Mielke: Benchmark milk prices poised to drop
The Agriculture Department announced the November Federal order Class III benchmark milk price at $16.88 per hundredweight, up 19 cents from October, 12 cents above November 2016, and equates to $1.45 per gallon. It ties the February price for the highest Class III in 2017 and puts the 11- month Class III average at $16.24, up from $14.64 at this time a year ago and $15.92 in 2015.
Class III futures settlements portend tough times ahead and Dec. 1’s settlement shows a December price of $15.32, which would result in a 2017 average of $16.16, up from $14.87 in 2016 and $15.80 in 2015. The January 2018 contract settled Dec. 1 at $14.49; February, $14.56; and March was at $14.63, with the peak at only $15.89 in October.
The November Class IV price is $13.99, down 86 cents from October but 23 cents above a year ago and the lowest Class IV since November 2016. Its 11-month average stands at $15.31, up from $13.66 a year ago and $14.24 in 2015.
California’s November 4b cheese milk price is $15.52 per hundredweight, down 65 cents from October, $1.93 below a year ago, and $1.36 below the comparable Federal order Class III price. That gap has varied from a low of 16 cents in July to a high of $2.05 in March. The 11-month 4b average stands at $15.35, up from $14.06 a year ago and $14.62 in 2015.
The 4a butter-powder price is $13.62, down 89 cents from October, 7 cents below a year ago, and the lowest 4a price since February 2017. Its 11-month average is at $15.09, up from $13.29 a year ago and $14.06 in 2015.
CME dairy prices were mostly lower the last week of November. Cheddar block cheese fell to $1.55 per pound the first day of trading following the Thanksgiving break, lowest spot price since Sept. 1, 2017, but closed Dec. 1, at $1.5625, down 4 3/4 cents on the week and 24 3/4 cents below a year ago. The Cheddar barrels fell to $1.51 Nov. 29 but finished Dec. 1 at $1.5350, down 14 cents on the week and 8 cents below a year ago. 22 cars of block traded hands on the week and a whopping 62 of barrel.
Milk headed to Class III plants remained accessible following Thanksgiving weekend, reports Dairy Market News, and spot prices ranged from flat market to $4 under Class. It adds that “Production schedules have increased to meet the current influx of milk. Mozzarella and provolone orders have slowed in the wake of the holiday, but are expected to return strongly through the rest of the year. Cheddar and traditional cheese makers report healthy demand, as end-of-year holiday orders are underway.” However, cheese prices are confounding Midwestern contacts because Thanksgiving week and the following week saw barrel prices hovering above the blocks, something contacts typically view as “an indication of market instability.”
Cheese output in the west is also strong due to higher milk availability. Barrels and block supplies are abundant and inventories continue to increase. “Domestic cheese sales for 40-pound-blocks are solid.” “Retail demand for cheese is doing well as some stores are packing for the end-of-the-year holiday needs. However, a number of end users have their needs met and are not looking to purchase additional cheese soon. On the other hand, some reports suggest that spot prices for cheese are dropping, resulting in more interest from the international market.
Cheese sales and prices in the coming weeks will depend on how much stocks processors can afford to hold going into the New Year and how much buyers want or need to pay,” DMN said.
Cash butter saw a Dec. 1 close at $2.2150 per pound, down three-quarter-cents on the week but 3 cents above a year ago when it jumped almost 14 cents. 15 cars exchanged hands on the week at the CME.
DMN says butter production is fully active. Bulk butter has seen a little more interest of late but prices remained at 3 cents under to 7 cents over the CME average. The butter market tone is somewhat bearish, DMN said, and “some contacts suggest that market prices may continue to ebb slowly, but they are doubtful regarding a market destabilizing descent.”
Western butter makers report plenty of cream available to meet the remaining butter needs for 2017. Demand has been relatively steady, DMN said, but a few processors note that interest seems to be waning for the remainder of the year. Some buyers have met their needs for December and are focusing their attention to quoted prices for 2018.
Cash Grade A nonfat dry milk closed Dec. 1 at 72 cents per pound, up three-quarters but 28 3/4 cents below a year ago when it jumped 10 1/4 cents to $1.0075 per pound.❖
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User