Cheese prices may have found a range at which they may remain for awhile.
There is risk of demand slowing further than anticipated the longer prices remains higher than world prices. But at this point in time, it would not have much impact due to the desire to build inventory.
Even though there is a need to increase inventory, some plants are turning away milk in order to match production and plant inventory to demand. There is evidence of slowing demand, which may be seen on upcoming export reports, but for now the Foreign Agricultural Service reported U.S. cheese exports for the first 4 months of this year, 39 percent higher than the same time last year.
Butter has a lot of room to fill. Inventory is substantially below last year and demand remains good. There is some evidence of slowing demand, but that would be welcomed by buyers as there is concern regarding supply through the end of the year.
Butter exports for the first 4 months of the year show an increase of 107 percent during the same period last year.
For the week ending June 13, Cheddar blocks closed at $2.03, down 2.0 cents with 11 loads traded. Barrels remained unchanged from the previous week at $1.9675 with five loads traded. Butter closed at $2.1850, down 3.75 cents with 37 loads traded. Grade A non-fat dry milk price declined 3.25 cents to $1.8250 with just one load traded.
Slight price changes made
U.S. Department of Agriculture( USDA) made very few changes to U. S. milk supply and use on the World Agricultural Supply and Demand report.
Milk production was left unchanged for 2014 at 206.1 billion pounds and 2015 milk production was left at 212.1 billion pounds, unchanged from last month. Projected 2015 Class III price was raised 5 cents to an average price of $17.45.
The Class IV average price was raised 10 cents to $19.20. The All-milk price was raised 5 cents to the average of $20.25. USDA left 2015 cheese price unchanged at an average of $1.72 per pound.
Dry whey price was left unchanged at 56.50 cents. USDA increased the average butter price from last month by 2.50 cents per pound to the current price of $1.70.50 while non-fat dry milk price was left unchanged at $1.64.
Higher income and prices
The National Agricultural Statistics Service released the Milk Production, Disposition, and Income report for 2013. Milk production was up 0.3 percent from 2012 to 201.2 billion pounds.
Production per cow reached 21,822 pounds, up 102 pounds compared with 2012. Cow numbers averaged 9.22 million head, down 12,000 head. Cash receipts from milk totaled $40.3 billion, up 8.7 percent with producers averaging $20.12 per cwt, up 8.4 percent above 2012.
So far we are on a track to see significantly higher prices and milk production than last year.
Cheese aging controversy
There has been some confusion regarding a ruling by the U.S. Food and Drug Administration (FDA) that seemed to indicate cheese artisans were to abandon the use of wood planks in the curing of cheese.
They cited that these planks could not be cleaned sufficiently possibly increasing the risk of the contamination of cheese; however, the FDA said they did not change the rules, but issued a clarification on the practice.
Cheese makers and government officials will meet to potential restrict the FDA from moving forward with this and amend the Ag Appropriations Bill to allow for this practice that has been used for many years.
AMS prices
For the week ending June 7, Agricultural Marketing Service (AMS) prices were mixed Prices for 40-pound cheddar blocks declined 2.8 cents to $2.02.
The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $2.02, down 3.6 cents. USDA grade AA butter averaged $2.19 for the week, up 5.6 cents. Non-fat dry milk averaged $1.84, down 4.7 cents. Dry whey averaged 67.7 cents, up 0.3 cents.
Source: Agriview