A futures price rally early in the week ran out of steam with price falling by week’s end essentially eliminating the gains and bringing futures back to where they began. Cheese prices increased early only to see selling interest increase as manufacturers were intent on moving supply. Early futures strength was attributed in part by the hot weather experienced in California with reports that milk receipts at the plant level were down 8 to 15 percent. The heat has abated to some degree allowing for relief for the cows. Milk production is reported to be slowly improving, but it is unlikely production will move back to previous levels. For the week, Cheddar blocks closed at $1.6750, up 1.0 cents from the previous week. Barrels closed at $1.65, down 0.50 cents. Butter fell 6.50 cents to close at $1.46 per pound. Spot trading activity was good with 23 loads of blocks, 20 loads of barrels and 10 loads of butter during the week.
Dairy prices reduced
USDA increased projected milk production this year by 200 million pounds to a total of 202.0 billion pounds on World Agricultural Supply and Demand report released on Thursday. USDA projects production in 2014 to reach 204.5 billion pounds, unchanged from last month’s estimate. The Class III expected average price for this year was reduced 20 cents to $17.80 while the estimate for next year was slashed 40 cents to an average of $17.10. Class IV was left unchanged this year at $18.40 while the estimate for 2014 was reduced 10 cents to $18.20. The All-milk price average for this year was reduced 15 cents to $19.65 with an average of $19.20 for next year, down 15 cents as well. Cheese price this year is projected to average $1.75 while next year’s price was reduced to an average of $1.68 per pound. Dry whey price was left unchanged at 59.50 cents this year and 58 cents next year. USDA reduced projected butter price this year 2.50 cents to average $1.5450 per pound. The average price next year was reduced 3 cents to $1.5850. Nonfat dry milk price was raised slightly this year to average $1.63 while next year remained unchanged at $1.63 per pound.
Dairy exports mixed
Cheese exports have been doing well the first four months of the year, but slowed in May. Exports totaled 27,514.4mt, up 7.7 percent from April, but down 1.5 percent from a year ago. This is the first year-over-year decline since November 2012; however, even though it is a decrease from a year ago, it is the second highest month of cheese exports in history. Whey exports are a bright spot with a total of 48,702mt exported in May, up 13.1 percent compared with April and up 6.5 percent compared with last year. Butter exports continue to suffer compared with last year, but increased significantly compared with April. May exports totaled 5,956.3mt, up 39.6 percent from April, but down 17.5 percent from a year ago. Exports of nonfat dry milk increased 1.4 percent compared with April and jumped 23.3 percent compared with last year.
Split Farm Bill
In a surprise move, House Republican leaders took a risk after bringing the farm bill back to the floor by splitting apart funding for food stamps and the agricultural sections. Lawmakers voted 216 to 208 to make changes to the farm bill and end direct subsidy payments to farmers. Included in the part of the bill that was passed was the Goodlatte-Scott Amendment that did not include a supply management provision for dairy. This has created much controversy and will now require the House to pass a version of the food stamps portion of the bill before both the House and Senate can work out an agreement.
AMS prices
For the week ending July 6, Agricultural Marketing Service (AMS) prices were mixed. Prices for 40-pound cheddar blocks decreased 2.5 cents to $1.72. The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $1.71, down 7.2 cents. USDA grade AA butter averaged $1.46 for the week, down 4.6 cents. Nonfat dry milk averaged $1.71, up 0.9 cents. Dry whey averaged 58.2 cents, up 1.0 cent.
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Source: Agriview
