Monthly Dairy Prices 12-14-09
Farm milk prices took another badly needed jump as the Agriculture Department announced the November Federal order Class III price Friday at $14.08 per hundredweight (cwt.), up $1.26 from October, $1.43 below November 2008, and 32 cents above California’s comparable 4b price. That put the year’s average at $11.03, down from $17.63 a year ago and $17.80 in 2007. The November Class IV price is $13.25, up $1.39 from October, and $1.00 above a year ago.
Class III futures portend further gains to come. The December contract settled Friday at $14.73. January settled at $14.54, February $14.62, March $15.08, April $15.30, May $15.50, June $15.79, July $16.14, with a peak of $16.20 in August before beginning its seasonal slide.
The NASS-surveyed cheese price averaged $1.5169 per pound, up 10.6 cents from October. Butter averaged $1.3817, up 15.7 cents. Nonfat dry milk averaged $1.1120, up 8.5 cents, and dry whey averaged 34.71 cents, up 2.9 cents.
California’s November 4b cheese milk price is $13.76 per cwt., up $1.07 from October, but $1.38 below November 2008. The 4a butter/powder price is $13.16, up $1.62 from October, and 96 cents above a year ago.
Traders in the cash cheese market are leery of the wide price spread between blocks and barrels. The block price actually inched back a quarter-cent the first Friday of December, following a run of gains, and closed at $1.7175 per pound, up 6 3/4-cents on the week and the highest it’s been since December 2008, but still 7 1/4-cents below a year ago.
Barrel closed at $1.46, down a nickel on the week, 28 3/4-cents below a year ago, and 25 3/4s below the blocks. Fifteen cars of block traded hands on the week and seven of barrel. The NASS U.S. average block price hit $1.5577, up 1.7 cents. Barrel averaged $1.4985, down 0.3 cent.
Butter closed Friday at $145, down 7 1/2-cents on the week but 19 1/4-cents above a year ago when butter melted down 24 1/4 cents, on its way to $1.11 the following week. Forty cars were sold in the first week of December. NASS butter averaged $1.4906, up 1.3 cents.
Cash Grade A nonfat dry milk closed at $1.4075, up three quarters on the week, while Extra Grade held all week at $1.40. NASS powder averaged $1.2048, up 3.1 cents, and dry whey averaged 35.35 cents, up 0.2 cent. Some question the discrepancy between the CME powder prices and the NASS surveyed prices.
Dr. Robert Cropp, emeritus professor at the University of Wisconsin at Madison, warned in Tuesday’s DairyLine that the price spread in cheese is pretty wide. He questioned whether the blocks would hold at this high level and expects them to slip. On the other hand, the cheese supply is fairly tight, he said, and sales are good at retail and Christmas cutting and wrapping, although October American type cheese stocks were pretty high. “We’ll see November data on December 22,” he said. “Cheese sales are good but that price spread cannot hold.”
Prior to Wednesday, the butter market had been stuck at $1.5250 since November 9, but butter production is way down from a year ago, Cropp explained. The cream supply is tight, he said, butter stocks are pretty good, but current needs are strong and older stocks have been accessed. Reports are that restaurant sales are up some and retail sales are good, thanks to store specials.
Meanwhile; the November Milk-Feed Price Ratio is 2.19, up from October’s revised estimate of 2.09, according to USDA’s latest “Ag Prices” report, and compares to 2.01 in November 2008.
The All Milk Price was estimated at $15.00 per cwt., up 80 cents from last month’s estimate, and the high for 2009, but still $2.10 below a year ago. Corn averaged $3.64 per bushel, up 3 cents from September, but 62 cents below a year ago. The soybean price, at $9.48 per bushel, was up 4 cents from October, and 9 cents above a year ago. Alfalfa baled hay was $110.00 per ton, up $1.00 from October, but $55.00 below a year ago.
The CME’s Daily Dairy Report says the income over feed cost was $8.15 for November, nearly double the rate producers saw in the first half of the year.
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