Monthly Dairy Prices 8-9-10 |

Monthly Dairy Prices 8-9-10

Farm milk prices keep inching higher. The Agriculture Department announced the July Federal order Class III price at $13.74 per hundredweight, up 12 cents from June and $3.77 above July 2009. That pulls the 2010 average to $13.60, up from $10.16 a year ago, and compares to $18.25 in 2008. The Class IV price is $15.75, up 30 cents from June and $5.60 above a year ago.

Looking ahead; Class III futures settled Friday as follows, August $14.94, September $15.40, October $15.08, November $14.86 and December $14.74.

The NASS-surveyed cheese price averaged $1.4567 per pound, up a penny from June. Butter averaged $1.7375, up 14.3 cents. Nonfat dry milk averaged $1.2277, down 3.5 cents, and dry whey averaged 36.41 cents, down a half cent.

Cash dairy product prices remain strong however cheese may be showing a little weakness. The blocks closed the last week of July at $1.6025 per pound, unchanged following six weeks of gain, but 31-3/4 cents above a year ago. Barrel closed at $1.5575, down a quarter-cent on the week, but 29-3/4 cents above a year ago. Six cars of block traded hands on the week and eight of barrel. The lagging NASS-surveyed U.S. average block price gained 6.3 cents, hitting $1.4999. Barrel averaged $1.5110, up 3.4 cents.

Butter gained a penny and a half, closing Friday at $1.8150, up 57 cents from a year ago. Nine cars were sold. NASS butter averaged $1.7713, up 2.8 cents. NASS powder averaged $1.1865, down 4.7 cents, and dry whey averaged 36.21 cents, up 0.1 cent.

The University of Wisconsin’s Dr. Brian Gould, said in Tuesday’s DairyLine “That’s quite significant that butter has gained over 15 percent since June 1. There hasn’t been a down day at the CME spot price it’s been going up continuously.” He adds that the high butter price has broader implications with respect to the federal pricing system. For example, last Friday the advanced Class I was released and the Class IV was the mover, at $15.77, compared to the advanced Class III of $13.66.

That’s more than a two dollar difference between the Class IV and Class III, he said, and it has been that way for six of the last 8 months. “It’s truly a change in the market conditions,” he said, “due to purely what’s going on in the butter side.”

He said that it could stay that way for a while with the heat and humidity affecting a large portion of the U.S. “The components are going down a little bit and being allocated to butter because it’s so valuable.”

The high butter price may bode well for cheese, according to Gould. “Again, the price of cheese may go up a little bit because fewer components are going into the cheese vat.”

Gould has a model on his “Understanding Dairy Markets” website at where current futures market data and a state specific statistical analysis to look at the relationship between the announced Class III and the futures Class III, and the mailbox price.

Using last week’s end of week Class III futures prices, we see that over the July to December period, the U.S. average Federal order mailbox is projected to be about $15.76. Wisconsin is $15.93 and California, not surprisingly, at $14.32. “And these are substantially higher than obviously what happened at this time last year,” he concluded.

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