Lackluster cheese demand and an abundance of fresh cheese was blamed for faltering CME prices. Traders were also anticipating Monday’s February Milk Production report, Tuesday’s GDT auction and Wednesday’s February Cold Storage data.
CME block Cheddar sank to $1.35 per pound last Wednesday, the lowest level since May 25, 2016, but rallied Friday, closing at $1.40, up a penny and a half on the week and the first upward movement in five weeks, but was 8 3/4-cents below a year ago.
The barrels fell to $1.35 Thursday, the lowest price since May 16, 2016, but regained some ground Friday to finish at $1.3650, down 3 1/2-cents on the week and 11 1/2-cents below a year ago. Sixteen cars of block traded hands on the week at the CME and 23 of barrel.
Monday saw the blocks creep up a quarter-cent and then jump 2 3/4-cents Tuesday, to $1.43. The barrels lost a half-cent Monday but jumped 3 cents Tuesday, hitting $1.39.
Cheese production in the Midwest is active and keeping pace with readily available milk, reports Dairy Market News, but even with spot milk as low as $5 under class, cheesemakers are turning offers away, trying to find a middle ground between cheese production and managing inventories.
Cash butter saw a meltdown to $2.11 per pound Thursday, as sellers unloaded 22 carloads. Friday’s close, at $2.13, was down 3 1/4-cents on the week but 7 1/2-cents above a year ago. A total of 32 cars traded hands on the week.
The butter was unchanged Monday but lost a penny Tuesday, slipping to $2.12.
Central butter producers are seeing no shortage of cream. Class II interest is increasing but cream is still available and at prices favorable to butter makers so output is active and inventories building.
Spot Grade A nonfat dry milk closed Friday at 80 1/2-cents per pound, down a half-cent on the week but 7 3/4-cents above a year ago.
The powder was unchanged Monday and Tuesday.
February milk up
Preliminary USDA data put February milk output in the top 23 producing states at 16.2 billion pounds, up 2.5 percent from February 2016, when adjusting for last year’s extra leap day.
Revisions lowered the January estimate 4 million pounds, now pegged at 17.0 billion pounds, up 2.7 percent from January 2016.
February cow numbers totaled 8.69 million head, up 3,000 from January and 66,000 more than a year ago. Output per cow averaged 1,865 pounds, up 32 pounds from a year ago, adjusting for the leap day.
California’s February output slipped below a year ago for the second month in a row, down 2.0 percent when adjusting for the leap day. Weather, 21 pounds less per cow, and 15,000 fewer cows than a year ago were contributing factors.
Wisconsin was up 1.3 percent, with output per cow up 25 pounds, but cow numbers unchanged.
Texas continued to “milk it for all it’s worth,” up 16.3 percent from a year ago, thanks to 40,000 more cows. Output per cow was up 127 pounds but again this is measured against last year’s Winter Storm Goliath. The other Goliath affected state, New Mexico, was up 11.7 percent, on a 130-pound per cow increase and 14,000 more cows.
Michigan was up 4.8 percent, on 11,000 additional cows and 42 pounds more per cow than a year ago. Idaho also milked 11,000 more cows but saw a 20-pound drop in output per cow, resulting in just a 0.8 percent increase.
Washington was down 2.3 percent, on 2,000 fewer cows, and a weather-caused drop of 30 pounds per cow.
GDT reverses
Hope springs eternal and spring brought a reversal in Tuesday’s Global Dairy Trade auction. The weighted average for all products was up 1.7 percent, after plunging 6.3 percent on March 7 and 3.2 percent on Feb. 21.
Unfortunately, skim milk powder again led the declines, down 10.1 percent, following a 15.5 percent plunge in the last event, and 3.8 percent the time before that. Lactose was down 2.7 percent and GDT Cheddar was down 1.0 percent, after dipping 4.2 percent.
The good news is that butter led the gains, up 4.9 percent, following a 1.2 percent gain last time. Rennet casein was up 3.6 percent. Anhydrous milkfat was up 3.0 percent, after inching 0.8 percent lower and whole milk powder was up 2.9 percent, after it dropped 12.4 percent on March 7.
FC Stone equated the 80 percent average butterfat GDT butter price to $2.1727 per pound U.S. CME butter closed Tuesday at $2.12 per pound. GDT Cheddar cheese equated to $1.5447 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.43. GDT skim milk powder was 88.34 cents per pound and whole milk powder averaged $1.2949 per pound U.S. CME Grade A nonfat dry milk price closed Tuesday at 80 1/2-cents per pound.
Source: CapitalPress
Link: http://www.capitalpress.com/Dairy/20170321/cme-dairy-prices-continue-to-slip