Lee Mielke: Monthly Dairy Prices 11-14-11
The Agriculture Department announced the October Federal order Class III benchmark milk price Friday, November 4, at $18.03 per hundredweight, down $1.04 from September, $1.09 above October 2010, and equates to about $1.55 per gallon. The decline pulled the 2011 Class III average to $18.25, up from $14.36 at this time a year ago and an anemic $10.72 in 2009. The Class IV price is $18.41, down $1.12 from September, but $1.26 above a year ago.
The NASS cheese price averaged $1.7471 per pound, down 11.2 cents from September. Butter averaged $1.7893, down 19.9 cents. Nonfat dry milk averaged $1.5109, down 3.3 cents, and dry whey averaged 61.52 cents, up 2.3 cents.
The November Class III futures contract settled that Friday at $18.88 and December at $18.22, which would result in a 2011 average of $18.30, up from $14.41 in 2010 and $11.36 in 2009.
California’s October 4b cheese milk price was $15.78 per cwt., down 55 cents from September, but 12 cents above October 2010, and $2.25 below the comparable Federal order Class III price. The 4b price has trailed the Federal order Class for 13 months, ranging this year from a low of 8 cents in February to a high of $3.07 in August. The Golden State’s 4b price average now stands at $16.41 but is still $3.15 above the level at this time a year ago.
The 4a butter-powder price is $18.29, down a dollar from September but $1.64 above a year ago. Its 2011 average now stands at $19.15, up $4.48 from 2010.
Cash cheese saw some holiday strength for the third week in a row. The blocks closed the first Friday in November at $1.88 per pound, up 10-3/4-cents on the week, and 40 cents above that week a year ago. Good demand for barrel pushed the price above the blocks, to $1.92, up 15-1/4-cents on the week, and 41 cents above a year ago. Only five cars of block traded hands on the week and six of barrel. The NASS-surveyed U.S. average block price slipped a half-cent to $1.7226 and barrel averaged $1.7411, down 0.1 cent.
Cash butter headed down Friday, reversing four weeks of gains, and closed the week at $1.8325, down 4-3/4-cents, and strangely 4-3/4-cents below a year ago when it plunged 30-1/2-cents on the week for no real clear discernable reason. Sales for Halloween week amounted to eight carloads. NASS butter averaged $1.8290, up 2-1/2-cents. NASS nonfat dry milk averaged $1.4872, down a penny, and dry whey averaged 62.38 cents, up 0.3 cent.
Most of the growth in U.S. milk production is in the western states, according to University of Wisconsin Emeritus Professor Bob Cropp in the November 1 DairyLine radio program. Texas was up substantially, he said, while California slowed some due to output per cow being down as high feed and hay prices and lower milk prices took their toll.
He also believes the growth in cow numbers has slowed so, if milk production gains stay around 1.5 percent or less, milk prices might be a little stronger than the futures are portending, the high $16s, maybe the low $17s, he said.
Cropp admits prices could be stronger as some predict but the market is “very sensitive.” He listed some positive developments; the new free trade agreements with South Korea, Panama, and Columbia; South Korea particularly. The truck dispute with Mexico has been resolved and cheese tariffs were removed. Stronger exports and holding production in check prices could mean stronger milk prices than we’re now forecasting, Cropp concluded.
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