Lee Mielke: Milk prices see increase in July | TheFencePost.com
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Lee Mielke: Milk prices see increase in July

The Agriculture Department announced July Federal order Class milk prices Wednesday. The benchmark Class III price is $15.24 per hundredweight (cwt.), up $2.02 from June but $1.09 below July 2015. It’s the highest Class III since November 2015 and equates to about $1.31 per gallon, up from $1.14 in June. The seven month Class III average is at $13.73 and compares to $16.04 at this time a year ago and $22.52 in 2014.

Class III futures, as of late Friday morning, portended an August price of $17.08 per cwt; September, $17.16; October, $16.98; November, $16.45; and December at $16.02 per cwt.

The July Class IV price is $14.84, up $1.07 from June, $1.69 above a year ago, and the highest Class IV since December 2015. The 2016 Class IV average now stands at $13.42, down from $13.62 a year ago and $23.19 in 2014.



California’s July Class 4b cheese milk price is $14.67 per cwt., up $1.64 from June but 31 cents below a year ago. Still, it’s the highest 4b price since October 2015 but is 57 cents below the comparable Federal order Class III price. Its seven month average stands at $13.02, down from $14.41 at this time a year ago and $20.35 in 2014.

The July Class 4a butter-powder price is $14.23, up 72 cents from June and $1.20 above a year ago. It is the highest 4a price since December 2015. The 4a average now stands at $13.11, down from $13.42 a year ago and $23.03



Cash dairy product prices headed up the first week of August, with cheese advancing for the sixth consecutive week. The blocks closed Friday at $1.8150 per pound, up 8 1/4-cents, 6 1/2-cents above a year ago, and the highest price since November 18, 2014. The barrels closed at $1.88, up 10 1/2-cents on the week, 16 1/4-cents above a year ago, highest since November 2014 also, and 6 1/2-cents above the blocks. Nine cars of block traded hands on the week at the CME and 20 of barrel.

FC Stone’s Dave Kurzawski wrote in his August 5 Early Morning Update; “We realize barrel cheese is tighter in the country and yesterday’s Dairy Products report aids that narrative, but such strength seems in a word: overzealous.”

HighGround Dairy’s August 1 Morning Huddle stated; “Though broader fundamentals are bearish, extreme heat and seasonal demand will likely keep cheese prices supported through the end of summer.”

Dairy Market News (DMN) reports that cheese production was steady to slightly lower the first week of August but Central region milk production continues to fall. DMN warned that manufacturers currently utilizing spot loads of milk are preparing for that milk to “disappear and production slow-downs as educational institutions begin to reopen.” Central inventories of aged cheese remain large but fresh cheese, processed cheese and cheese curd sales are all up.

Western cheese output is “active and steady,” reports DMN. “Milk is generally available for most processing, with a few extra loads moving around the region to fill production voids. Food service demand has eased a bit. “Buyers are making regular orders, but are not actively looking for extra cheese. Retail demand is solid while export markets continue to be weak.”

“Some manufacturers are eager to move into the fall football/pizza season and are anticipating the increased demand will help reduce inventories of mozzarella and other cheeses used on pizzas.”

FC Stone’s Dave Kurzawski wrote in his August 4 Early Morning Update that “Forecasts are not calling for unseasonably warm temp for the majority of dairy producing areas; the panhandle being the only exception. That region is projected to experience some excessive heat in the coming 10 days. However, heat in the Midwest two weeks ago has taken its toll on milk production, which should further more tighten up excess milk.”

Spot butter reversed two weeks of loss, finishing at $2.27 per pound, up 13 1/2-cents on the week and 28 cents above a year ago. Sixteen cars were sold.

Butter production in the Central region was steady this week, according to DMN. “Cream remains available and manufacturers are running full schedules. Demand for butter remains strong.”

Western output remains steady. Cream is generally available and contacts say “domestic butter demand is good with a lot of interest coming from retailers.” Contacts also note a “cat and mouse game going on with the price of butter. Fluctuations in price can spur on or suppress buyer interest rather quickly.”

Cash Grade A nonfat dry milk closed Friday at 83 1/4-cents per pound, down 1 3/4-cents on the week but 11 1/4-cents above a year ago, with 16 cars sold.❖


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