Archive for Dairy Markets

Dairy prices rise at fastest pace in 14 months, as New Zealand output concerns deepen

Dairy prices extended their strong start to 2018 at GlobalDairyTrade, rising at their quickest pace in 14 months, amid mounting concerns over New Zealand milk output, spurred by a sharp deterioration in Fonterra collections.

The GlobalDairyTrade index rose by 4.9% at Tuesday’s event, the quickest rise at the auction since November 2016, and taking to 7.2% its gains so far in 2018.

All six major products traded at the event rose in price, with the biggest gains seen in butter, which soared 8.8%, its quickest rise in eight months.

Whole milk powder, which accounts for the bulk of volumes traded, rose by 5.1% – well above the 1.8% gain in March futures in the dairy commodity as traded on the NZX exchange, and the rise of 2-4% forecast by ASB Bank.

Volume downgrade

The gains followed a caution last week by Auckland-based Fonterra, which runs GlobalDairyTrade (GDT), of a further cut in volumes sold through the auction, with the reduction blamed on weather setbacks to milk output in New Zealand, the top milk-exporting country.

The co-operative cut by 17,000 tonnes, to 615,004 tonnes, its forecast for its volumes sold through GDT over the next year, comprising a cut of 2,000 tonnes in the butter offering, 5,000 tonnes in the skim milk powder supply, and 10,000 tonnes in whole milk powder volumes.

“The reduction in volumes is driven by the impact of dry weather on milk flows,” the group said, adding that it would “continue to keep a close eye on the impact that this is having on milk collections”.

‘Dry, hot weather’

Overnight, Fonterra – which last month cut by 45m kilogrammes of milk solids to 1.48bn kilogrammes of milk solids its forecast for its New Zealand milk collections in 2017-18, putting a 3% year-on-year decline on the cards – reported that its December receivals fell by 6%.

The decline was “due to dry weather across the country”, which “significantly impacted soil moisture and pasture quality”, and ironically followed on from an unduly wet start to 2017-18, which began in June.

The December dip was worst in North Island, where it reached 8%, with Fonterra saying that “dry, hot weather… caused the large decrease in production”.

The co-operative added that the arrival of early-January rainfall would “help in some regions.

“However, further rain in the next few weeks will be needed to see any recovery in production, particularly in Waikato, Taranaki and Central districts.”

Australia result

By contrast, Fonterra reported a 28% surge to 16.1m kilogrammes of milk solids in its collections in Australia, representing a swathe of producer sign-ups, besides better weather.

“Growth continues to be driven by new suppliers to the co-operative and strong seasonal conditions across Australia,” the co-operative said.

 

Source: Agrimoney

International milk prices start to strengthen

The last week’s Global Dairy Trade (GDT) event, hosted by Fonterra Co-op in New Zealand, saw prices rise by an average of 4.9%, relative to the auction held a fortnight earlier.

This was the second consecutive sale at which a strengthening of marketing returns had been recorded. The first event of the New Year saw GDT increase move forward by an average of 2.2%.

At this week’s event whole milk powder prices increased by 5.1%; skimmed milk powder by 6.5%; butter prices by 8.8% and cheddar cheese prices by 5.5%.

Fonterra has reported that December milk production in New Zealand was significantly down, 6% compared to December last year. Subsequently, Fonterra reduced forecasts for milk collection to 16,333 million litres for the 2017/18 season. As a result a feeling of unease within the marketplace has put upward pressures on prices.

Commenting on the latest GDT result, Ulster Farmers’ Union (UFU) Dairy Chairman William Irvine said: “The EU has a significant amount of skimmed milk powder in its stores. If these stores were to be opened, this would have an impact on price. This is not an overnight development, as the last auction a fortnight ago had risen by 2.2%.

“Whilst significant, it is a reflection of adverse weather in New Zealand. Closer to home, Dutch Dairy Board has seen stabilised prices and for some products, improved returns. Also, there has been an improvement in the Mozzarella price, up €100/tonne last, illustrative of good demand. The UFU Milk Price Index has risen by 1.07%.”

Holstein UK’s John Martin said: “New Zealand production levels are currently unstable but, over the calendar year, I think production will be up overall. Demand continues to increase with Chinese buying a help.

“EU production is up slightly overall in 2017 with large increases recorded at the end of the year.”

He added: “We remain the largest exporter of dairy but global demand is currently keeping pace with production. However, there is no room for sustained large increases in production as the EU intervention options have changed with no soft landing.

“I do believe that a production reduction tool will be used within the next 12 months if the supply trend continues in the EU, as it has in the last quarter of 2017.” 

 

Source: Farming Life

Milk prices paid to dairy farmers for 2018 is deplorable!

By: Arden Tewksbury

After consultation with government and industry personnel, it’s very clear that milk prices paid to dairy farmers in 2018 still will not be pretty.

The price in Federal Order #1 could average between $16.40 per cwt. and $16.60 per cwt. (hundredweight) for this year. This is deplorable, and this time, something must be done.

What happens to dairy farmers in Federal Order #1, will also happen all across the United States. These prices should not be happening, and action must be taken to soften this blow to all dairy farmers, and I don’t mean tinkering with the ill-fated Margin Insurance Program.

Does anyone remember the Federal Milk Marketing Improvement Act that was introduced by the late Senator Arlen Specter and Senator Robert P. Casey, Jr. (D-PA)? 

Many politicians and dairy farmers turned their heads away from this proposal. If it had been passed, chances are that the present mess that dairy farmers are facing could have been avoided.

At a listening session conducted by Pennsylvania Congressman GT Thompson (R-PA) and several other US Congressmen, no one less than Congressman Colin Peterson (D-MN) admitted that he worked with the National Milk Producers Association in developing the Margin Insurance Program, and Congressman Peterson admitted that program failed.

If anyone can remember, I wrote several editorials predicting the Margin Insurance Program would turn out to be a failure, and it did.

Maybe it’s time for Congressman Peterson and other elected officials to listen to some other people besides always depending on National Milk and IDFA. 

Pro-Ag and other people are proposing temporary solutions to the dairy farmers’ crisis until either Congress or the USDA can come up with a feasible pricing system that would allow dairy farmers an opportunity to cover their cost of production.

Certainly Congress has the ability and responsibility to either peg the Class I price to a level of at least $20 per cwt. or, more feasible, place a floor price under all milk used for manufacturing dairy products, which would also raise the Class I price.

These actions would stabilize prices paid to dairy farmers.

Source: Wisconsin State Farmer

Dairy farmers left behind again

According to many officials in Washington DC, the economy in the United States is really taking off. This may be true. Maybe millions of people will be benefiting from the new tax bill. However, who is being left behind?

I don’t hear anything from DC from either party that will benefit area dairy farmers. What politicians must realize is, that dairy farmers do not want a hand out from anyone. All they want is a fair price for the nutritional milk their great dairy animals produce. This milk is one of the most nutritional foods that consumers need.

Now is the time that dairy farmers support the efforts of the people that really want to generate a fair price for all dairy farmers.

There are certain things that Congress and the USDA can and must do.

1) Congress could and should peg the Class I price and all Federal Orders at least at $20 per cwt. (hundred pounds).

2) An alternate to number one, would be for Congress to place a floor price under all milk used to manufacture dairy products. This could be done in two increments, and reach $20 per cwt.

3) The USDA should and must call a national milk hearing and give the dairy farmers a chance to testify.

4) Sooner, not later, the industry must give credence to a reasonable milk supply management program that is fair to everyone.

