Lee Mielke: Monthly Dairy Prices 7-16-12
July 16, 2012
Farm milk prices for 2012 have bottomed out and are reversing gears. The Agriculture Department announced the June Federal order Class III price at $15.63 per hundredweight (cwt.) up 40 cents from May, $3.48 below June 2011, 98 cents above California's comparable 4b price, and equates to about $1.34 per gallon. That put the 2012 Class III average at $15.90, down from $17.06 at this time a year ago and compares to $13.58 in 2010 and $10.19 in 2009.
Looking ahead, Class III futures settled Friday, July 6, as follows: July $16.71; August, $17.52; September, $17.87; October, $17.76; November, $17.63; and December was at $17.45 per cwt. That would result in a second half average of $17.49 versus $15.90 in the first half.
The June Class IV price is $13.24, down 31 cents from May and $7.81 below a year ago.
The four-week, AMS-surveyed cheese price averaged $1.5846 per pound, up 6.3 cents from May. Butter averaged $1.3991, up 3.3 cents, nonfat dry milk $1.1023, down 5.3 cents, and dry whey averaged 50.13 cents, down 3.8 cents from May.
California's comparable June 4b cheese milk price is $14.65 per cwt., up $1.09 from May but $4.14 below a year ago. The 4a butter-powder price is $13.17, down 28 cents from May and $7.62 below a year ago. The 4b price average for 2012 now stands at $13.83, down from $15.67 a year ago and compares to $12.29 in 2010. The 4a price average now stands at $14.73, down from $18.94 a year ago and compares to $13.69 in 2010.
Checking the markets; cash block cheese closed the 4th of July week at $1.64 per pound, down a penny on the holiday-shortened week, 47 cents below a year ago, and 3-1/2-cents below the barrels. The barrels held all week at $1.6750, 42-3/4-cents below a year ago. Three carloads of block traded hands on the week and none of barrel. The AMS-surveyed U.S. average block priced hit $1.6346, up 1.2 cents, while the barrels averaged $1.6220, up 4.1 cents.
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Cheese prices across the country continue to show strength, according to USDA's Dairy Market News. Retail sales are good. Cheese production continues to hold fairly steady with marginal declines, due to declining milk production. There have been few concerns from cheese manufacturers about milk availability. Production has been geared to build inventories in case of shorter milk supplies later in the summer, according to USDA, but increasing price levels are beginning to impact export sales.
Cash butter closed Friday at $1.5325, up a half-cent on the week but 49 3/4- cents below a year ago. Three cars found new homes. AMS butter averaged $1.4695, up 7.1 cents.
Butter churns are operating on busy schedules although cream volumes are tightening. Class II demand continues to pull significant volumes of cream, especially for ice cream and mix needs. Butter demand is steady at generally good levels coast to coast. Retail ads indicate that butter ranges from $1.49 in the Central part of the country to $3.99 per pound in the Northeast and Southeast with a national average of $2.48.
Cash nonfat dry milk was unchanged, with Grade A remaining at $1.2275 and Extra Grade at $1.1950. AMS powder averaged $1.0977, down 1.1 cent. Dry whey averaged 48.68 cents, also down 1.1 cent.
Milk production across the country is being impacted by an array of factors ranging from nearly perfect conditions, tropical storm Debbie, too much moisture, not enough moisture, and hot, record setting, temperatures. All of these factors have occurred in various areas from coast to coast at varying rates during the past week causing milk production to be irregular for all Class needs. I got a personal reminder of how hot it can get in the Midwest, making a quick trip to Wisconsin to visit family this week. Temperatures topping 100 sent me packing for my cooler and greener home in the Pacific Northwest.
If the hot weather continues, milk production and component yields will suffer and drive milk prices higher however, resulting reduced corn yields will mean higher dairy cattle feed costs, leaving dairy farmers caught in the middle again. ❖
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