Lee Mielke: Monthly Dairy Prices 2-13-12
February 13, 2012
Farm milk prices continue to head down. The Agriculture Department announced the January 2012 Federal order benchmark Class III price at $17.05 per hundredweight (cwt.) down $1.72 from December but $3.57 above January 2011, $2.82 above California’s comparable 4b cheese milk price, $2.82 above California’s comparable 4b cheese milk price, and equates to $1.47 per gallon.
Looking ahead, Class III futures settled Friday as follows: $16.15 per cwt. for February; $15.89 for March; $15.94, April; $16.42, May; and $16.67 for June. The peak was $17.08 in September.
The January Class IV price is $16.56, down 31 cents from December, but 14 cents above a year ago.
The NASS-surveyed cheese price averaged $1.6097 per pound, down 19.7 cents from December. Butter averaged $1.59, down 2.2 cents. Nonfat dry milk averaged $1.3942, down 2.6 cents, and dry whey averaged 68.76 cents, up 3.4 cents.
California’s comparable 4b cheese milk price is $14.23, down 91 cents from December, and $1.74 above a year ago. The 4a butter-powder price is $16.18, down 41 cents from December and 31 cents below January 2011.
Increased volumes of milk available to cheese plants are allowing some manufacturers to increase production, according to USDA’s Dairy Market News. Others are waiting for orders to arrive before increasing production. Buyers are reluctant to place additional new orders while the market is trending lower.
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The cash Cheddar blocks closed the first Friday of February at $1.4850 per pound, down 2-1/2-cents on the week, and 32-1/2-cents below a year ago. The barrels rolled three quarters of a cent lower but regained it on Friday to close at $1.4950, 28 cents below a year ago. Sixteen cars of block traded hands on the week and nine of barrel. The NASS-surveyed U.S. average block price edged 0.7 cent lower, to $1.5832, while the barrels averaged $1.5788, down 2.7 cents.
FC Stone dairy broker Dave Kurzawski wrote in his February 1 eDairy Insider Opening Bell: “Not only are we making slightly more cheese, but more cheese is also being put into storage. In December, cheese manufacturers produced 1.2 percent more cheese than a year earlier and they put away 2.9 percent more cheese, which indicates there was probably a slowing of demand in December and it likely hasn’t picked up much in January.”
Cash butter is at the lowest point since March 2010, closing Friday at $1.4925, down 5-3/4-cents on the week, and 60-3/4-cents below a year ago. Three cars were sold on the week. NASS butter averaged $1.5897, down 0.3 cent.
Churning activity across the country is strong as cream is plentiful and clearing from one region to another to find processing. Producers are gearing up schedules and often, churns are running at capacity levels and, as such, greatly surpassing demand, thus clearances to inventory are heavy, says USDA. Butter demand is fair at best as many buyers are hesitant to procure too heavily in a down price cycle and the thinking is that, with milk production looking strong, there will be plenty of butter churned ahead.
Cash Grade A nonfat dry milk lost 9-1/4-cents, closing Friday at $1.3575. Extra Grade plunged 18-1/4, to $1.2975. NASS powder averaged $1.3936, up 2.8 cents, and dry whey dropped for the first time since mid October, averaging 67.53 cents, down 3.6 cents.
“Cash (powder) had to come down to meet futures to bring prices back into realignment,” said FC Stone market analyst Derek Nelson in their January 30 Insider Closing Bell. “China has started to depend more on New Zealand product, which has decreased export opportunities for the U.S,” wrote Nelson.