Lee Mielke: Monthly Dairy Prices 10-10-11
Farm gate milk prices are heading down. The Agriculture Department announced the September Federal order Class III milk price at $19.07 per hundredweight (cwt.), down $2.60 from August, but still $2.81 above September 2010, and equates to about $1.64 per gallon. That pulls the 2011 Class III average to $18.28, up from $14.07 at this time a year ago and $10.49 in 2009.
Looking ahead, Class III futures settled Friday as follows: October $17.44, November $16.41 and December at $16.35.
Looking “back to the futures” now combined with the announced Class III prices, the Federal order Class III contract’s average for the last half of 2011 was at $19.63 on September 2, $19.36 on September 9, $19.49 on September 16, $19.21 on September 23, and $18.72 on September 29.
The September Class IV price is $19.53, down 61 cents from August, but $2.77 above a year ago. California’s comparable September 4a and 4b prices are scheduled to be announced.
The four week NASS-surveyed cheese price averaged $1.8592 per pound, down 28.1 cents from August. Butter averaged $1.9886, down 8.1 cents. Nonfat dry milk averaged $1.5439, down 3 cents, and dry whey averaged 59.26 cents, up 2.4 cents.
Cash cheese lost a little more ground the last week in September though some positive movement occurred in the week. The 40-pound Cheddar blocks closed Friday at $1.72 per pound, down three quarter-cents on the week, and 4 cents below that week a year ago.
The 500-pound barrels closed at $1.64, down 6-3/4-cents on the week, and 9-1/2-cents below a year ago. Ten cars of block traded hands on the week in the spot market and 18 of barrel.
The NASS U.S. average block price fell to $1.8005, down a penny and a half from the previous week, and the barrels averaged $1.7694, down 1.2 cents.
FC Stone dairy broker Dave Kurzawski wrote in his September 26 Insider Opening Bell that, “As long as domestic spot cheese prices stay in the $1.70 range with international prices about a dime higher, export demand isn’t likely to change enough to lift domestic prices.”
The CME’s Daily Dairy Report says USDA confirmed the slowdown in cheese usage this summer, reporting that disappearance of American cheese was down 1.9 percent from 2010 in the May-July period and down 9.6 percent in July alone.
Growth in butter movement slowed as well, due to a decline in exports. Overall butter disappearance was up 2.7 percent in May-July; domestic use was up 4.1 percent, while exports were down 8.7 percent, according to USDA numbers.
The cash butter market closed September 30 at $1.76, down a penny on the week, and 47-1/2-cents below a year ago when it peaked for 2010 at $2.2350. Only four cars were sold this week. NASS butter averaged $1.8911, down 4.8 cents.
Cash Grade A nonfat dry milk held all week at $1.49, while the Extra Grade remained at $1.58. NASS powder closed at $1.5413, up a half-cent, and dry whey averaged 60.04 cents, up a penny. v