5) Members of Congress and the USDA must answer the question, “Why does the Federal Milk Marketing Orders Formula allow a make allowance (nearly $2 per cwt.) to be credited to milk handlers when they convert milk into dairy products, but neither the USDA nor Congress will listen to a cost of production formula for dairy farmers?” Isn’t this a double standard, with dairy farmers being on the short end of the stick again?

6) Advertising and promoting milk: Let’s be honest, while neither of the two major political parties have been fair to the American dairy farmers. However, the past administration certainly did harm to our dairy farmers by developing unwise standards for our school lunch program. Don’t they realize that the present school lunch program is ruining future milk drinkers by not having good tasting whole milk? All dairy farmers must immediately confer with members of Congress and the current administration to correct the inequities in the school lunch program; especially milk. It’s high time that schools be allowed to have the choice to serve whole milk, both white and flavored. Whole milk certainly belongs in our school lunch program. Please get after all of our elected or appointed officials.

Do you need a reason to do the above? The reason is that the milk you produce in December and January will go way below $17 per cwt. It’s time to get with it.

Pro-Ag can be reached at 570-833-5776.

 

SourceMadison County Courier

Mixed results Thursday on trading at CME

At the Chicago Mercantile Exchange, Thursday results where mixed. January milk was down $.01 at $13.83.  February was down $.15 at $13.54.  March was down $.23 to $13.52.  April was down $.29 closing at $13.73.  The rest of the 2018 milk futures were all down.

Grade AA Butter was down $.0175 closing at $2.1325.  Two carloads were sold at $2.13.25 and $2.1350. Barrels were up $.0275 to $1.35.  Seven carloads were sold ranging from $1.35 to $1.3750. 40-pound blocks were up $.0275 to  $1.55.  One carload of blocks was sold at $1.5550. Nonfat dry milk was up $.0075 at $.7150 per pound. Three carloads were sold, one at $.7125 and two at $.7150.

Dairy markets up for the second day in Chicago

At the Chicago Mercantile Exchange the Dairy market trading was all up except for butter for the second day in a row. January milk was up $.07 at $13.84.  February was up $.32 at $13.69.  March was up $.32 to $13.75.  April was up $.21 closing at $14.02.  The rest of the 2018 milk futures were all up from four to eighteen cents

Grade AA Butter was down $.01 closing at $2.15.  One carload was sold at that price. Barrels were up $.0475 to $1.3225.  Sixteen carloads were sold ranging from $1.30 to $1.3225. 40-pound blocks were up $.0550 to  $1.5225.  Two carloads of blocks were sold at $1.50 and $1.5225. Nonfat dry milk was up $.0175 at $.7075 per pound. Ten carloads were sold ranging from $.70 to $.71 cents per pound.

Global dairy prices surge as New Zealand production wanes

Global dairy prices surged in the second auction of the year as buyers anticipated sluggish supply from the world’s largest milk exporter, New Zealand.

The Global Dairy Trade Price Index climbed 4.9 percent – the largest gain in more than a year – with an average selling price of $3,310 per tonne, in the auction held early on Wednesday. The lift was largely on the back of the world’s biggest dairy processor, Fonterra , slashing its New Zealand milk collection as the country struggles with unusually dry weather.

The index had risen 2.2 pct at the previous sale, according to GDT Events, snapping a losing streak that had left farmers worried that they would receive a lower payout in 2018.

Nevertheless, analysts cautioned the gains might ease off in coming months given global supply for some products remained strong.

“Poor milk production from NZ should be supporting prices for WMP (whole milk powder) … as NZ is the key supplier,” said Amy Castleton, analyst at AgriHQ.

“But global milk production is continuing to grow – notably that coming out of Europe and the U.S. – so plenty more SMP (skim milk powder), butter and cheese will make its way onto the global market in coming months.”

Whole milk powder jumped 5.1 percent at the latest auction, and skim milk powder also posted strong gains of 6.5 percent.

Auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation’s gross domestic product.

Despite the stellar result, the currency slipped 0.34 percent overnight to $0.7273 as it consolidated after a rally in
the past week.

A total of 23,319 tonnes was sold at the latest auction, falling 8.2 percent from the previous one, the auction platform said on its website.

A number of companies, including Dairy America and Murray Goulburn , use the platform to sell milk powder and other dairy products, with roughly half of buyers based in China as traders there seek to supplement flagging domestic milk supplies.

The auctions are held twice a month, with the next one scheduled for Feb. 6.

Source: Reuters

Dairy markets were all up except for butter Tuesday at CME

On trading on Tuesday at CME Dairy markets were all up except for butter. January milk was up $.01 at $13.77.  February was up $.30 at $13.37.  March was up $.27 to $13.43.  April was up $.27 closing at $13.81.  The rest of the 2018 milk futures were all up more than four cents.

Grade AA Butter was unchanged at $2.16.  There were no sales recorded. Barrels were up $.0575 to $1.2750.  Sixteen carloads were sold ranging from $1.2275 to $1.2750. 40-pound blocks were up $.0125 to  $1.4675.  Two carloads of blocks were sold at $1.4450 and $1.4675. Nonfat dry milk was up $.0225 at $.69 per pound.  Three carloads were sold at that price.

USDA Lowers Milk Price Projection to $15.80/cwt for 2018

The U.S. Department of Agriculture has lowered it’s milk price projection for 2018 by $0.80/cwt in the latest World Agricultural Supply and Demand Estimates.

The milk production estimate for 2017 is reduced on recent data. For 2018, the milk production estimate is reduced on slower anticipated growth in the dairy cow herd combined with continued slow growth in milk per cow.

Fat basis imports for 2017 are reduced on slower butter imports, but exports are raised on solid global demand for U.S. butter and other dairy products.

Skim-solids basis imports are reduced modestly while exports are raised on strong demand for skim milk powder and several other products.

For 2018, the fat basis import forecast is reduced on slowing demand for butter products, while the export forecast is raised on expected robust foreign demand for U.S. fat-containing products.

On a skim-solids basis, the 2018 import forecast is reduced on weak demand for U.S. milk protein concentrates. The 2018 skim-solids basis export forecast is raised reflecting stronger demand for a number of products.

Dairy product prices for 2017 are adjusted for December data. For 2018, all dairy product prices are reduced on slowing domestic demand and global competition.

The Class III and Class IV price forecasts for 2018 are reduced on lower product prices. The all milk price is lowered to $15.80 to $16.60 per cwt for 2018.

Source: USDA

Dairy futures higher at CME Thursday

At the Chicago Mercantile ExchangeClass III milk futures closed mostly higher Thursday as traders bought back oversold positions. January milk was up $0.03 closing at $13.81. February was $0.08 higher at $13.21. March closed $0.07 higher to $13.25. April milk was up $0.07 at $13.65. The rest of the 2018 milk futures were mixed from three cents a hundredweight lower to a nickel higher.

Grade AA Butter was $0.0125 lower at $2.1550. One load was sold. Barrels were down $0.0050 to $1.29, the lowest settlement price since May 2016. Three loads were sold all at $1.29. 40 # blocks were $0.0025 lower at $1.4375. One load was sold. Nonfat dry milk was $0.0050 higher at $0.67. One load was sold.

Mixed results at CME on Wednesday

In trading at CME, Class III milk futures closed mixed Wednesday on technical activity. January milk was down $0.02 closing at $13.78. February was $0.05 lower at $13.13. March closed $0.01 lower to $13.18. April milk was up $0.05 at $13.58. The rest of the 2018 milk futures were mostly higher by a penny to six cents a hundredweight.

