Benchmark up 53 cents |

Benchmark up 53 cents

Volatility was the word of the day, the week, and the hour, as the war between Russia and Ukraine rages on, raising havoc in every market, not to speak of the devastation on innocent human life. StoneX Dairy Group broker Dave Kurzawski said in the March 7 “Dairy Radio Now” broadcast that markets are currently focusing on the worst case scenarios and hopefully, calmer heads will prevail.

The Agriculture Department announced the February Federal order Class III benchmark milk price at $20.91 per hundredweight, up 53 cents from January, $5.16 above February 2021, and the highest Class III price since November 2020.

Friday’s Class III futures settlements showed the March contract at $22.55; April, $23.68; May, $23.62 and June at $23.44.

The Class IV price is a record $24 per cwt., up 91 cents from January, $10.25 above a year ago, and topped the previous record of $23.89 in August 2014.

“The wheat markets are on fire,” says StoneX and impacting other commodities. Milk prices are also climbing but they need to, says Kurzawski, in order for producers to pay the higher feed and fertilizer costs ahead. $20 dollar milk would normally portend a response of more milk, he said, “But that’s not the case right now and if corn goes to $8 or $9, $22 milk is not going to be enough.”

Markets are on edge worldwide and that was evidenced in the March 1 weighted average at the Global Dairy Trade auction, up 5.1%, biggest boost since the 15.0% pole vault on March 2, 2021, and the fifth consecutive session of gain.

Traders brought 55.6 million pounds of product to the market, down from 61.1 million on Feb. 15, lowest since Sept. 21, 2021, but the average metric ton price climbed to a record high $5,065 U.S., highest since Feb. 14, 2014.

GDT Cheddar led the way, up 10.9%, following a 3.5% rise on Feb. 15. Butter followed, up 5.9%, after rising 5.1% last time. Buttermilk powder was up 5.8%, and whole milk powder was up 5.7%, after advancing 4.2% in the last event. Skim milk powder was up 4.7%, following a 6.0% jump. Anhydrous milkfat was up 2.1%, following a 1.2% rise, and lactose was up 0.9%.

StoneX Dairy Group says the GDT 80% butterfat butter price equates to $3.1359 per pound U.S., up 17.7 cents, after jumping 14.5 cents on Feb. 15, and compares to CME butter which closed Friday, March 4, at a real steal of $2.6850. GDT Cheddar, at $2.9002, was up 23.3 cents, after gaining 8.9 cents on Feb. 15, and compares to Friday’s CME block Cheddar at $2.15. GDT skim milk powder averaged $2.0328 per pound, up from $1.9482. Whole milk powder averaged $2.1578 per pound, up from $2.0424. CME Grade A nonfat dry milk closed Friday at $1.8725 per pound.

January U.S. milk production dropped for the third month in a row from a year ago. The Agriculture Department’s latest Milk Production report shows preliminary output at 19.05 billion pounds, down 1.6% from January 2021, steepest year over year decline since March 2004, when there was a shortage of recombinant bovine somatotropin, according to Dairy and Food Market Analyst editor Matt Gould.

Output in the top 24 producing states totaled 18.2 billion pounds, down 1.4%. Revisions lowered the original 50-State December estimate by 35 million pounds, now put at 18.8 billion pounds, down 0.3% from a year ago.

January cow numbers totaled 9.368 million head, down 5,000 from December, eighth consecutive month they were down from the previous month, and were 82,000 head below a year ago. The December count was revised 2,000 head lower. The milking herd has dropped 139,000 head from its peak in May 2021.

January output per cow averaged 2,034 pounds, down 15 pounds or 0.7% from 2021.

California’s January output totaled 3.5 billion pounds, down 68 million pounds or 1.9% from a year ago, thanks to a 40 pound drop per cow. Cow numbers were unchanged. Revisions lowered December output by 25 million pounds.

Wisconsin output totaled 2.7 billion pounds, down 8 million or 0.3%. Cow numbers were up 11,000 head but output per cow was down 25 pounds.

