Monthly Dairy Prices 9-13-10
September 13, 2010
The August benchmark milk price took a big jump. The Agriculture Department announced the Federal order Class III price at $15.18 per hundredweight (cwt.), up $1.44 from July, $3.98 above August 2009, 79 cents above California’s comparable 4b price, and the highest Class III since December 2008. The 2010 average now stands at $13.80, up from $10.29 at this time a year ago, but compares to $18.14 in 2008. The August Class IV price is $15.61, down 14 cents from July, but $5.23 above a year ago.
The NASS-surveyed cheese price averaged $1.6031 per pound, up 14.6 cents from July. Butter averaged $1.8508, up 11.3 cents. Nonfat dry milk averaged $1.1557, down 7.2 cents, and dry whey averaged 35.9 cents, down a half-cent.
Class III futures settled Friday as follows: September $16.16, October $15.63, November $14.94, and December $14.50 which would result in a 2010 average of $14.30, compared to $11.36 in 2009 and $17.44 in 2008.
California’s August 4b cheese milk price is $14.39 per cwt., up $1.02 from July, and $3.10 above August 2009. The 2010 4b average is $12.69, up from an anemic $9.97 a year ago, and compares to $17.48 in 2008. The August 4a butter-powder price is $15.69, up 7 cents from July, and $5.48 above 2009.
Dairy industry eyes are fixed on the cash dairy markets to get some kind of signal, according to the University of Wisconsin’s Dr. Brian Gould. Speaking in Tuesday’s DairyLine broadcast, Gould said the increase in milk production and high cheese stocks has many believing the peak in cheese had arrived.
The Cheddar blocks closed the Friday before Labor Day at $1.72 per pound, up 2-1/2-cents on the week, and 45 cents above a year ago. Barrel caused a scare Thursday, inching back a half, but gained it back and then some Friday to close at $1.6850, up 2 cents on the week, and 43-3/4-cents above a year ago. One car of block traded hands on the week and five of barrel. The NASS U.S. average block price hit $1.6245, up 2.2 cents. Barrel averaged $1.6166, up 0.9 cent.
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Cash butter moved higher for the 14th week in a row, closing Friday at $2.2250 per pound, up 4-1/2-cents on the week, and $1.0550 above a year ago. Two cars were sold. NASS butter averaged $1.9659, up 7.2 cents.
Cash Grade A nonfat dry milk closed Friday at $1.23, up 3 cents on the week. Extra Grade held all week at $1.2250. NASS powder averaged $1.1413, down 0.8 cent, and dry whey averaged 35.84 cents, up 0.3 cent.
Prices for whole milk powder, skim milk powder, anhydrous milkfat, and butter milk powder up sharply in this week’s Global Dairy Trade auction.
“We are at a reasonable level in terms of cheese and butter prices, relative to recent history,” Gould said, but he’s advised dairy producers to think more seriously about risk management at this time and one such tool is the Livestock Gross Margin Insurance program. He reported that, as of July, farmers in all of the lower 48 states can now participate. Previously, California and Idaho producers could not. The program sets a floor on your income over feed costs so it’s not locking anything but allowing for upward movement.
Other changes in the works that will make this program more palatable, according to Gould, are the insurance premiums will be subsidized and won’t be due until after the insurance contract runs its course, and their level of deductible will increase, which should decrease the cost of this insurance program. He encourages producers to take a serious look at the program, especially with the changes that are being made.