Grade AA Butter was $0.0125 lower at $2.1675. One load was sold. Barrels were down $0.05 to $1.2950, the lowest settlement price since May 2016. 40 # blocks were $0.0150 lower at $1.44. Nonfat dry milk was $0.05 lower at $0.6650. Two loads were sold ranging from $0.66 to $0.06650.

The USDA reports cash butter for the week ending January 4th averaged $2.22 per pound, $0.011 lower than the previous week. 40 pound blocks of cheddar were pegged at $1.52, $0.034 lower. 500 pound barrels averaged $1.62, a decrease of $0.034. Dry whey came out at $0.285, down $.016. Nonfat dry milk averaged $0.704, down $.002.

California’s Department of Food and Agriculture says the statewide average price for Class I milk for February will be $15.49 per hundredweight, based on production, and $15.61, based on utilization. California’s nonfat dry milk price for the week ending January 5th averaged nearly $0.71 with sales of 4.5 million pounds. The price is down more than five percent from the previous week and 29 percent from the same week last year.

Spot market pressure drive milk futures lower

On continued pressure in the spot market, Class III milk futures at the Chicago Mercantile Exchange closed lower Tuesday.  January milk was down $0.05 closing at $13.80. February was $0.06 lower at $13.80. March closed $0.12 lower to $13.19. April milk was down $0.11 at $13.53.

Butter was $.01 lower at $2.18. One load was sold at $2.17. Barrels were down $.0250 to $1.55. Three loads were sold, ranging from $1.30 to $1.3025. 40 # blocks were $.0350 lower at $1.450. Three loads were sold, including two at $1.47 and one at $1.4550. Nonfat dry milk was $.0075 lower at $0.67. Seven loads were sold ranging from $0.6675 to $0.06750.

Dairy markets were down Monday at CME

The Dairy markets were down on trading on Monday at the Chicago Mercantile Exchange. January milk was down $.09 at $13.85.  February was down $.20 at $13.24.  March was down $.19 to $13.31.  April was down $.19 closing at $13.64.  The rest of the 2018 milk futures were all down from four to fifteen cents a hundredweight.

Grade AA Butter was down $.0475 at $2.19.  There were no sales recorded Monday. Barrels were down $.0650 to $1.3250.  Eleven carloads were sold ranging from #1.3250 to $1.35. 40-pound blocks were down $.005 to  $1.49.   Nonfat dry milk was down $.0025 at $.6775.  One carload was sold at that price.

Chicago Mercantile Exchange Dairy markets were mixed Thursday

The Chicago Mercantile Exchange Dairy markets were mixed Thursday. January milk was up $.04 at $14.07.  February was up $.10 at $13.62.  March was up $.12 to $13.66.  April was up $.04 closing at $13.93.  The rest of the 2018 milk futures were all up except May, which remained unchanged at $14.27.

Grade AA Butter was up $.01 at $2.23.  There were five carloads sold ranging from $2.22 to $2.23. Barrels were down $.0025 to $1.3975.  40-pound blocks were down $.0125 to $1.495. No sales of blocks or barrels were recorded. Nonfat dry milk was unchanged at $.67.  Three carloads were sold ranging from $.6550 to $.67 per pound.

CME Dairy markets were mostly down Wednesday

At the CME the Dairy markets were mostly down Wednesday. January milk was down $.01 at $14.01.  February was down $.07 at $13.52.  March was down $.03 closing at $13.54.  April was unchanged at $13.89.  Outside of June and July, the rest of the futures were unchanged or up for the remainder of 2018.

Grade AA Butter was up $.0125 at $2.22.  There were two carloads sold at that price. Barrels were down $.0275 to $1.40.  Eight carloads were traded ranging from $1.4025 to $1.4275. 40-pound blocks were down $.0175 to $1.5075.  One carload of blocks sold for $1.51. Nonfat dry milk was unchanged at $.67.  There were no nonfat dry milk sales recorded Wednesday.

Milk surplus to hit global dairy market

The “rising tide of milk” has seen sentiment in the global dairy industry begin to wane, as growth in exportable surpluses across key milk-producing regions gains momentum, according to Rabobank’s latest Dairy Quarterly report. 

The report says the global market will “confront a wave of exportable surplus” in coming months, estimated to be 3.2 billion litres higher year-on-year (in liquid milk equivalents) for the six month period October 2017 to March 2018. 

“The recent growth in global milk supply, which peaked in the last quarter of 2017 with the Oceania spring peak and a return to growth in Europe, is taking its toll on global commodity prices,” said Rabobank senior dairy analyst Michael Harvey. 

Mr Harvey said supply growth was emerging as the biggest risk for global dairy markets, with the entire dairy complex witnessing weakness. 

“Even butterfat prices, which had been defying gravity, have fallen in recent months,” he said.

“However the low stocks of butter and robust demand are expected to support prices well above the five-year average. 

“Meanwhile skim milk prices remain depressed, with the closure of the European intervention scheme removing the floor and allowing prices to soften further.” 

While there is no immediate end in sight for weak skim milk powder prices, which have dragged the whole milk price lower, Mr Harvey said the global cheese market has “fared best” with the buoyant importing of cheese in countries like Japan and China providing support. 

Mr Harvey said with pressure expected to build on global commodity prices, the first signs of weaker milk prices (in local currency) had emerged in a number of export regions. 

“In Australia, the downward pressure on global prices, together with a stronger currency, has seen Rabobank revise its full-year milk price in southern export regions for 2017/18 to AUD 5.50/kgMS, down AUD 0.20/kgMS on previous forecasts – but excluding any supplementary payments and market premiums,” he says. 

While the growth in global exportable surpluses is likely to place pressure on the global dairy complex through to the middle of 2018, Mr Harvey said exportable surpluses were not expected to completely overwhelm global markets, helped by strategies to limit supply growth from processors.

“China will also play a key role in ensuring global markets remain ‘fairly balanced’, with their import purchasing demand, assisted by lower-than-expected milk supply and some improvements in demand, expected to remain active throughout 2018,” he said. 

Mr Harvey says there is unlikely to be a smooth recalibration of the dairy complex, however Rabobank is forecasting a gradual tightening of exportable supplies through the second half of 2018. 

“Much will hinge on production trends in Europe, and while supply growth is set to continue, an easing of milk prices and efforts to contain supply growth in some regions is likely to constrain growth,” he said. 

Dairy policy interventions in the EU will be a key ‘watch factor’ in 2018, as well as the risk of a US exit from NAFTA, and geopolitical tensions – all of which could create volatility in global dairy markets. 

Aussie outlook

Mr Harvey says improving milk prices and favourable seasonal conditions were starting to flow into a recovery in Australian production and exports, with national milk production forecast to increase by 2.7 per cent in the 2017/18 season. 

“With most of the growth coming from the southern export regions, particularly Victoria, the good reserve of high-quality fodder, good soil moisture and high water entitlement for irrigators is boding well for a strong shoulder and solid finish to the season,” he said.

Mr Harvey says Australia’s exportable surplus has contracted significantly over the past 18 months, and “it is only now that the benefit of improving milk supply will start to drive a recovery”.

“In export markets, while demand growth is starting to moderate following a period of robust growth, dairy demand in emerging economies appears to be strong, with robust import purchasing in key deficit regions, including South-East Asia,” he said. 

 

Source: North Queensland Register

 

Lower Milk Prices in 2018?

As America’s dairy farmers look to 2018, they are wondering whether or not higher prices are on the horizon. A massive herd, large domestic supply, falling domestic demand, and a strong dollar all show that prices may slip before they improve. Mike North of Commodity Risk Management says there is a growing supply of product across the board as we enter the time of year when dairy consumption typically drops. North adds, “We’re continuing to make product that’s adding to an already large supply, so there’s a massive collision of increased supply and declining demand.” Scott Brown of the University of Missouri says it is not just domestic oversupply that is causing challenges, but global milk supplies are continuing to increase as well.

