Mielke: Benchmark milk prices climb
November 9, 2017
The nation's October benchmark Class III milk price climbed to $16.69 per hundredweight, up 33 cents from September and $1.87 above October 2016. It is the highest Class III since February 2017 and equates to $1.44 per gallon, up from $1.27 a year ago. The 10-month Class III average is at $16.19, up from $14.42 at this time a year ago and compares to $15.98 in 2015.
Class III futures portend a downward trend from here however, with nothing above $16 until August 2018. The November contract settled Nov. 3 at $16.56 and December at $15.66, which would result in a $16.17 average for the year, up from $14.87 in 2016 and $15.80 in 2015.
The October Class IV price is $14.85, down $1.01 from September but $1.19 above a year ago, and the lowest Class IV since May 2017. Its average stands at $15.44, up from $13.65 a year ago and $13.97 in 2015.
California's October Class 4b cheese-milk price is $16.17 per cwt., up $1.29 from September, $1.74 above a year ago and 52 cents below the comparable Federal order Class III price. Its 10-month average stands at $15.33, up from $13.72 a year ago and $14.63 in 2015.
The Class 4a butter-powder price is $14.51, down 18 cents from September, $1.40 above a year ago, but the lowest 4a price since May 2017. The 4a average now stands at $15.24, up from $13.25 in 2016 and $13.81 in 2015.
CME block Cheddar climbed to $1.76 per pound on Halloween but closed the first Friday of November at $1.7150 per pound, as traders absorbed the mostly bearish September Dairy Products report. That's down 3 cents on the week, 18 1/2-cents below a year ago, and compares to $1.7275 on the first trading day of October. The barrels also finished at $1.7150, up a penny on the week, 14 1/2-cents below a year ago when they jumped 26 1/4-cents, and are 2 1/2-cents above their Oct. 2 perch. Three cars of block traded hands on the week and 14 of barrel.
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Dairy Market News reports that cheese demand has ebbed slightly for some Midwest cheesemakers who had reported upswings in orders in recent weeks. Others report sales remained fairly steady. Spot milk loads were slightly more difficult to locate and prices ranged from flat to $1 over Class III. Some contacts expect that discounted milk prices will return during the holidays. Cheesemakers continue to report that they are using nonfat dry milk to free up storage space and to circumvent the spot milk market. The cheese market tone has improved and the once large chasm between CME block and barrel prices has compressed and contacts "generally believe this to be a bullish indicator of general market health.
"The western cheese market seems to be following its normal seasonal trend for this time of the year.
Contacts suggest that current cheese prices are set at a premium to CME, but are below a year ago and projected to stay firm throughout November. Cheese production is steady, supplies are substantial, but are not causing major concern. Overall, current international sales are good and manufacturers hope that will help reduce inventories.
"Cheese sales are active in the domestic market as the pizza season draws more loads of mozzarella. The football season at many schools has also created an increased cheese intake," although Papa Johns founder, John Schnatter, claims the NFL's national anthem controversy is hurting pizza sales.
Cash butter fell to $2.2225 on Oct. 30, the lowest price since May 10, 2017, but it closed Nov. 3 at $2.2325, down 7 cents on the week but 34 cents above a year ago, with 22 cars finding new homes on the week.
Cream continues to be available for central region butter producers, according to DMN. Cream from across the nation is finding its way to upper Midwestern churns at prices reasonable to buyers. Butter market prices are experiencing downward pressure and contacts suggest weakening European butter markets are bringing U.S. prices down.
Western butter makers report holiday orders are upon them. Buyers are still somewhat restrained but processors believe that shoppers will buy according to their holiday needs regardless.
Cash Grade A nonfat dry milk closed Nov. 3 at 72 cents per pound, down 3 cents on the week, 12 3/4 cents below a year ago, and the lowest spot price since April 14, 2016. Thirty-eight cars were traded on the week at the CME, 24 on Nov. 3.❖