Idaho was up 0.6%, on 4,000 more cows. Output per cow was unchanged. Michigan was down 3.5% on 10,000 fewer cows and a 30 pound drop per cow. Minnesota was down 1.0% on a 25 pound drop per cow, though cow numbers were up 1,000. New Mexico output plunged 12.1% on a drop of 42,000 cows. Output per cow was up 10 pounds.

New York was off 0.6% on 5,000 fewer cows though output per cow was up 5 pounds. Oregon was down 1.4% on a 10 pound drop per cow and 1,000 fewer cows. Pennsylvania was down 2.9%, on 6,000 fewer cows and 30 pounds less per cow. South Dakota was up 18.3%, thanks to 28,000 more cows offsetting a 20 pound drop per cow. Texas was up 3.5% on 12,000 more cows and a 35 pound gain per cow. Washington State was down 7.1% on a loss of 17,000 cows and 20 pounds less per cow than a year ago.

The Daily Dairy Report’s Sarina Sharp wrote in the Feb. 25 Milk Producers Council newsletter; “Global milk output is shrinking and deficits getting bigger. In December, milk production among the world’s five largest dairy exporters fell 1.3% below December 2020. That’s the steepest decline in five years, dating back to 2016 when European governments paid dairy producers to pare back production. The deficit likely got even bigger in January,” says Sharp.

CME block Cheddar cheese closed the first Friday of March at $2.15 per pound, up 20.50 cents on the week, highest since Nov. 11, 2020 and 41.75 cents above a year ago.

The barrels closed at $1.97, 7 cents higher, also the highest since Nov. 11, 2020, 46.25 cents above a year ago, and 18 cents below the blocks.

The CME saw 10 cars of block trade hands on the week, 16 in the month of February, down from 18 in January. Barrels sales totaled 21 for the week, 39 for all of February, up from 23 in January.

Midwest cheesemakers report demand ranged from steady to very busy as March got underway. Dairy Market News says limited staffing is a recurring problem in meeting customer needs but things are improving. Milk prices remain around Class III to slightly lower. More contacts are saying milk yields are not as ample as they had previously expected in the late winter weeks, which brought milder weather.

Cheese sellers in the west report that retail sales are steady and food service continues to improve as COVID restrictions loosen. Cheese made in the U.S. continues at a discount to other countries, prompting increased interest from international markets. A shortage of truck drivers and port congestion are still causing delays. Loads of milk and production supplies also continue to face delays due to the ongoing lack of truck drivers and plants continue to report that, combined with labor shortages, they are not able to run at capacity.

Butter hit $2.70 per pound Thursday but backtracked to a Friday finish at $2.6850, up 9.75 cents on the week and 99.50 cents above a year ago, with 27 sales on the week, 69 for the month of February, down from 111 in January.

DMN says Central butter production is busy as cream multiples hold in the low 1.20s. There are setbacks due to employment shortness but plants are churning as close to capacity as possible. A number of contacts see a potential shortness of butter moving into late summer and fall. Butter market tones are mixed near term, but longer term expectations generally fall under the bullish category, says DMN. “Some regional butter makers are keeping an eye on the Ukrainian situation, particularly as to what global milkfat suppliers plan to ship, or not ship, into Russian ports.”

Cream is available in the West, though inventories are tightening and cream demand is steady. COVID restrictions continue to loosen in the West and restauranteurs are increasing butter purchases while retail is mixed. Butter inventories are tight in the region, though some say availability is increasing. Butter producers are running busy schedules but below capacity due to continued labor shortages and delayed deliveries of supplies.

Grade A nonfat dry milk closed Friday at $1.8725 per pound, up 1.25 cents on the week and 69.50 cents above a year ago. CME sales totaled 14 for the week, 80 for February, up from 60 in January.

Dry whey fell to a Friday close at 75.75 cents per pound, down 2.25 cents, lowest since Jan.6, but still 17.75 cents above a year ago. There were six sales on the week at the CME, 30 in the month of February, up from10 in January.


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