The National Milk Producers Federation and the International Dairy Foods Association are looking for creative ways to help stimulate domestic demand for dairy in an attempt to eat through some of the excess supply. “One of the things we’re looking at,” says Michael Dykes of the IDFA, “is can we do something with the Supplemental Nutrition Assistance Program to incentivize dairy consumption.”

 

Source: NAFB News Service

Chicago Mercantile Exchange Dairy markets were mostly up Thursday

For the 2nd consecutive day dairy markets where mostly up Thursday on trading at the Chicago Mercantile Exchange. December Class III milk futures were unchanged at $15.42. January milk was up $.07 at $14.07. February was up $.12 at $13.73. March was up $.07 closing at $13.69. April was up $.09 at $14.01. The rest of the 2018 milk futures were all up or unchanged

Grade AA Butter was up $.005 closing at $2.2075. There were no sales recorded Thursday. Barrels were unchanged at $1.44. Four carloads were traded with three at $1.44 and one at $1.4450. 40-pound blocks were up $.02 to $1.5275. Two carloads of blocks were traded at $1.5175 and $1.5275. Nonfat dry milk was up $.01 closing at $.67. Five carloads were sold ranging from $.67 to $.6725 per pound.

CME Markets show gains on Wednesday

At the Chicago Mercantile Exchange, the Dairy markets made some gains on Wednesday. December Class III milk futures were up $.01 at  $15.42. January milk was up $.06 at $14.00.  February was up $.06 at $13.61.  March was up $.02 closing at $13.62.  April was up $.02 at $13.92.  The rest of the 2018 milk futures were all up a little or unchanged.

Grade AA Butter was up $.0325 closing at $2.2025.  One carload was sold at that price. Barrels were up $.02 to $1.44.  Three carloads were traded ranging from $1.42 to $1.44. 40-pound blocks were also up  $.02 to $1.5075.  Two carloads of blocks were traded at $1.4975 and $1.5075. Nonfat dry milk was up $.01 closing at $.66.  Two carloads were sold for $.6525 and $.66 cents per pound.

Dairy prices wobble through holidays

Cash dairy prices weakened the week before Christmas though cheese and powder regained a little ground at week’s end.

A somewhat bullish Milk Production report may have been partly responsible but traders were also anticipating the November Cold Storage report.

CME block Cheddar fell to $1.4350 per pound last Wednesday, lowest price since March 21, 2017, but jumped a nickel Friday to close at $1.4925, down 3 3/4-cents on the week, down 22 1/4-cents since Nov. 3, and 19 3/4-cents below a year ago when they dropped 11 cents.

The barrels dipped to $1.40 last Wednesday, the lowest price since July 10, 2017, but closed Friday at $1.41, down 25 cents on the week, 14 1/2-cents below a year ago when they dropped 14 1/2-cents, and they reversed the inverted spread to 8 1/2-cents below the blocks. Nine cars of block traded hands last week at the CME and 42 of barrel.

The markets were closed Christmas Day but Tuesday’s trading took the blocks down a penny, to $1.4875, while the barrels were up a penny, to $1.42.

Cheese producers accepted spot milk at marked discounts last week, according to Dairy Market News, ranging $4 to $8 under Class III. Cheese sales remained steady to slow. DMN said there would be some allotted days off during the holidays but plants plan to ramp up cheese production to meet the abundant milk intakes.

Western cheese makers report solid domestic retail and food service demand has generally helped support the cheese market this fall. However, as holiday shipment obligations are fulfilled, there is concern that there may be a lull following the winter holidays, before the football playoffs.

Cash butter finished Friday at $2.18 per pound, down 6 1/2-cents on the week and 6 3/4-cents below a year ago, the first time in almost a year that it fell below a year ago. Seventeen cars found new homes last week.

The butter lost a penny Tuesday, slipping to $2.17, lowest price since $2.13 on May 10, 2017.

DMN says butter sales are on par with previous years. Holiday retail orders are completed, thus food service is now one of the priorities on the production side. Cream has been abundant but the market tone remains somewhat resilient.

The western butter market was steady to weak last week. Contacts report that prices are higher than expected as holiday orders have mostly been fulfilled and butter supplies are plentiful. Some buyers are expecting and waiting for further price decreases so they are limiting purchases to their immediate needs.

Cash Grade A nonfat dry milk set a record low of 64 3/4-cents per pound last Tuesday; however, it closed Friday at 66 1/2-cents, up three quarter-cents on the week but 35 1/2-cents below a year ago, with 17 cars exchanging hands on the week.

The powder gave up a penny and a half Tuesday, falling to 65 cents per pound.

 

Plentiful supply

 

The Agriculture Department’s last Cold Storage report of 2017 shows Nov. 30 butter stocks stood at 158.8 million pounds, down 59.1 million pounds or 27 percent from October and 2.4 million or 1 percent below November 2016.

American type cheese, at 733.2 million pounds, was down 7.2 million pounds or 1 percent from October but 20 million or 3 percent above a year ago. The other cheese category totaled 500.3 million pounds, down 1 percent from October but 13 percent higher than a year ago. The total cheese inventory was down 9.3 million pounds or 1 percent from October but 76 million pounds or 6 percent above a year ago.

FC Stone says the large jump in the “other cheese” category may indicate that we are producing quite a bit more mozzarella and that may have had something to do with the wide barrel/block inversion.

 

Culling nose-dives

 

U.S. dairy cow culling nose-dived in November but was up slightly from November 2016. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 243,700 head were slaughtered under federal inspection, down 17,300 head from October but 500 head above a year ago. Culling in the first 11 months of 2017 totaled 2.74 million head, up 108,000 from a year ago.

 

Class I down

 

The first Federal order Class I base milk price of 2018 was announced by the USDA at $15.44 per hundredweight, down $1.44 from December 2017, $2.01 below January 2017, and equates to about $1.33 per gallon, down from $1.45 in December. It is the lowest Class I price since June 2017

Source: Capital Press

Dairy markets down after Christmas Break

Dairy markets were down Tuesday on the Chicago Mercantile Exchange, with the exception of blocks,

December Class III milk futures were down $.02 at  $15.41. January milk was down $.08 at $13.94.  February was down $.09 at $13.55.  March was down $.07 closing at $13.60.  April was down $.05 at $13.90.  The rest of the 2018 milk futures were all down except for a $.06 gain in September.

Grade AA Butter was down $.01 closing at $2.17.  One carload was sold Tuesday at that price. Barrels were up $.01 closing at $1.42.  Three carloads were traded at that price. 40-pound blocks were down  $.005 to $1.4875.  Eight carloads of blocks were traded, ranging from $1.48 up to $1.4925. Nonfat dry milk was down $.015 closing at $.65.  Four carloads were sold ranging from $.6450 to $.6525.

Cash dairy markets break records

Records were broke in last week’s cash dairy markets. CME block Cheddar fell to $1.4450 per pound on Dec. 12 but then rallied and closed Friday at $1.53, up 5 1/2-cents on the week and reversed six weeks of decline, but was 27 cents below a year ago.

The barrels closed at $1.66, down a penny, 4 cents below a year ago, and 13 cents above the blocks after setting a record inverted spread of 22 1/2-cents last Tuesday. They also set a record single day volume Monday, selling 36 cars, highest since daily trading started Sept. 1, 1998 and surpassed the previous high of 35 loads set June 18, 2010, according to FC Stone. A total of 97 cars were sold last week at the CME and just 7 of block.

