Benchmark milk price at seven-year low
The Agriculture Department announced the May Federal order Class III milk price at $12.76 per hundredweight (cwt.), down 87 cents from April, $3.43 below May 2015, the lowest Class III since September 2009’s $12.11, but is $1.39 above California’s comparable Class 4b cheese milk price. It equates to about $1.10 per gallon, down 7 cents from April.
The five month Class III average stands at $13.53, down from $15.84 a year ago and $22.94 in 2014. June 3 Class III futures portended a June Class III price of $13.16; July, $13.91; August, $14.56; and September at $15.00 per cwt. The 2016 peak was only $15.32 in November. The May Class IV price is $13.09 per cwt., up 41 cents from April but 82 cents below a year ago.
The five month average is at $13.06, down from 13.65 a year ago and compares to $23.08 in 2014. California’s May 4b cheese milk price is $11.37 per cwt., down $1.34 from April, $3.26 below a year ago, and the lowest 4b price since March 2010. The 2016 4b average stands at $12.69, down from $14.07 a year ago and $20.94 in 2014.
California Department of Food and Agriculture Secretary Karen Ross ordered a permanent change to the dry whey scale of the State’s Class 4b pricing formula, effective June 1, 2016. Be that as it may, the May shortfall is the biggest since December 2015. The May 4a butter-powder price is $12.57 per cwt., up 3 cents from April but $1.34 below a year ago.
The five month 4a average now stands at $12.81, down from $13.45 a year ago and $22.89 in 2014. Hopes were strengthened at Wednesday’s Global Dairy Trade (GDT) auction, first one of the 2016/17 season. The June 1 event saw the weighted average for all products offered up 3.4 percent, following a 2.6 percent uptick May 17. Back on the home front; CME block Cheddar closed the Memorial Day holiday-shortened week at $1.44 per pound, up 6 cents on the week but 27 1/2-cents below a year ago.
The barrels finished at $1.4450, up a half-cent on the week and 19 3/4-cents below a year ago. Sixteen cars of block traded hands on the week and 17 of barrel. Cheese vats are running at or near full capacity in the Midwest, says Dairy Market News (DMN). Manufacturers forecast full schedules for June, as milk production shows little to no sign of slowing but contacts are optimistic for continual growth in sales and promotions.
Midwest cheese stocks are long despite strong sales and many participants believe it is going to take much larger growth in sales to alleviate inventory pressures across the region.
The market undertone is mixed but international interest is steady. Western cheese output also remains strong as milk is readily available. Domestic demand is firm but, without reliable export demand, inventories for almost all varieties of cheese continue to trend upwards. Retail and food service demand has been solid, says DMN, but some contacts are asking if this can hold through the summer. Many processors are hoping the difference between U.S. cheese prices and world prices will narrow and help stimulate export interest.
Cash butter finished the week at $2.10 per pound, up 3 1/2-cents, the highest spot price since April 29, 2016, and 20 cents above a year ago when it dropped 10 1/2-cents. Only three cars traded hands on the week at the CME. Butter production is steady for many manufacturers, says DMN, and retail and food service demand is consistent. Cream remains plentiful and readily available. Overall, butter stocks are building, but remain at comfortable levels as warmer months approach. DMN adds that Western churns also remain active as cream is generally plentiful. Inventories are also building along seasonal trends but domestic demand remains steady.
Cash nonfat dry milk climbed to 82 cents per pound Wednesday, highest price since October 2015, but closed Friday at 81 1/4-cents per pound, up 1 3/4-cents on the week but 6 3/4-cents below a year ago. Thirteen cars sold on the week. A lower All-Milk price and higher feed prices lowered the latest milk feed price ratio.
The April ratio is 1.97, down from 2.08 in March, up from 1.95 in April 2015, and the lowest ratio since May 2015, according to USDA’s latest Ag Prices report. The index is based on the current milk price in relationship to feed prices for a dairy ration of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay, in other words, one pound of milk today purchases 1.97 pounds of dairy feed containing that blend.
The April U.S. average All-Milk price was $15.00 per cwt., down 30 cents from March and $1.50 below April 2015. California’s All Milk average hit $13.63, down 50 cents from March, while Wisconsin’s, at $15.60 per cwt., was down 20 cents. April corn averaged $3.58 per bushel, up a penny from March but 17 cents per bushel below April 2015. Soybeans averaged $9.04 per bushel, up 48 cents from March, but still 65 cents per bushel below April 2015.Alfalfa hay averaged $153 per ton, up $9 per ton from March, but $30 per ton below April 2015. Looking at the cow side; the April cull price for beef and dairy combined averaged $81.50 per cwt., up $1.50 from March, $31.50 per cwt. below April 2015, but compares to the 2011 base average of $71.60 per cwt. Prices received for milk cows averaged $1,820.00 per head, down $10 per head from January 2016, down $150 from April 2015, but $400 above the 2011 base price. ❖