Monthly Dairy Prices 5-14-12
The nation’s benchmark farm milk price took a breather following four months of decline. The Agriculture Department announced the April Federal order (FO) Class III price at $15.72 per hundredweight (cwt.), unchanged from March, but $1.15 below April 2011, $2.29 above California’s comparable 4b cheese milk price, and equates to about $1.35 per gallon. That put the 2012 Class III average at $16.14, down from $16.69 at this time a year ago, and compares to $13.62 in 2010 and meager $10.33 in 2009. The April Class IV price is $14.80, down 55 cents from March and $4.98 below a year ago.
Class III futures portend further declines in May and June. Settlements Friday were as follows: May, $15.10; June, $14.09; July, $14.18; August, $14.71; September, $15.31; October, $15.41; November, $15.50; and December at $15.39 per cwt.
The AMS-surveyed cheese price averaged $1.5361 per pound, up 1.1 cent from March. Butter averaged $1.4634, up 2.9 cents. Nonfat dry milk averaged $1.2514, down 8 cents, and dry whey averaged 59.21 cents, down 1.9 cents.
The California Department of Food and Agriculture (CDFA) announced its April 4b cheese milk price at $13.43 per cwt., down 24 cents from March, 91 cents below April 2011 and as stated above well below the FO Class III. Taking a quick look back, it has lagged the Class III from as little as 8 cents in February 2011 to as much as $3.63 in December 2011. The 4b 2012 average now stands at $13.69, down from $15.13 at this time a year ago, but above the $12.28 in 2010. The 4a butter-powder price is $14.72, down 61 cents from March, the eighth consecutive month of decline, and $4.73 below a year ago. The 4a average now stands at $15.44, down from $18.22 a year ago but up from $13.23 in 2010.
The cash dairy markets don’t portend much hope. The CME block cheese price finished the first week of May at $1.5350 per pound, unchanged on the week but 11-1/4-cents below a year ago. The barrels gained almost 7 cents to correct the spread with the blocks but gave some of it back and closed Friday at $1.47, up 3-1/2-cents on the week but 19 cents below a year ago and still 6-1/2 cents below the blocks. Eight cars of block found new homes on the week and 14 of barrel.
The lagging AMS-surveyed block price averaged $1.5030, down 0.2 cent. The barrels averaged $1.4904, down 1.3 cents.
Cheese production across the country is robust. Milk supplies are up and much of that production is finding its way to cheese plants. Excess milk volumes are often being discounted to encourage additional cheese manufacturing. Cheese inventories are building and this was reflected in the March Cold Storage data.
Cash butter fell for the sixth consecutive week and is now at the lowest level since February 2010, closing May 4 at $1.31, down a nickel on the week and 78-1/2-cents below a year ago. Thirteen cars traded hands on the week. AMS butter averaged $1.4268, down 1.3 cents. AMS Nonfat dry milk averaged $1.2180, down 2.4 cents, and dry whey averaged 57.13 cents, down 2 cents.
Churning schedules remain seasonally strong as cream supplies are readily available, according to USDA. In most instances, churning was surpassing demand, thus clearances to inventory are strong. Butter producers and handlers indicate that buying interest is fair at best with most buyers cautious and procuring near term needs.
Retailers state that butter feature activity has slowed significantly since the recent Easter/Passover holiday period and overall butter demand is typical for this time of year. Food service buyers report fairly steady needs as traffic flow through restaurants is holding steady at fairly good levels.
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