The blocks lost 4 cents Monday, as traders anticipated Tuesday morning’s Global Dairy Trade auction and the afternoon’s November Milk Production report. They gave up another 4 cents Tuesday, dipping to $1.45, the lowest block price since March 29, 2017.

The barrels lost 8 cents Monday and plunged a dime Tuesday, to $1.48, lowest barrel since July 27, 2017, but narrowed the spread to 3 cents above the blocks, a spread that typically runs 3-5 cents below the blocks.

Dairy Market News reports that milk remains readily available to Midwestern cheese plants and some cheese producers warned that only heavily discounted milk offers will be considered for the remainder of 2017.

Western cheese output is ongoing as milk is also plentiful. Processors are hesitant to take on additional milk due to the weakness of cheese prices and ample supplies.

Cash butter slipped to $2.19 per pound last Monday, then reversed gears and slowly climbed to $2.26 Thursday, but saw a Friday close at $2.2450, up 2 1/2-cents on the week and 5 1/2-cents above a year ago when it jumped 12 1/2-cents. 40 cars traded hands last week at the CME.

The butter was down 4 1/2-cents Monday but gained a penny Tuesday, inching back to $2.21 per pound.

Central region butter producers report that orders are back in line with expectations following a slow start to the month. Cream remains abundant but the market tone remains resilient.

Western butter makers report that demand is following typical seasonal patterns. Inventories have been drawn down, but cream is becoming less expensive and readily available.

Cash Grade A nonfat dry milk also set a record last week, unfortunately a record low of 65 3/4-cents per pound, down 2 1/2-cents on the week and 36 1/4-cents below a year ago.

The powder inched three-quarter cents lower Monday and a quarter-cent Tuesday, sliding to another record low of 64 3/4-cents per pound.

November milk up

November milk output was up for the 47th consecutive month in the U.S., totaling 16.2 billion pounds in the top 23 states, according to preliminary USDA data, up just 1.1 percent from November 2016. The 50-state total at 17.3 billion pounds, was up 1.0 percent. Revisions lowered the original October 23-state estimate by 27 million pounds, now put at 16.7 billion pounds, up 1.3 percent from a year ago.

Milk cow numbers totaled 8.73 million head in the 23 states, unchanged from October but 57,000 more than a year ago. The 50-state total, at 9.4 million head, was unchanged from October but 53,000 above a year ago. Output per cow averaged 1,861 pounds in the 23 states, up 9 pounds.

California output trailed its year ago data for the 11th consecutive month, down 34 million pounds or 1.1 percent, due to 14,000 fewer cows milked and a 5 pound loss per cow. Wisconsin was up just 0.9 percent, on a 20-pound gain per cow but cow numbers were down 1,000 head from a year ago.

New York edged out Idaho for the No. 3 slot, though output was off 0.3 percent, due to a 20-pound loss per cow. Cow numbers were up 5,000. Idaho was down 0.6 percent on a 15-pound drop per cow and cow numbers were up 100. Pennsylvania was up 2.1 percent, thanks to a 35-pound gain per cow. Cow numbers were unchanged. Minnesota was up 1.5 percent, on a nice 40-pound gain per cow offsetting a 4,000 cow loss.

Michigan was up 2.2 percent on a 20-pound gain per cow and 5,000 more cows. New Mexico was up 2.0 percent on 6,000 more cows and a 5-pound gain per cow. Texas was up 5.9 percent, thanks to 25,000 more cows and a 15-pound gain per cow. Washington state was off 0.8 percent on a 5-pound loss per cow and 1,000 fewer cows. Analysts see the report feeding the bulls.

GDT drops

Hemorrhaging in the Global Dairy Trade auction was back Tuesday, the last GDT of 2017. All products offered suffered losses, with the weighted average plunging 3.9 percent, after inching up 0.4 percent on Dec. 5, reversing a 3.4 percent drop Nov. 21 and 3.5 percent on Nov. 7.

Cheddar led the declines, down 7.9 percent after dropping 3.9 percent Dec. 5. Anhydrous milkfat was down 6.7 percent, after inching 0.6 percent lower last time. Skim milk power was down 4.8 percent, after leading the gains last time with a 4.7 percent uptick. Whole milk powder was down 2.5 percent, following a 1.7 percent gain, and butter fell 2.3 percent after an 11.1 percent meltdown last time.

HighGround Dairy equated the GDT butter price to $2.03 per pound U.S. CME butter closed Tuesday at $2.21. GDT Cheddar cheese equated to $1.54 per pound U.S. and compares to Tuesday’s CME block Cheddar at $1.45. GDT skim milk powder averaged 76 cents per pound and whole milk powder averaged $1.25 per pound U.S. CME Grade A nonfat dry milk price closed Tuesday at 64 3/4-cents per pound.

 

Source: Capital Press

Dairy markets were mostly up Thursday

In Chicago, Thursday dairy markets were mostly up at the CME. December Class III milk futures were unchanged at  $15.44. January milk was up $.17 at $13.97.  February was up $.14 at $13.70.  March was up $.12 closing at $13.75.  The rest of the 2018 milk futures were all slightly up or unchanged.

Grade AA Butter fell down $.015 closing at $2.18.  Two carloads of butter were sold ranging from $2:1775 to $2.18. Barrels were up $.0025 closing at $1.4025.  No barrels were traded Thursday. 40-pound blocks were up $.0075 to $1.4425.   Nonfat dry milk was up fractionally, ending a slide of record low prices.  Prices were up  $.0125 closing at $.66.  Two carloads were sold with one going for $.6550 and the other at $.66.

Dairy markets were ­­­­mostly lower Wednesday

At the Chicago Mercantile Exchange on Wednesday the dairy markets were mostly lower, following decreases in federal order prices for Class I milk as well follow through selling and increased milk production forecasts set by the EU. Class III milk futures for December were unchanged at $15.44 Wednesday. January milk closed $0.13 lower at $13.80. February closed down $0.08 to $13.56. March was down $0.15 at $13.63.

Grade AA Butter closed down $0.0150 at $2.1950. Twenty-one carloads of butter were sold on a range of $2.1925 to $2.22. Barrels were down $0.08 to $1.40. Eleven carloads were sold ranging from $1.42 to $1.4450. 40-pound blocks closed $0.0150 lower at $1.4350. One trade was at $1.42.

For January, the USDA has set the base Class I milk price at $15.44 per hundredweight, down $1.44 from December, with the base Class I skim price at $6.98, down $1.32.

The USDA reports cash butter for the week ending December 16th averaged $2.22 per pounds, $0.01 lower than the previous week. 40 pound blocks of cheddar were pegged at $1.79, $0.0650 lower. 500 pound barrels averaged $1.63, a decrease of $0.03. Dry whey came out at $0.315, up $0.023. Nonfat dry milk averaged $0.727, up $0.003.

Dairy prices tumble to 14-month low, amid signs of buoyant milk output

Dairy prices fell to a 14-month low at GlobalDairyTrade auction, defying strength in whole milk powder futures, as prices felt pressure from raised sales volumes, and buoyant milk output signs.

The GlobalDairyTrade index dropped 3.9% at Tuesday’s auction, the last of 2017, to 935 points, its lowest since October last year.

The decline, which meant the index finished down 13.1% for the year, defied indications from New Zealand’s NZX market of higher prices.

Best-traded whole milk powder futures for March closing earlier on Tuesday at $2,990 a tonne, up 2.7% since the previous GlobalDairyTrade auction, two weeks ago, after a rally spurred by worries over dryness in major producing regions in New Zealand, the top milk-exporting country.

