Monthly Dairy Prices 11-15-10
The October Federal Order Class III milk price was announced by USDA at $16.94 per hundredweight (cwt.), up 68 cents from September, $4.12 above October 2009, $1.28 above California’s comparable 4b cheese milk price, and the highest it has been since October 2008. The 2010 Class III average now stands at $14.36, up from $10.72 at this time a year ago, but compares to $17.91 at this time in 2008. The October Class IV price is $17.15 up 39 cents from September, and $5.29 above a year ago.
Class III futures were heading back down. The November contract settled that Friday at $15.45 and December settled at $13.56.
The four-week, NASS-surveyed cheese price averaged $1.7666, up 6.5 cents from September. Butter averaged $2.1893, up 3.2 cents. Nonfat dry milk averaged $1.1674, up 2.9 cents, and dry whey averaged 36.76 cents, up fractionally.
California’s October Class 4b cheese milk price was announced by CDFA at $15.66 per cwt. That’s up 18 cents from September, and $2.97 more than October 2009. The 4a butter-powder price is $16.65 per cwt., up 4 cents from September and $5.11 more than October 2009.
Year-to-date, the average 4b price is $13.26, up $2.88 from the same period in 2009. The average Class 4a price stands at $14.67, up $4.54 from the same period a year ago.
The block cheese price closed the first week of November at $1.48 per pound, down 16-cents on the week, and 8 cents below a year ago. Barrel closed Friday at $1.51, down 15-1/2-cents on the week, and 1-1/2-cents below a year ago. Twenty cars of block traded hands on the week and 25 of barrel. The lagging NASS-surveyed U.S. average block price decreased 1.9 cents, to $1.7505, while the barrels averaged $1.7395, down 2.5 cents on the week.
Cash butter dropped 27 cents on Friday, November 5 and closed the week at $1.88, down 30-1/2-cents on the week, but still 38 cents above a year ago. Two cars were sold on the week. NASS butter averaged $2.1676, down 0.3 cent. NASS nonfat dry milk averaged $1.1925, up 5.1 cents, and dry whey averaged 37.72 cents, up 0.7 cent.
The October Milk-Feed Price Ratio is 2.23, down from September’s revised estimate of 2.38, according to USDA’s “Ag Prices” report and compares to 2.11 in October of 2009. The All Milk Price was estimated at $18.30 per hundredweight, up 60 cents from last month, and $4.00 above a year ago.
Corn averaged $4.78 per bushel, up 78 cents from September, and $1.17 above a year ago. The soybean price, at $10.70 per bushel, was up 72 cents from September, and $1.27 above a year ago. Alfalfa baled hay was $118.00 per ton, up $1.00 from September, and $9.00 above a year ago.
The drop in cash cheese prices is a continuation of what started in mid October, according to Downes-O’Neill dairy economist Bill Brooks. The slow nature of the declines has limited buyers from stepping into the market and taking large quantities of cheese. Brooks said earlier in the week that we are not to the point where the bottom has been established. “We’re probably getting down closer to that price level that’s going to spur additional demand, but I’m not sure that we’ve reached it yet,” he said.
The October milk-feed price ratio could be the start of a downward trend as both milk and feed prices increased in October. We may have another month or so of higher milk prices, but after that we’ll start to see a decline based on the futures prices. “The profitability level above the feed costs is going to get squeezed again,” he said.
Brooks said it won’t be as bad as last year, but it’s not going to be a fun time from an economic standpoint for dairy producers, based on where our futures prices are sitting at right now as we go into 2011.
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