Cheese production remains heavy, but not enough to be bearish to the market. Demand is being met with limited amounts available to move into storage. Manufacturers are confident to keep schedules full as there is little to indicate supply will overwhelm demand.
Components are declining with plants compensating by the addition of condensed skim milk to the vat.
Cheese prices continue to hover around $2. There is risk that demand may slow allowing for a stocks to increase more than desired, but this will not happen unless demand slows noticeably. Buyers and sellers continue to do business a necessary keeping spot markets choppy.
For the week ending June 20, Cheddar blocks closed at $2, down 3 cents from the previous week with 18 loads traded. Barrels moved to $2.01, up 4.25 cents with eight loads traded. Butter closed the week at $2.2350, up 5 cents with 30 loads traded. Grade A non-fat dry milk remained unchanged at $1.8250 with no loads traded.
The Federal Order Class I price for July is $23.02, up 16 cents from June.
Slaughter at 3-year low
Dairy producers are holding onto cows due to plentiful feed and high milk prices. Dairy cattle slaughter in May totaled 209,000 head, down 21,000 head from April and down 39,000 from last year.
This is the lowest monthly slaughter since July 2011.
Milk production higher
Cow numbers in May increased 10,000 head in both the top 23 states and in the U.S. The number of milk cows on farms totaled 9.25 million head.
Milk production in the top 23 states increased 1.5 percent with production per cow averaging 1,976 pounds. U.S. production per cow averaged 1,951 pounds with milk production, up 1.4 percent. This is the highest percentage increase so far this year.
Of the top 23 states, there were five states which showed a decline in milk production from last year. Ohio declined 2.5 percent; Pennsylvania declined 1.4 percent; Vermont declined 0.4 percent; New York was down 0.3 percent, and Minnesota declined 0.1 percent.
Texas showed the greatest production gain of 10.1 percent. Colorado increased 9.5 percent; Kansas gained 7 percent; South Dakota increased 5.9 percent; Arizona gained 3.9 percent; Florida gained 3.6 percent; and Michigan gained 3.3 percent.
All other states showed lesser gains than 3 percent. California gained 1 percent with Wisconsin unchanged from the previous year.
GDT average price increases
The Global Dairy Trade (GDT) auction showed an increase in the trade weighted average of 0.9 percent. This is the first increase after 8 consecutive declines.
Whole milk power price increased 2.4 percent to $3,658 per metric ton (mt) or $1.66 per pound. Skim milk powder declined 0.2 percent to $3,855per mt or $1.75 per pound. Anhydrous milk fat declined 3.8 percent to $3,898 per mt or $1.77 per pound.
Butter price increased 1.8 percent to $3,699 per mt or $1.68 per pound. Cheddar cheese price increased 2.4 percent to $4,381 per mt to $1.99 per pound. Buttermilk powder jumped 17 percent to $4,535 per mt or $2.06 per pound. Rennet casein increased 4.6 percent to 11,155 per mt or $5.06 per pound.
AMS prices
For the week ending June 14, Agricultural Marketing Service (AMS) prices were mixed.
Prices for 40-pound cheddar blocks declined 0.6 cents to $2.02. The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $2.02, down 0.3 cents. USDA grade AA butter averaged $2.18 for the week, down 0.2 cents. Non-fat dry milk averaged $1.86, up 2 cents. Dry whey averaged 67.7 cents, unchanged from the previous week.
Source: Agriview