Mielke: Dairy prices see downward trend
November 18, 2016
The Agriculture Department announced October's Class III benchmark milk price at $14.82 per hundredweight (cwt.), down $1.57 from September and 64 cents below October 2015, but is 39 cents above California's comparable 4b cheese milk price.
It equates to about $1.27 per gallon, down from $1.41 in September and $1.33 a year ago. It is the lowest Class III price since June 2016 and the lowest October Class III since 2009's $12.82.
The Class III average now stands at $14.42, down from $15.98 at this time a year ago and $22.83 in 2014.
Class III futures indicate the price will reverse direction in November but then fall again in December.
The November contract settled Nov. 4, at $16.80 and December at $16.45. The January 2017 contract settled at $15.93, February at $15.98, and March at $16.05 per cwt.
The October Class IV price is $13.66, down 59 cents from September, $2.77 below a year ago, and is the lowest since June 2016 and the lowest November Class IV price since 2009.
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Its ten-month average is at $13.65, down from $13.97 a year ago and $23.01 in 2014.
California's October 4b cheese milk price was announced by the California Department of Food and Agriculture at $14.43 per cwt., down 81 cents from September, 32 cents below October 2015, and the lowest level since June 2016.
It lost $1.10 in September. That put the 4b average at $13.72 for the year so far, down from $14.63 at this time a year ago and $20.57 in 2014.
The October 4a butter-powder milk price is $13.11, down 47 cents from September, $2.61 below a year ago, and the lowest 4a since May 2016. The 4a average stands at $13.25, down from $13.81 a year ago and $22.93 in 2014.
There was positive news in the global dairy markets as the Nov. 1 Global Dairy Trade auction sustained the reversed direction of the previous event on October 18.
The weighted average for all products offered jumped 11.4 percent, following the 1.4 percent gain last time. It's the biggest gain since the 12.7 percent rise on August 16, 2016.
Back home, Halloween week ended with cash block Cheddar at $1.90 per pound, up 17 cents on the week and 20 cents above a year ago.
The Cheddar barrels started the week by jumping 13 ¼ cents, the largest single day gain since July 31, 2008 when barrel cheese rallied 15 cents, reports FC Stone. The barrels finished Friday at $1.86, up 26 ¼ cents on the week and 21 cents above year ago, with only three cars of block trading hands on the week and 16 of barrel.
The blocks have gained 35 cents in three weeks and the barrels have gained 40 cents.
Dairy Market News reports that Midwest cheese output is "strong and many manufacturers are using all the milk available to them."
"A few processors are surprised the milk supply is not a little heavier. Some contacts mention they could run a few more loads, but are having trouble finding available milk.
Industry contacts note an increase in cheese orders. Sales seem to be picking up as the Fourth Quarter holidays draw closer. Inventories are generally comfortable, but in some cases blocks are a little tighter due to the seasonal increase in demand," the Dairy Market News read.
Western cheese production is also seasonally strong and active, according to the Dairy Market News, with milk supplies in good balance with manufacturing needs.
"A few processors suggest milk is finding its way into cheese vats as opposed to other dairy products. Cheese inventories are stable. Orders for holiday retail demand are increasing and industry contacts report a solid pull from food service accounts," according to the Dairy Market News.
CME cash butter, after jumping 16 ½ cents the previous week, closed the first Friday of November at $1.8925 per pound, down 3 ¼ cents on the week and 99 ¼ cents below a year ago. 21 cars traded hands on the week.
Class II processors are pulling "significant cream volumes," Dairy Market News reported, but butter churning "remains active in the Central region."
"Most production schedules are centered on print butter as retailers' orders increase along seasonal patterns. Food service demand is fair to good."
Western producers report butter is moving well, according to Dairy Market News. "Demand for retail butter is seasonally heavy and helping draw down inventories. Cream is in good supply and manufacturers are not opposed to buying a few extra loads of cream to keep production at or near full capacity."
Spot Grade A nonfat dry milk climbed to 89 cents per pound Wednesday but then retreated and closed Friday at 84 ¾ cents per pound, down three-quarter cents on the week and 4 ¼ cents above a year ago. Eleven carloads traded hands.❖