Milk price highest in 5 years
U.S. dairy farmers are seeing more profit from their milk price. The Agriculture Department announced the August Federal order Class III benchmark price at $17.60 per hundredweight, up a nickel from July, $2.65 above August 2018, and the highest Class III price since December 2014.
Sept. 6 Class III futures portended a September price at $17.96; October, $17.72; November, $17.36; and December at $16.90, which would result in a 2019 average of $16.38, up from $14.61 in 2018 and $16.17 in 2017.
The 2019 Class III average currently stands at $15.83, up from $14.44 at this time a year ago but compares to $16.09 in 2017.
The August Class IV price is $16.74, down 16 cents from July but $2.11 above a year ago and the highest August Class IV since 2014. Its eight month average stands at $16.19, up from $13.85 a year ago and $15.46 in 2017.
A higher All Milk price and lower hay price inched the July milk feed price ratio higher, the first positive move since March. The USDA’s latest Ag Prices report put the ratio at 2.16, up from 2.08 in June and compares to 1.93 in July 2018.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, 1 pound of milk today purchases 2.16 pounds of dairy feed containing that blend.
Unfortunately, the national average corn price averaged $4.16 per bushel, up 18 cents from June, following a 35 cent jump last month, and was up 69 cents per bushel from July 2018. Soybeans averaged $8.37 per bushel, up 6 cents from June, following a 29 cent jump, but is 71 cents per bushel below a year ago. Alfalfa hay averaged $183 per ton, down $10 from June but $4 per ton above a year ago.
The Daily Dairy Report’s Sarina Sharp said “The Dairy Margin Coverage program’s national average income-over-feed margins reached $9.47 per cwt. in June, up 47 cents from May. Margins slipped 4 cents from June to July, as higher cash corn prices offset a 60 cent increase in the All-milk price. Despite larger milk checks, dairy producers are still strapped for cash.”
Checking the markets, cash block cheese climbed to its highest price since November 2014 in the Labor Day holiday shortened week, closing Sept. 6 at $1.9975 per pound, up 6 3/4-cents on the week and 33 1/2-cents above a year ago.
The barrels finished at $1.7425, a half-cent higher on the week, 24 1/4-cents above a year ago when they fell 14 1/2-cents, but are at a whopping 25 1/2-cents below the blocks.
Cheesemakers in the Midwest continue to report mostly positive sales, according to Dairy Market News. Food service orders increased, as many schools have returned. Cheese production is steady. Milk handlers suggest cheese producers are “somewhat satisfied” with their internally sourced milk supplies. Hurricane Dorian which is affecting mostly the Southeastern portion of the country, was also keeping milk loads in the upper Midwest, DMN said.
Cheese demand is active in the west and export sales have remained stable despite higher U.S prices. Domestic cheese requests are on the up side. Cheese needs for school lunch programs and the demand for the football season are helping maintain consumption at a high level. Inventories have declined a bit. Processing is steady, with manufacturing plants running close to full capacity.
Cash butter remains under pressure and closed Sept. 6 at $2.1725 per pound, down 1 3/4-cents on the week and the lowest CME price since July 6, 2018, and 5 3/4-cents below a year ago.
With the holiday weekend behind them, butter makers continued to see holiday-rate cream prices. Cream availability from the West and within the region remains intact and churning is on the rise. August sales were bullish and some producers struggled to keep up. Imports have increased from Oceania and EU butterfat is a bargain, said DMN, but “Butter markets have been a bastion of steadiness in 2018 and 2019, therefore contacts are reticent to suggest markets will slip from their range-bound position, at least in the near term.”
Western butter makers convey cream availability fluctuated as demand from ice cream and other Class II processors ebbed and flowed the first week of September. Cream moving to the churns was heavy through the holiday weekend but supplies thinned into the week. With ice cream manufacturing slowing and school milk bottling active, butter manufacturers expect more cream to head to the churns. Butter output is increasing as the push toward the fall holidays and baking season begins. Inventories are stable. Food service demand remains strong but retail is modest.
Grade A nonfat dry milk moved three-quarter cents higher on the week, closing at $1.0475 per pound, 13 3/4-cents above a year ago, on 19 sales for the week.
CME dry whey closed the week at 39 1/2-cents per pound, up a half-cent on the week but 12 cents below a year ago, with only one trade recorded. ❖