Monthly Dairy Prices | TheFencePost.com

Monthly Dairy Prices

Lee Mielke
Dairyline Communications

Happy June Dairy Month! Though easily taken for granted, consumers need to be reminded of the valuable contributions dairy products make to their life. They are a real food bargain considering their nutritional wholesomeness.

Unfortunately, times remain tough financially on the farm despite improved prices from a year ago. The May Federal order Class III benchmark milk price was announced June 4 by the USDA at $13.38 per hundredweight (cwt.), up 46 cents from April, $3.54 above May 2009, and 98 cents above California’s 4b cheese milk price.

That pulled the 2010 Class III average to $13.57, up from $10.23 a year ago, but compares to $17.86 in 2008. Friday’s Class III futures settlements portend a June Class III price of $13.50, $13.25 in July, $13.86 in August, $14.53 in September, and a peak of $14.75 in November before retreating. The May Class IV price is $15.29, up $1.56 from April and $5.15 above a year ago.

California’s May 4b cheese milk price is $12.40 per cwt., up a dime from April, and $2.86 above May 2009. The 4a butter-powder price is $13.95, up 46 cents from April and $3.92 above a year ago.

Cash cheese prices have been on a roller coaster and continued to weaken in the Memorial Day holiday-shortened week. The blocks closed Friday at $1.3975, 6-3/4-cents below the previous week, but 25-cents above a year ago. Barrel closed at $1.3575, down 7-1/4-cents on the week, and 25-3/4-cents above a year ago. Nineteen cars of block traded hands and 14 of barrel. The lagging NASS-surveyed U.S. average block price gained 3.4 cents, hitting $1.4325. Barrel averaged $1.4544, up 3.9 cents.

Butter strengthened, closing Friday at $1.5750, up 1-3/4-cents on the week and 32-1/4-cents above a year ago. Nothing was sold. NASS butter averaged $1.5858, up 0.2 cent.

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Cash Grade A nonfat dry milk closed Friday at $1.25, down a nickel on the week. Extra Grade closed at $1.26, down 3-cents. NASS powder averaged $1.2878, up 1.6 cents, and dry whey averaged 37.01 cents, up 0.6 cent.

University of Wisconsin Emeritus Professor Dr. Robert Cropp said in Tuesday’s DairyLine that the cheese market is responding to USDA’s April Milk Production report which showed output above a year ago for the second month in a row. He added that there’s still a fair amount of cheese in storage, with American stocks the highest since April 1986.

Cheese recovered the second week in May, he said, but now it has dropped and he sees it hovering in the $1.40-$1.45 per pound range until we work some of this inventory off or see some sign that milk production is going to slow and cow numbers not keep climbing.

He said it’s hard to say if the Cooperatives Working Together (CWT) announcement made last week will have an impact. It depends on how many cows are removed, he said, but he pointed to the maximum bid of $3.75 as being down a fair amount from the last removal program. He’s not convinced the removal program will get a big response but “If they can move out 30, 40, or 50,000 cows it may help a little bit.” He stressed that we need to get cow numbers going down but warned that “there’s a lot of replacement heifers out there.”

Butter sales are fair, according to Cropp, as there’s interest in the export market, butter stocks are down about 13 percent from a year ago, and the cream supply is tighter, “so $1.55-$1.60 butter seems to be reasonable,” he concluded.

Citing a number of economic benchmarks like cull rates and cull cow prices, the CWT program announced its 10th herd retirement on May 27. Bids will be accepted up to June 25 and will be considered up to, but not to exceed $3.75 per hundredweight, according to NMPF CEO Jerry Kozak who cautioned, “There is no guarantee that a producer who bids at the maximum level will be selected.”

As in previous herd removals, CWT has no set target for milk volume or number of cows removed but will depend on the number of bids received and the price level of those bids, according to a CWT press release.

There will not be a bred heifer option this time around, CWT members whose bids were accepted in a previous CWT herd removal may not bid in this round, and producers whose bids are accepted will be paid in two installments. For complete details, please log on to http://www.CWT.coop.