Mielke: Milk price creeping higher
Happy June Dairy Month, which is an annual reminder to consumers of the wonderful contributions milk and dairy products make to health and well-being.
Meanwhile, the benchmark Federal order Class III milk price for May crept 35 cents higher, to $15.57 per hundredweight (cwt.), $2.81 above May 2016 and equates to $1.34 per gallon, up 3 cents from April.
The five-month average stands at $16.05, up from $13.53 at this time a year ago and compares to $15.84 in 2015, and $22.94 in 2014.
Class III futures settled June 2 with a June price of $16.52; a July price of $16.95; an August price of $17.18; and a peak of $17.33 in September.
FC Stone’s Dave Kurzawski wrote in his June 2 Early Morning Update that “Producers seem to be locking in attractive second-half margins a little more aggressively at the moment, but commercial buyers have a ‘buy the dip’ mentality. Throw in the speculative community who is continually hedging off new option positions with futures and a volatile two-sided trade is the net result.”
The Class IV price is $14.49, up 48 cents from April and $1.40 above a year ago. Its five-month average is at $14.92, up from $13.06 in 2016 and $13.65 in 2015.
The Ag Market Service-surveyed cheese price used in calculating the Class milk prices averaged $1.5390 per pound, up 4.3 cents from April. Butter averaged $2.1644, up 4.8 cents. Nonfat dry milk averaged 87.04 cents per pound, up 3.2 cents, and dry whey averaged 50.94 cents per pound, down 1.5 cents from April.
California’s comparable May Class 4b cheese milk price is $15.25 per cwt., up 95 cents from April and $3.88 above a year ago, but is 32 cents below the comparable Federal order Class III price, smallest gap since June 2016.
The 4b average stands at $15.02, up from $12.69 a year ago, $14.07 in 2015, and compares to $20.94 in 2014.
The May 4a butter-powder milk price is $14.43, up 70 cents from April, $1.86 above a year ago, and reversed three months of decline. The 2017 average now stands at $14.64, up from $12.81 a year ago and $13.45 in 2015.
Cash butter soared in the Memorial Day holiday shortened week, skyrocketing to $2.41 per pound May 31 and closed June 2 at $2.4850. That’s the highest spot price since Dec. 9, 2015, up 12 1/2-cents on the week, 39 1/4-cents since May 1 and is 38 1/2-cents above a year ago. 14 cars were sold on the week at the CME.
Dairy Market News says churns are active, as Central region producers are looking to pack away butter for the late summer and early fall. Adding to the mix is post-holiday cream availability, which had some producers opting to churn more cream as opposed to offering it on the spot market. Retail and food service demand continues to be strong and the butter market tone is “steady.”
Western butter makers are also steadily churning but holding back when they can. Cream is generally plentiful, but a number of processors anticipate cream supplies will tighten as summer takes hold and ice cream manufacturers pull more cream. Stocks are “comfortable.” However, in some secondary markets, butter supplies are tight. Buyers are looking for butter at favorable prices. Some end users are eager to cover late year needs. Demand is steady with a few describing demand to be “better than expected for this time of year.”
Block Cheddar cheese climbed to $1.7450 per pound May 31, highest spot price since Feb. 2, 2017, but closed June 2 at $1.70, down 3 1/4-cents on the week and ending four weeks of gain, but is 26 cents above a year ago. The barrels climbed to $1.5450 May 31, the highest price since Feb. 22, 2017, but closed the week at $1.49, up a penny, 4 1/2-cents above a year ago, and still at an unsustainable 21 cents below the blocks. Fourteen cars of block traded hands on the week at the CME and 35 of barrel.
DMN says milk continues to be readily available for cheese production in the Midwest, where cheese has become Wisconsin’s official state dairy product. Spot milk prices ranged $3.50 to $6 under Class. Packaged retail cheese, pizza cheese and specialty type cheeses are selling well. Some process cheese producers report contractually steady demand, but barrel sales are expected to pick up in line with warming temperatures.
The barrel inventory is “generally long.” Some block producers report balanced inventories while others are concerned about limited storage space. The cheese market tone is “mixed” as many contacts are anxious about the large spread and consider a gap above 10 cents “a sign of instability.”
Western contacts report that cheese is moving well, but buyers are not seeking a lot of additional loads. Export opportunities are developing as U.S. cheese prices coincide with international prices and the dollar has weakened some against other currencies. A few contacts say warehouses are full and premiums are being charged for additional space. Barrels are reportedly heavy but blocks are tight. Cheese with age is harder to move and cheese output is active, “following the wave of milk production,” according to DMN.
Cash Grade A nonfat dry milk hit the highest price since Feb. 9, 2017 on May 31, but closed June 2 at 94 3/4 cents per pound, up 2 cents on the week and 13 1/2-cents above a year ago, with 18 cars exchanging hands on the week at the CME.
“The strength in nonfat dry milk has come as a surprise to many,” Kurzawski said. “But, like butter, the increase in price is not just a U.S. phenomenon. Skim milk prices worldwide rallied in the recent weeks. Chinese imports have been strong, especially in April. On the supply side of things, the EU has been struggling to rebound, milk production wise, with the major milk producing nations of France and Germany showing year over year declines.”
“However, we are approaching price levels that might be incentive for the EU to let go of some inventories in intervention, which should put a cap on this rally,” he warned, but he added June 2 that there are reports of “strong demand from Mexico and prices rising handsomely.”❖
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CASPER, Wyo. — The following are results after Monday slack at the 72nd annual College National Finals Rodeo, June 14, 2021 courtesy of the National Intercollegiate Rodeo Association. Complete results are available at www.collegerodeo.com.