Benchmark milk price down 32 cents | TheFencePost.com
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Benchmark milk price down 32 cents

The Agriculture Department announced the January Federal order Class III benchmark milk price at $16.04 per hundredweight, up 32 cents from December but $1.01 below January 2020.

Friday’s futures settlements portended a February Class III at $15.64; March, $16.69; April, $17.12; May, $17.48; June, $17.57; July, $17.60; August, $17.68; September, $17.69; October, $17.63; November, $17.45; and December $17.28.

The January Class IV price is $13.75, up 39 cents from December but $2.90 below a year ago.



CME dairy product prices were mixed in the first week of February, or mixed up, as traders weighed the Feb. 2 Global Dairy Trade auction and the December Dairy Products report.

The Cheddar blocks fell to $1.5350 per pound Feb. 4, lowest since May 12, but jumped 10.50 cents Feb. 5 to close at $1.64, up 6.50 cents on the week, reversing three weeks of decline, but were 29 cents below that week a year ago.



The barrels finished Feb. 5 at $1.50 per pound, up 11 cents on the week, 2.25 cents above a year ago, and reduced the spread to 14 cents. Nineteen cars of block were traded on the week at the CME and 14 of barrel.

StoneX Dairy’s Feb. 5 Early Morning Update stated; “With uncertain government purchases and the potential for increased food service business in the coming months, it seems the 0.5% cheese production growth (reported in the Dairy Products report) is not enough to give cheese buyers peace of mind.”

Cheese contacts tell Dairy Market News that spot milk offers were quieter than in recent weeks but far from tight. Prices for spot milk remain at strong discounts. Cheese production is busy as managers keep ahead of the milk by producing cheeses that require aging. Winter weather hit the Northeast and added stress for Midwestern cheese producers who provide restaurants that will not be able to offer outdoor dining for the near term. DMN says “There are myriad questions regarding near and long term market conditions, as contacts’ outlooks are foggy.”

Western cheese is widely available and inventories are growing for most varieties as cheese output also tries to keep pace with the available milk. Cheese supplies are outpacing demand as retail sales decreased following the holidays and pizza cheese demand has eased some, with the football season ending. Super Bowl is characteristically the biggest cheese selling time of the year and hopefully that’s still the case. Food service demand has yet to see much improvement even as some areas relax COVID restrictions on restaurants.

DMN says “Government purchases can help clean up some of the cheese stocks but market observers are also wary of the impact that additional purchases can have on price volatility.”

Butter dropped 3.50 cents Feb. 1 to $1.21 per pound, lowest since May 5, but jumped 8.25 cents Feb. 2, spurred by the GDT, and ended Feb. 5 at $1.2675, up 2.25 cents on the week, but 56.50 cents below a year ago, on 23 sales.

Cream prices remain within reach for butter makers in the Central region, says DMN, but steadily growing ice cream production has some contacts reporting slight upticks on the multiples. Plant managers have said they are using primarily internally sourced cream, which is abundant. Butter production remains busy, although food service demand is “a shell of its pre-COVID-19 self,” says DMN, but retail demand has covered some of the lost ground. A few producers report that February has picked up some steam regarding bulk butter sales. DMN stated; “There are only a few weeks of old crop butter trading left on the CME, which typically offers at least a short term bullish shift.”

Western cream supplies are increasing seasonally and churns are on full schedules in many cases. Butter inventories are adequate for some, but heavier than anticipated for others, though domestic butter demand is described as good.

Grade A nonfat dry milk fell to $1.09 per pound Feb. 4, lowest since Nov. 24, but saw a Nov. 5 finish at $1.12, down 5.25 cents on the week and 13 cents below a year ago. A whopping 60 carloads exchanged hands on the week, including a single day record of 33 on Feb. 3.

StoneX says “The conventional wisdom this year is that the slack in domestic powder demand was balanced by strong global markets. That dynamic likely still exists, but we do wonder if price weakness, even modest price weakness, on NFDM will increase domestic usage. With plenty of fluid milk available we don’t expect to hear about fortifying the cheese vats now, but maybe there is an attraction to the storability of powder.”

Dry whey held all week at 53.50 cents per pound, 14.50 cents above a year ago, with just one sale reported on the week at the CME.

Tight margins are returning to U.S. dairy farms as falling milk prices and rising feed costs take their toll. The USDA’s latest Ag Prices report shows the December milk feed ratio at 2.18, down from 2.58 in November and the lowest since May 2020, and compares to 2.57 in December 2019.

The index is based on the milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. One pound of milk could purchase 2.18 pounds of dairy feed of that blend in December.

The U.S. All-Milk price averaged $18.50 per hundredweight (cwt.), down $2.80 from November and $2.20 below the December 2019 average.

California’s All Milk price fell to $19.20, down $3.80 from November and 60 cents below a year ago. Wisconsin’s, at $18.10, was down $4.60 from November and $3.30 below a year ago.

The national average corn price averaged $3.97 per bushel, up 18 cents per bushel from November, which followed an 18 cent rise the month before, and a 21 cent rise in October. It was priced 26 cents per bushel above December 2019.

Soybeans averaged $10.50 per bushel, up 20 cents from November which followed a 67 cent rise from October, and $1.80 per bushel above a year ago.

Alfalfa hay averaged $169 per ton, up $2 from October but $3 per ton below a year ago.

The December cull price for beef and dairy combined averaged $58.10 per cwt., down $1.20 from November, after dropping 70 cents in November from October, and is $1.20 below December 2019 and $13.50 below the 2011 base average of $71.60 per cwt.

Milk cow replacements averaged $1,360 per head in January, up $20 per head from October and $60 above January 2020. They averaged $1,350 per head in California, unchanged from October but $50 per head below a year ago. Wisconsin cows averaged $1,470 per head, up $50 per head from October and $210 per head above January 2020.


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