Skim milk, milk fat price tumbles

However, data this week from Dcanz, the New Zealand dairy industry group, revealed domestic milk output up 3.3% last month at 242.6m kilogrammes of milk solids.

Fonterra, the Auckland-based dairy giant which runs GlobalDairyTrade, ahead of Tuesday raised by more than 10,000 tonnes, to 643,000 tonnes, its forecast for product volumes it intended to sell through the event over the next 12 months.

“This change reflects an increase of 6,000 tonnes for skim milk powder and 4,180 tonnes for anhydrous milk fat,” Fonterra said, flagging “strong market demand” for both products.

Nonetheless, skim milk powder prices fell by 4.8% at the auction to a 19-month low, while anhydrous milk fat values by 6.7%.

Prices of whole milk powder, which accounts for the bulk of volumes sold through GDT dipped by 2.5%.

‘Bursting with powder’

Values of anhydrous milk fat remain up 19.1% for 2017 despite Tuesday’s setback – contrasting with a 36% slump in GlobalDairyTrade prices of skim milk powder.

Skim milk powder prices have felt particular pressure from larger-than-expected output in the European Union, the top producer and exporter of the commodity, where production has been supported by a European Commission intervention scheme buying which has created a stocks mountain of some 400,000 tonnes.

The EU’s “substantial” skim milk powder inventories “will continue to weigh on global skim milk powder markets”, the US Department of Agriculture said in a briefing on Friday.

In the US itself, prices of Chicago-traded non-fat dry milk futures have continued to underperform, with December futures last week touching spot 72.63 cents per pound, a record low for a spot contract.

“Warehouses in the US and Europe are bursting with powder, and driers are running hard for the holidays,” the US-based Milk Producers Council said.

‘Continued sharp correction’

Butter values fared a little better at GlobalDairyTrade, in falling by 2.3% to $4,474 a tonne, to leave the commodity with gains of 4.3% for 2017 as a whole.

The relative resilience defied a caution from the USDA that “for 2018, the price outlook points to a continued sharp correction in butter prices,” although the department did add that “strong consumer demand should keep prices from dropping far below $4,000 a tonne”.

Indeed, the USDA said that “given the dismal outlook” for the market for skim milk powder, manufactured as a co-product of butter output, “it appears that processors are unwilling to churn more butter at the risk of carrying burdensome supplies of co-products”.

Source: Agrimoney

Dairy markets were mostly down Tuesday

At the Chicago Mercantile Exchange on Tuesday dairy markets were mostly down. December Class III milk futures finished down $.06 at  $15.44. January milk was down $.12 at $13.93.  February was down $.20 at $13.64.  March was down $.20 closing at $13.78.  The rest of the 2018 milk futures were all down.

Grade AA Butter was up $.01 closing at $2.21.  Nine carloads of butter were sold ranging from $2:19 to $2.21. Barrels were down $.10 closing at $1.48.  Seventeen carloads of barrels traded between $1.48 and $1.5550. 40-pound blocks fell $.04 to $1.45.  One carload of blocks sold at $1.45. Nonfat dry milk fell again, closing down $.0025 at $.6475.  Two carloads were sold with one going for $.65 and the other at $.6450.

Dairy markets down Monday in Chicago

At the Chicago Mercantile Exchange dairy markets continued to fall as the new week of trade began. December Class III milk futures finished unchanged at  $15.50. January milk was down $.35 closing at $14.05.  February was down $.38 at $13.84. March was down $.34 closing at $13.98.  The rest of the 2018 milk futures were all down or unchanged.

Grade AA Butter was down $.045 Monday closing at $2.20.  Six carloads of butter were sold ranging from $2.1925 to $2.2275. The spread between barrels and blocks remains wide, but both went down Monday. Barrels were down $.08 closing at $1.58.  Eleven carloads of barrels traded between $1.5875 and $1.63.

 

New Zealand Stock Exchange to extend dairy derivatives trading session

The New Zealand Stock Exchange (NZX) said on Tuesday it would extend trading by six hours in its dairy derivatives market from July 2018, citing higher global demand.

NZX said it would keep the market open until 10 p.m. (1000 GMT) instead of closing at 4 p.m. (0400 GMT), adding that opening times would remain unchanged.

“The extended market hours will facilitate easier trading between Europe and Asia, two key dairy trading regions,” NZX said in a statement.

NZX’s dairy derivatives volumes have grown 57 percent in the year to date and it has added 208 unique users over the same period, which is up 58 percent from the previous year.

“This extension will also enable key dairy buying regions, such as the Middle East and Africa, greater access to NZX’s dairy derivatives market,” NZX derivatives head Nick Morris said.

NZX said it would collaborate with participants and clearers, as well as software and data vendors in early 2018 on the changes.

Source: KITCO

Low milk prices affect struggling dairy farms in the Valley

Many local dairy farms have been forced out of business in recent years.

A low milk price at the grocery store might seem like a good thing for your wallet, but it can actually hurt local dairy farmers.

Most dairy farmers need $19 per hundred-weight of milk to be profitable.

According to The University of Wisconsin-Madison’s Brian Gould, in 2015, the price was $17.13.

In 2016, it had dropped to $15.97, and in 2017, the price was back up to $17.54.

In 2018, prices are set to be around $14 and lower.

“It was very much a joy to grow up on a family farm,” said Teresa Callender. “I’m the sixth generation on the dairy farm.”

Walkup Holsteins has been in operation for a century.

Due to competitive milk prices in Europe, Canada, and here at home, they’re forced to look at other options.

“We are basically looking at diversifying,” said Callender. “We have tried to control our expenses, and we’ve got them pulled down to the point that we just, we can’t pull them down a whole lot further.”

“We are being more efficient, and more efficient,” said Randy Inman.

Mar-Bil Farm has three generations.

“Our grandkids want to farm,” said Inman.

His daughter Karen, her husband Jason, and their three children also live and work on the farm.

“It’s going to be hard for us to sustain that until they grow up,” said Hewitt.

“We haven’t been replacing equipment,” said Inman. “We need to! You know?”

Simply adding more cows to an operation is not always an option.

“We just don’t have the facilities and, obviously, we can’t expand right here,” said Callender.

“I feel like it’s going to take the government kind of intervening,” said Hewitt.

Some expenses, such as caring for the cows, won’t go away.

“We can’t jeopardize their health and just not do those type of things, so those expenses will always be there,” said Callender.

You can help by trying to purchase locally-produced milk when you shop.

The Rockingham Cooperative is also partnering with the Harrisonburg Baptist Church to purchase cheese made from local milk and donate it to those in need in the area.

 

Source: WHSV 3

Dairy prices were mostly higher Wednesday

At the Chicago Mercantile Exchange, Dairy prices were mostly higher on Wednesday. Class III milk futures for December were up $.01 closing at  $15.61.   January milk was up $.23 closing at $14.50.  February was up $.17 at $14.36.  March was up $.12 closing at $14.45. The rest of the 2018 milk futures were mixed.

Grade AA Butter closed up $.005 at $2.2125.  Three carloads of butter were sold with one selling at $2.2125. Barrels were unchanged at $1.67.  Sales were up again, with 16 carloads of barrels trading at that price. 40-pound blocks closed up $.01 at $1.4550.  One carload of blocks was sold.   Nonfat dry milk has dropped to a new all-time low for the second day in a row, down another $.01 at $.67.  Nine carloads were sold Wednesday, with three of them topping at $.67 a pound.

USDA Drops Milk Production Forcast

USDA’s World Agricultural Supply and Demand Estimates dropped the forecast for milk production in 2017. Trend could continue into 2018.

