Dairy market review: New record #cheese price

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Warmer weather is having an impact with milk production improving.
 
The market is not yet in a period of spring flush, but is nearing that time of the year. Strong demand may not allow production to overwhelm the market and push price lower.
 
Whether consumer demand will continue to support milk prices or if demand will slow due to high dairy product prices will be realized during the next few months.
 
Despite improving milk production in the country and especially those areas in which the grip of winter is fast becoming history, milk prices for available milk continues to hold a premium of as much at $2.00 per cwt over class.
 
Bottling demand has slowed overall with spring break affecting demand in many areas. Frozen dessert and ice cream production is slowly increasing contributing to stronger cream demand.
 
For the week ending Mar. 14, Cheddar blocks price increased 4.50 cents to end at a record price of $2.3625 with no loads traded. Barrels increased 4.50 cents to end at $2.2625 with 2 loads traded. Butter price did move during the week, but ended closing where it started at $1.88 with 8 loads traded.
 
Buyers become more confident
 
Increasing milk supply is helping to increase cheese production which is being welcomed by buyers; however, it does not seem to be having any impact on supply.
 
Domestic demand is strong with buyers not only purchasing for immediate demand, but also to build inventory. Buyers were waiting for lower prices in order to purchase for projected upcoming demand, but the calendar is moving forward and they cannot wait any longer.
 
In fact, the longer they wait, the more they need to spend to purchase supply. Traders and the industry in general seem to be more confident prices will hold and risk of lower prices is minimal.
 
USDA raises price outlook
 
USDA estimates milk production to remain unchanged from February at 205.7 billion pounds according to the World Agricultural Supply and Demand report. Projected milk prices were raised substantially.
 
Class III price increased 25 cents to an average of $19.25, Class IV price was raised 35 cents to $20.70, and the All-milk price was raised to an average of $21.70 per cwt.
 
If these estimates come to fruition, Class III will be up $1.26 from 2013, Class IV will be up $1.65, and the All-milk price will increase $1.69 from last year.
 
It certainly will be surprising to see if milk production will hold or if production will rise further as dairy farmers take advantage of record prices.
 
USDA is optimistic on product prices with the average cheese price for this year raised 5 cents per pound to an average estimate of $1.89. Dry whey price was raised 2 cents per pound to an average of 59.50 cents. Demand is expected to be strong with exports on a fat basis raised 900 million pounds from last month reaching 12.4 billion pounds.
 
Exports on a skim-solids basis were left unchanged at 38.2 billion pounds. The average price for butter was raised 5 cents per pound to average $1.65 per pound compared with $1.5450 last year.
 
Nonfat dry milk price was raised 3.50 cents to now average $1.85 per pound compared with $1.7050 last year.
 
AMS prices
 
For the week ending Mar. 8, Agricultural Marketing Service (AMS) prices were higher. Prices for 40-pound cheddar blocks increased 4.3 cents to $2.19. The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $2.21, up 0.8 cents. USDA grade AA butter averaged $1.82 for the week, up 1.6 cents.
 
Nonfat dry milk averaged $2.10, up 1.8 cents. Dry whey averaged 64.8 cents, up 0.5 cents.
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in commodity trading that may not be suitable for recipients of this publication.
 
Source: Agriview

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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