Lee Mielke: A look at March, future milk and dairy product prices
April 8, 2016
The March Federal order Class III benchmark milk price was announced by USDA at $13.74 per hundredweight (cwt.), down 6 cents from February, $1.82 below March 2015, and equates to about $1.18 per gallon, down from $1.19 in February. It is the lowest March Class III since 2010.
The First Quarter Class III average stands at $13.75, down from $15.73 at this time a year ago and a distant dream of $22.61 in 2014.
Friday futures settlements portended an April price of $13.81, $13.98 in May, and $14.05 in June, with a 2016 peak of $14.95 for October and November.
The March Class IV price is $12.74, down 75 cents from February, $1.06 below a year ago, and the lowest Class IV since October 2009. The three-month Class IV average stands at $13.18, down from $13.62 a year ago and $23.14 in 2014.
California's March 4-b cheese milk price is $13.24 per cwt., up 19 cents from February but 73 cents below a year ago, and 50 cents below the comparable Federal order Class III price. The gap is the smallest since June 2011, thanks to a state-mandated, temporary 4b price adjustment. The 4b average for 2016 now stands at $13.12, down from $13.83 a year ago and $21.20 in 2014.
The March 4a-butter-powder milk price is $12.41, down 87 cents from February and $1.01 below a year ago. The 4a average stands at $12.98, down from $13.32 a year ago and $22.86 in 2014.
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The Chicago Mercantile Exchange Cheddar block cheese closed April Fool's Day at $1.47 per pound, down 2 cents on the week and 11 cents below that week a year ago. The barrels finished at $1.4550, up a half-cent on the week but 14 cents below a year ago. Seven cars of block were traded on the week and 11 of barrel.
Midwest cheese makers say production is at or near full capacity, reports Dairy Market News (DMN), and inventories are bulging.
Butter shot up early in the week, jumping 2 3/4-cents Tuesday and closed Friday at $1.96, 3 3/4-cents higher on the week, reversing three weeks of decline and 22 cents above a year ago. Fifteen cars were sold on the week.
DMN notes that, "With recent research showing the health benefits of dairy butterfat, many restaurant account managers continue to offer butter as a regular menu item."
Cash Grade A nonfat dry milk finished the week three-quarter cents lower, closing at 71 3/4-cents per pound, 25 3/4-cents below a year ago, with eight carloads trading hands on the week.❖