The milk production forecast is lowered for 2017 on slower growth in milk per cow. The slower growth in milk per cow is expected to carry into 2018 and combined with an expected slower rate of growth in cow numbers, the 2018 milk production forecast is lowered. The 2017 and 2018 fat basis import and export forecasts are unchanged from the previous month. On a skim-solids basis, the 2017 and 2018 export forecasts are raised on higher expected whey exports. No changes are made to 2017 and 2018 skim -solids basis import forecasts.
 
Price forecasts for cheese, butter, and nonfat dry milk are lowered for 2017 on current price weakness and slower demand. The 2017 whey price forecast is unchanged at the midpoint. All dairy product price forecasts are reduced for 2018 on pressure from large stocks and slower expected demand. Class III and Class IV price forecasts are lowered for 2017 and 2018, reflecting the lower product prices. All milk prices are forecast lower at $17.60 to $17.70 per cwt for 2017and $16.65 to $17.45 per cwt for 2018.

USDA’s negative price forecasts pushes markets lower

At the CME on Tuesday the Dairy markets were ­­­­lower in reaction to USDA’s negative price forecasts for 2017 and 2018. Class III milk futures for December were down $.01 closing at $15.60. January milk was down $.07 at $14.27. February closed down $.07 to $14.33. March was down $.07 at $14.33.

Grade AA Butter closed up $.0175 at $2.2075. Twenty-one carloads of butter were sold on a range of $2.1925 to $2.22.

The cash cheese spread ended Tuesday with a fresh all-time high. Barrels were unchanged at $1.67. Nineteen carloads were sold ranging from $1.66 to $1.67.

 

Dairy prices were mostly lower again

At the Chicago Mercantile Exchange on Monday, Dairy prices were mostly lower again. Class III milk futures for December were the exception, up $.01 closing at  $15.61.  All other milk futures through 2018 went down. January milk was down $.04 closing at $14.34.  February was down $.06 at $14.26.  March was down $.10 closing at $14.41.  

Grade AA Butter closed down $.03 at $2.19.  Three carloads of butter were sold with two selling at $2.20. Barrels were unchanged at $1.67.  Sales were up, with 36 carloads of barrels trading between $1.6675 and  $1.6725. 40-pound blocks closed down $.0175 at $1.4575.  Three carloads of blocks were sold ranging from $1.4575 to $1.48.  

 

Dairy prices were mostly down

At the Chicago Mercantile Exchange dairy prices were mostly down on Wednesday trading.   Class III milk futures for December were unchanged at  $15.42. January milk was down $.05 closing at $14.24.  February was down $.06 at $14.25.  March was down $.05 closing at $14.42.  Most of the 2018 milk futures market saw similar losses except for a penny gain in September.

Grade AA Butter closed up $.0250 closing at  $2.225.  Twenty carloads of butter were sold with two topping at $2.225. Barrels were up $.0075 closing at $1.57.  Eight carloads of barrels were sold ranging from $1.5625 to $1.57. 40-pound blocks dropped $.0425 to $1.47.  Nine carloads of blocks were sold ranging from $1.47 to $1.505.   Nonfat dry milk ended the day unchanged at $.7125.  No sales were recorded.

Dairy prices were mostly up Tuesday

At the Chicago Mercantile Exchange dairy prices were mostly up Tuesday with Class III milk futures for December were up $.05 to $15.42. January milk was up $.01 closing at $14.29.  February was down $.03 at $14.31.  March was unchanged at $14.47.  The milk futures market also saw some small gains in April, May, and June. Grade AA Butter closed up $.01 closing at  $2.20.  

November NMPF Dairy Market Report

U.S. Cheddar cheese prices hit a 10-month high in October, while butter prices softened but remained well above $2 a pound. Nonfat dry milk and dry whey prices are showing extended weakness due to deteriorating prices in world markets, which are overhung by excessive stocks of skim milk powder in the European Union (EU).

Against this backdrop of prices, there are some recent signs that overall supply has been gradually heading back toward balance with demand in U.S. domestic dairy markets. These include: (1) year-over-year growth in milk production well below 2 percent, (2) slower growth in cheese production, (3) further reduction in cheese stocks and (4) continued growth in cheese exports.

The Dairy Market Report is produced by the National Milk Producers Federation with support from Dairy Management, Inc.

The report is available on the NMPF web site: http://www.nmpf.org/dairy-market-report

Milk futures were mixed, mostly lower, on long term demand uncertainties

At the Chicago Mercantile Exchange Class III milk futures were mixed, mostly lower, on long term demand uncertainties. Class III milk futures for December were up $.05 to $15.37. January milk was down $.21 closing at $14.28. February was $.22 lower at $14.34. March closed $.16 lower to $14.47. The milk futures markets saw losses for the every since June.

Cash cheese blocks were $.0425 lower at $1.52. Five loads were sold, including two at $1.53 and three at $1.52. Barrels were up $.0150 to $1.55. Eleven loads were sold, ranging from $1.5375 to $1.55. Butter was $.0250 lower at $2.19. Eight loads were sold, ranging from $2.1850 to $2.20. Nonfat dry milk was $.01 lower at $0.71.

Cooperatives Working Together recently announced the acceptance of 20 requests for export assistance from member co-ops, covering 3.351 million pounds of Cheddar, Gouda, and Monterey Jack cheeses, along with 55,116 pounds of butter. The products are headed to Asia, with delivery slated for December 2017 through February 2018.

Exports key to higher U.S. milk prices in 2018

USDA’s milk production report shows October production increased to 1.4% higher than a year ago; September production was 1% higher than a year ago.

“This is a lot of milk considering that last year, milk production was running 2.5% higher than a year ago,” says Bob Cropp, University of Wisconsin Extension dairy economist.

The October increase was the result of 0.7% more cows and just 0.6% more milk per cow.

“Overall the increase in milk production will put some downward pressure on milk prices,” Cropp says.

The September Class III price was $16.36. The normal seasonal increase in dairy product sales helped boost the October Class III price to $16.69.

USDA’s milk production report shows October production increased to 1.4% higher than a year ago; September production was 1% higher than a year ago.

“This is a lot of milk considering that last year, milk production was running 2.5% higher than a year ago,” says Bob Cropp, University of Wisconsin Extension dairy economist.

The October increase was the result of 0.7% more cows and just 0.6% more milk per cow.

“Overall the increase in milk production will put some downward pressure on milk prices,” Cropp says.

The September Class III price was $16.36. The normal seasonal increase in dairy product sales helped boost the October Class III price to $16.69.

“The November Class III is expected to be up slightly to around $16.80,” Cropp says. “But dairy product prices have declined, meaning the December Class III price could fall below $16, to around $15.45.”

Milk prices higher in 2017
That puts the average for 2017 at about $16.15, compared to $14.48 last year – an increase of more than a $1.65.

According to Cropp, the Class III price is driven by the price of butter, cheddar cheese and dry whey. The price of butter on the Chicago Mercantile Exchange averaged $2.65 per pound in August, but declined steadily since then, hitting $2.21 at the end of November. The amount the price declined is a little surprising in that September butter production was 0.3% lower than a year ago and Sept. 30 stocks were 4.5% lower than a year ago. But butterfat exports, which had been running higher than a year ago, fell 16% in September, resulting in year-to-date exports up just 9%. Butterfat exports had been aided by Europe butter being priced higher than U.S. butter on the world market. The price of butter could still fall further, but should stay above $2 per pound.

