and food service demand is increasing, according to DMN. Export demand is strong. Cheese output is steady, as milk is available, but port congestion and a shortage of truck drivers continues to cause delays.

CME butter closed Friday at $2.64 per pound, down 3.50 cents on the week but 87 cents above a year ago, on 14 sales for the week.

Butter producers report seasonal demand slowdowns are giving them time to build inventory. The churning question among contacts is how tight butter will be by the expected seasonal upshift in demand. Cream volumes are slightly lower, according to Midwestern butter producers, as ice cream production upticks are beginning to, at least slightly, “thin out the cream pool,” says DMN.

Demand for cream is steady in the West. Ice cream makers are running busy schedules. Some butter makers are processing their cream internally to build inventory. Butter production is steady, though some plants report labor shortages and delayed deliveries of production supplies continues to prevent running full schedules. Butter demand is steady in food service, though declining at retail as higher store prices may have caused some switching to butter substitutes.

Grade A nonfat dry milk saw its close Friday at $1.74 per pound, 1.50 cents lower but 41.75 cents above a year ago, with 12 sales reported on the week.

Dry whey continued to head lower, closing the week at 58.50 cents per pound, down 2 cents, and 4.25 cents below a year ago, on seven sales at the CME.


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