Monthly Dairy Prices 7-11-11
July 11, 2011
The June Federal order benchmark farm milk price took a much needed jump. The Agriculture Department announced the Class III manufacturing grade milk price on July 1 at $19.11 per hundredweight, up $2.59 from May, $5.49 above June 2010, the highest it has been since June 2008, and equates to about $1.64 per gallon. The 2011 average now stands at $17.06, up from $13.58 at this time a year ago, and compares to an anemic $10.19 in 2009.
Looking ahead, Class III futures settled Friday as follows: July $20.51, August $18.83, September $18.26, October $17.80, November $17.12, and December $16.63. These prices would result in a 2011 average of $17.63, up from $14.41 in 2010, $11.36 in 2009, and $17.44 in 2008.
The June Class IV price is $21.05, up 76 cents from May, and $5.60 above a year ago.
The 4-week NASS-surveyed cheese price averaged $1.8999 per pound, up 24.7 cents from May. Butter averaged $2.1287, up 10 cents. Nonfat dry milk averaged $1.6520, up 4 cents, and dry whey averaged 52.33 cents, up 3 cents from May.
California’s June 4b cheese milk price is $18.79 per hundredweight, up $4.05 from May, $6.56 above June 2010, 32 cents below the comparable Federal order Class III price though the gap continues to narrow, and equates to about $1.62 per gallon. Its 2011 average now stands at $15.67, up from 12.29 a year ago. The 4a butter powder price is $20.79, up 85 cents from May, and $5.53 above a year ago. Its 2010 average is now $18.94, up from $13.69 a year ago.
Cash dairy prices saw little change in the week entering the 4th of July holiday. Block cheese closed that Friday on a down note at $2.1250 per pound, down a half-cent on the day and the week, but 67 cents above that week a year ago. Barrel closed at $2.0975, up 2 cents on the week, and 69-3/4-cents above a year ago. Only two cars of block traded hands on the week and none of barrel. The lagging NASS-surveyed U.S. average block price hit $1.9861, up 3-1/2-cents, and the barrels averaged $2.0478, up 5-1/2-cents.
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FC Stone dairy broker Dave Kurzawski looks for cheese to slip after the 4th. In a Wednesday DairyLine interview Kurzawski said he has heard of discounted cheese being sold. Cheese sold at the Chicago Mercantile Exchange is no more than 30 days old, he said, so the steady current price is a “symptom of some tightness in fresh cheese,” but he believes that’s about to change.
Eyes are on butter which slipped the second week in a row, though it did rally a penny on Wednesday and Thursday. It has been at or above $2 since the first of the year. The cash price closed Friday at $2.04, down 2 cents on the week, following the previous week’s 8 cent drop, but is still 29 cents above a year ago. Ten cars traded hands on the week. The NASS price hit $2.1272, up 0.8 cent.
Kurzawski doesn’t believe we’re out of the woods yet on the tightness in butter as demand still appears to be good but the real issue in his mind is what will demand look like on August 1. By then a lot of commercial buyers will have sourced their needs almost for the balance of the year, he said, and we could see prices slip at that point but, “as of today, we still have a pretty decent support underpinning the market.”
Cash Grade A nonfat dry milk held all week at $1.6250 while Extra Grade remained at $1.61. NASS powder averaged $1.6629, up 0.9 cent, and dry whey averaged 53.06 cents per pound, up a half-cent. Powder has been pretty quiet, Kurzawski said, and he cited an old adage, “Don’t sell a sleeping market.”
He’s not calling it a sleeping market, he said, as it is quiet most of the time and right now buyers have been quiet and international pressure has come on prices but we’ll know more from Fonterra’s auction on July 5. “The demand picture has been quiet,” he concluded, “I really wouldn’t think that this market is going to be very well supported as we roll into the middle of third quarter.”
Looking “back to the futures;” the Federal order Class III contract’s average for the last half of 2011 was $17.64 per hundredweight on May 6, $17.49 on May 13, $18.22 on May 20, $18.39 on May 27, $18.72 on June 3, $18.34 on both June 10 and June 17, and $18.21 on June 24.