Benchmark milk price loses 5 cents
The Agriculture Department announced the February Federal order Class III benchmark milk price at $17 per hundredweight, down 5 cents from January, $3.11 above February 2019, and the highest February Class III since 2014.
Class III futures settlements on March 6 portended a March price at $16.37; April, $16.03; May, $16.28; and June at $16.48; with a peak at $17.12 in October.
The February Class IV price is $16.20, down 45 cents from January, 34 cents above a year ago, and the highest February Class IV price since 2014.
Cheddar block cheese started March by ending three weeks of loss. It shot up to $1.7675 per pound March 2 but closed March 6 at $1.75, up 2.75 cents on the week and 21.5 cents above a year ago. The barrels dropped to $1.4775 by March 6, down 11.25 cents on the week, 11.25 cents above a year ago, but at an unsustainable 27.25 cents below the blocks. 7 cars of block sold and 17 of barrel.
The coronavirus outbreak is affecting markets around the world, including dairy, with no end of the impact in sight. Dairy product demand is still good enough to keep prices above year ago levels, at least for cheese, but there’s increasing amounts of milk available to cheese vats and plenty of cream for the butter churns. Dairy Market News warns that the coronavirus outbreak “continues to bring more uncertainty into the market.”
Butter, which fell below $2 per pound just before Thanksgiving last year, first time since November 2016, continues to struggle. It fell to $1.6950 in late February but was back up to $1.8550 on March 6, 13 cents higher on the week but 41.25 cents below a year ago.
Grade A nonfat dry has been impacted the most by the coronavirus but it closed March 6 at $1.1150 per pound, up 5 cents on the week and 14 cents above a year ago.
Dry whey closed at 34.75 cents per pound, 0.75 cents higher on the week and 0.75 cents above a year ago.
China is opening its doors to more U.S. dairy products, especially dry whey, as it tries to rebuild its hog population, devastated by the African swine fever, prior to the coronavirus outbreak.
The March 3 Global Dairy Trade auction is also being impacted by the coronavirus and saw its weighted average of products offered slip 1.2%, following the 2.9% drop on Feb. 18 and 4.7% plunge on Feb. 4. A year ago, the first GDT’s weighted average for March was up 3.3% and was the seventh consecutive month of gain.
U.S. dairy farm profitability suffered some as a lower All Milk price and higher feed costs pulled the January milk feed price ratio lower, second month in a row of decline. The Ag Prices report put the ratio at 2.41, down from 2.55 in December but compares to 2.06 in January 2019.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, with that ratio, 1 pound of milk purchases 2.41 pounds of dairy feed containing that blend.
The U.S. All-Milk price averaged $19.60 per hundredweight (cwt.), down $1.10 from December but is $3 above January 2019.
The national average corn price averaged $3.79 per bushel, up 8 cents per bushel from December and 23 cents per bushel above January 2019. Soybeans averaged $8.84 per bushel, up 14 cents from December and 20 cents per bushel above a year ago. Alfalfa hay averaged $171 per ton, down $4 from December and $8 per ton below a year ago.
Looking at the cow side of the ledger; the January cull price for beef and dairy combined averaged $61.40 per cwt., up $2.10 from December, $7.20 above January 2019, but is $10.20 below the 2011 base average of $71.60 per cwt.
Milk cow replacements averaged $1,300 per head for the quarter in January, down $10 per head from October, but $160 per head above January 2019. Cows averaged $1,400 per head in California, unchanged from October but $300 above a year ago. Wisconsin cows averaged $1,260 per head, down $10 from October but $140 above January 2019.
Dairy farm margins continued to weaken the second half of February as the milk market remained under pressure despite generally steady feed costs, according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC.
“Although margins have retreated from very profitable levels,” the MW stated, “they remain relatively strong from a historical perspective. Ongoing headwinds from the expanding global coronavirus outbreak have pressured milk prices as rising production and stocks raise concern over near and medium-term demand. ❖
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