Lee Mielke: Monthly Dairy Prices 4-9-12 | TheFencePost.com

Lee Mielke: Monthly Dairy Prices 4-9-12

Lee Mielke
Mielke Productions

The March Federal order benchmark milk price dropped another 34 cents, to $15.72 per hundredweight, the fourth month in a row of decline, $3.68 below March 2011, and equates to about $1.35 per gallon. The 2012 average now stands at $16.28, down from $16.63 at this time a year ago, and compares to $13.85 in 2010 and $10.18 in 2009. Looking ahead, Class III futures settled Friday as follows: April, $15.66; May, $15.66; and June, $15.91; with a peak of $16.78 in September. The Class IV price is $15.35, down 57 cents from February and $4.06 below a year ago. California’s comparable prices were scheduled to be announced April 2.

The four-week, NASS-surveyed cheese price averaged $1.5248 per pound, down 1.6 cents from February. Butter averaged $1.4347, down 3.7 cents. Nonfat dry milk averaged $1.3310, down 4.8 cents, and dry whey averaged 61.07 cents, down 2.9 cents.

The Agriculture Department reported in its latest Dairy Market News that the market is “awash with milk as increased production is noted across the U.S. Typical spring flush for the southern tier of states continues, while mild winter/spring weather in the northern areas has increased milk supplies.”

The good news is that cream demand has increased due to higher ice cream demand combined with better cream based production for Easter/Passover features. But, several processors in the West are preparing to implement financial assessments on producers for milk marketed above established volumes. Discounts for milk above basis are reported to be “severe.”

March ended with the block cheese price trading at $1.49 per pound at the Chicago Mercantile Exchange, down a half-cent on the week and 10-1/2-cents below that week a year ago. Barrel closed at $1.46, unchanged on the week but 11-1/4-cents below a year ago. Five carloads of block traded hands on the week and three of barrel. The NASS-reported U.S. average block price climbed to $1.5135, up 1.8 cents, while the barrels averaged $1.5549, up 4.9 cents.

Higher than expected milk supplies are driving increased cheese manufacturing. Plants across the U.S. have access to all the milk they need and then some in many cases. Surplus production is leaning towards Cheddar production but the higher production has led to increased retail featuring of cheese, USDA reports.

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Jerry Dryer, editor of the Dairy and Food Market Analyst, warned in his March 23 edition that cheese could fall as low as $1.45 per pound and possibly lower. He says the milk supply is overwhelming dairy product demand and exports appear to have “taken a hiatus.” He believes product prices will be lower for the next several months, based on the latest Global Dairy trade auction.

Butter closed March at $1.4625, down 6 cents on the week and 52-3/4-cents below a year ago when it fell below $2 for the first time in 2011, though it was a short-lived two weeks before climbing back above $2. No butter was sold the last week of March. The NASS butter average hit $1.4519, up 0.9 cent. NASS powder averaged $1.3043, down 2.2 cents, and dry whey averaged 61.13 cents, up a half-cent.

Dairy Market News says many butter producers and handlers believed the cash price would ease once the Easter/Passover holidays passed. Churning remains seasonally active although some producers indicate that cream supplies are a little less available due to enhanced Class II demand cream cheese, sour cream, whipping cream, and other cream based products.

Warmer temperatures are encouraging ice cream consumption, according to USDA, but for the most part ice cream production remains seasonally limited. Retail butter demand has eased now that most orders for the holiday have been shipped. Suppliers indicate that orders are still occurring for fill-in needs. Retail features across the country are occurring and food service orders have been stronger in anticipation of the holidays, according to USDA.