Cheddar cheese prices were above $1.70 per pound in October and the first two weeks in November. But both cheddar blocks and barrels are now below that mark — barrels are $1.64 and blocks, $1.60. Cheese stocks remain ample, with Sept. 30 American cheese stocks 4.7% higher than a year ago and total cheese stocks 5.7% higher.

Cheese production has been relatively strong, with September production of cheddar cheese 4.5% higher than a year ago and total cheese production 2.7% higher. Domestic cheese sales have been fair. But cheese prices have benefited from higher exports. September cheese exports were 23% higher than a year ago and 24% higher year to date.

According to the U.S. Dairy Export Council, the European Union exported 43% more skim milk powder from January through August compared to the previous year. Canada, with aggressive pricing below both the EU and the U.S., has increased exports of skim milk powder. Canada previously was exporting about 1,000 tons of skim milk powder per month but is now exporting 8,000 to 10,000 tons.

“In addition, Mexico having concerns about the outcome of current NAFTA negotiations has reduced its source of nonfat dry milk imports from the U.S.,” Cropp says. “Mexico last year sourced 94% of its nonfat dry milk from the U.S. This has dropped to 77%, as Mexico is now sourcing from both the EU and Canada. As a result, the price of nonfat dry milk has fallen to $0.715 per pound, a level not seen since early last year.”

USDA and other forecasters have lowered their price forecast for 2018. Both Class III and Class IV futures for 2018 have fallen. Class III futures are in the $14s from January through May and in the $15s for the remainder of the year. Class IV futures start the year below $14, and reach the $14s by March and the $15s by August. If these prices hold true, milk prices in 2018 will average lower than 2017 prices. USDA reports the Class III price in 2018 could average as low as $15.50 and the Class IV price as low as $14.15. But according to Cropp, final milk prices will depend on the level of milk production, domestic sales and exports.

USDA is forecasting an increase in 2018 milk production of 1.8%, from a 0.5% increase in the average number of milk cows and 1.3% more milk per cow. This is a lot of milk, Cropp says, “but if milk prices start the year near current futures market prices, we could see heavier culling of milk cows and a lower increase in milk per cow.”

All eyes on exports
Domestic sales of butter and cheese should continue to be favorable in 2018, Cropp says. But he believes a crucial factor in where milk prices end up will be dairy exports.

“For most of this year, milk production for four major exporters — EU, New Zealand, Argentina and Australia — was lower than the year before. The U.S. was the exception with increased production,” Cropp says. “But milk production has now started to increase in all five exporters, meaning the U.S. will face strong competition for markets in 2018. Unless there is good growth in world demand to absorb this increase in milk production, world dairy product prices will decline.”

China and others are expected to increase their imports, but world prices have already started to decline, which will put pressure on U.S. prices.

“But still, I feel milk prices will end up higher than current futures market prices, particularly for the last half of the year, from a little lower increase in milk production and prices supported by domestic sales and exports,” Cropp concludes.

 

Source: Wallaces Farmer

Too much to digest at dairy markets

Dairy traders had a lot to digest last week and it wasn’t just turkey. The menu also included the October Milk Production, Cold Storage and Slaughter reports, plus the Global Dairy Trade auction.

They closed the Thanksgiving-holiday shortened week with CME block Cheddar at $1.61 per pound, down a penny on the week and 25 cents below a year ago.

The barrels finished at $1.6750, up 4 3/4-cents, 1 1/2-cents below a year ago, and an inverted 6 1/2-cents above the blocks.

The blocks fell 6 cents Monday only to get it back Tuesday, returning to $1.61.

The barrels rolled 8 1/2-cents lower Monday and lost a nickel Tuesday, plunging to $1.54, the lowest price since Sept. 21, with 13 cars selling Monday and 14 more on Tuesday.

Cheesemakers in the Midwest were receiving spot milk offers early last week and expected them to continue through Wednesday, according to Dairy Market News, and spot milk prices range from flat market to $5 under class. Cheese inventories vary but are generally “fairly long.” Cheese orders have been steady to slow, with some contacts suggesting that buyers are waiting for steadying market prices.

Western cheesemakers report steady production and plenty of milk available, says DMN. “Demand is stable, but not as robust as previous years. Interest from foreign buyers has picked up as prices have eased on market exchanges” and “exports may play a critical role in maintaining comfortable cheese stocks entering into 2018.”

Cash butter closed last Wednesday at $2.2225 per pound, up three-quarter cents on the week and 17 1/2-cents above a year ago, with 22 cars exchanging hands.

The October Cold Storage report butter data didn’t seem to matter Monday as the butter lost a penny and a half and melted down another 2 1/4-cents Tuesday, to $2.1850.

Central region butter makers reported active production schedules Thanksgiving Week, as cream was readily accessible and “finding its way into Midwestern butter plants from regions across the country,” according to DMN. “Butter sales remain strong late into the busy season, and the butter market tone is holding somewhat steady.”

Western processors also have enough cream for churning. Holiday demand is “solid and drawing down butter inventories,” but supplies remain plentiful. Retail stores have increased butter promotions. International market competition between the EU and the USA for market share is increasing, says DMN.

Cash Grade A nonfat dry milk dipped to 70 1/2-cents per pound Tuesday, lowest price since April 2016, but finished Wednesday at 71 1/4-cents, down 1 1/4-cents on the week and 19 1/4-cents below a year ago. Only two cars sold on the week.

Monday took the powder up three-quarters and added a penny Tuesday, creeping back to 73 cents per pound.

Class I up

The Agriculture Department announced the final Class I base milk price of 2017 at $16.88 per hundredweight, up 47 cents from November and even with December 2016.

It is the highest Class I since March 2017 and equates to $1.45 per gallon. The year’s average is $16.45, up from $14.80 in 2016 and $16.34 in 2015.

Cold storage

Americans continue to chow down butter and cheese supplies. The USDA’s latest Cold Storage report put Nov. 30 butter stocks at 219.75 million pounds, down 36 million or 14 percent from September and 8.4 million pounds or 4 percent below 2016. The September estimate was revised 1.1 million pounds lower.

American type cheese, at 739.3 million pounds, was down 41.2 million pounds or 5.0 percent from September and only 3.3 million pounds above, virtually unchanged, from a year ago. The “other” cheese category showed stocks of 504.2 million pounds, up 2 million pounds from September and 42.3 million or 9 percent above a year ago.

The total cheese inventory stood at 1.27 billion pounds, down 40.2 million pounds or 3 percent from September but 45.5 million or 4.0 percent above a year ago. Revisions added 2.7 million pounds of American cheese to September’s total, 1.8 million pounds to the other cheese total, and 2.5 million pounds to the total cheese estimate. Pundits viewed the report as bullish on cheese and neutral on butter.

Culling jumps

Rising milk output and falling prices are pushing more dairy cows into retirement. U.S. dairy cow culling reversed gears in October and was up from September and October 2016. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 261,000 head were slaughtered under federal inspection, up 11,400 head from September and 23,800 head above a year ago.

Culling in the first 10 months of 2017 totaled 2.497 million head, up 108,000 from the same period a year ago.

 

Source: Capital Press

Milk and butter prices up, cheese steady

On Thursday at the Chicago Mercantile Exchange, milk and butter prices closed up again, and cheese held steady. Class III milk futures for December were up $.12 to $15.37. January milk went up $.21 closing at $14.68.  February was up $.19 at $14.71.  March was up $.17 to $14.74.  Thursday was the third straight day where milk prices for later in 2018 were either up or unchanged. Grade AA Butter closed up $.0075 at $2.2125.  Six carloads of butter were sold with one topping at $2.2125. Barrels were unchanged at $1.51.  

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