Monthly Dairy Prices 2-15-10
The January Federal order benchmark milk price reversed gears following five consecutive monthly gains. The Agriculture Department announced the Class III price at $14.50 per hundredweight (cwt.), down 48 cents from December but $3.72 above January 2009, and $1.78 above California’s comparable 4b price.
Class III futures portend additional declines ahead. The February contract settled Friday at $14.10. March settled at $13.55, April $13.24, May $13.40, June $14.00, July $14.76, August $15.06, with a peak at $15.37 in September before beginning its seasonal retreat.
The Federal order Class IV price is $13.85, down $1.16 from December, but $4.26 above a year ago, and 10 cents above California’s comparable 4a price.
The four-week, NASS-surveyed cheese price averaged $1.5374 per pound, down 6 cents from December. Butter averaged $1.3610, down 8.5 cents. Nonfat dry milk averaged $1.1929, down 9.3 cents, and dry whey averaged 38.80 cents, up 2.1 cents.
California’s January 4b cheese milk price is $12.72 per cwt., down $2.32 from December, but $3.70 above January 2009. The 4a butter-powder price is $13.75, down $1.01 from December, but $4.22 above a year ago.
The cash cheese market weakened the first week of February, sending shivers to farmers and their bankers. With Super Bowl demand behind us it remains to be seen what happens next. The cash block price closed the first Friday of February at $1.4925 per pound, down 2-1/4-cents on the week, but still 33-1/2-cents above that week a year ago.
The barrels closed at $1.4725, down 3-1/4-cents on the week, and 32-1/2-cents above a year ago. Only one car of block traded hands on the week and two of barrel. The NASS-surveyed U.S. average block price fell 1.4 cents, to $1.4502, while the barrels gained 2.6 cents, averaging $1.5024.
Cash butter started the week losing 2 cents, then gained almost 4 cents, but gave back two on Friday to close at $1.3275, down a quarter-cent on the week, but 22-1/2-cents above a year ago. Twenty four cars traded hands on the week. NASS butter averaged $1.4039, up 1.9 cents.
Cash Grade A nonfat dry milk closed the week at $1.15, down 4 cents, and Extra Grade held all week at $1.24. NASS nonfat dry milk reversed gears, averaging $1.1328, up 4.1 cents, following the previous week’s 19.6-cent loss. Dry whey averaged 38.94 cents, up 0.3 cent.
International demand for U.S. nonfat dry milk is slow, according to the CME’s Daily Dairy Report, as questions remain over supply and demand issues, both domestically and internationally.
Mary Ledman, Principal of Keough Ledman, and Associates in Libertyville, Ill., said in Tuesday’s DairyLine that there was a “fire sale” on nonfat dry milk the weeks of January 18 and 25. She was referring particularly to last week’s 19.6-cent plunge to $1.09 per pound in the NASS-surveyed powder price.
The California weighted average price of $1.0542, published last Wednesday, was the driving force behind that, according to Ledman, and she expected low powder prices for at least the next two weeks but added, “We could be somewhat hopeful that this low priced inventory is out and higher prices are on the horizon.” She added that the downturn also put downward pressure on the whey protein concentrate market and Class III futures.
On a brighter note Ledman pointed out that the cash cheese market has been fairly steady of late and, while the slippage sounds counter to that, we now have a more normal block-barrel spread and she believes the cheese market will flirt with that $1.40 level but she doesn’t see prices going much below that.
When asked about demand; Ledman reported that American cheese commercial disappearance in the September to November 2009 period dropped 1.2 percent. Prior to that, sales were up over 4 percent through August.
She quickly added that CME block Cheddar through October averaged less than $1.25 per pound and there were tremendous promotional activities through the first half of the year. “Clearly, when the cheese market goes above $1.50 per pound, those promotional activities tend to evaporate,” she concluded.