Most mid-May CME dairy prices climbed higher, as traders absorbed last Tuesday’s Global Dairy Trade auction and awaited Friday afternoon’s April Milk Production report and Monday’s April Cold Storage data.
Buoyed in part by the GDT, CME butter shot up to $2.43 per pound Tuesday, highest price since Dec. 9, 2015, only to ease back Wednesday, regain some ground Thursday, then slip Friday, finishing at $2.3750, up 11 1/4-cents on the week after jumping 15 1/2-cents the previous week, and is 30 1/2-cents above a year ago.
The butter eased back 1 1/4-cents Monday and held there Tuesday, at $2.3625.
Butter production is active in the Central region, reports Dairy Market News, and some were taking discounted cream from the Southwest. Better-than-expected retail sales are reported; others report a seasonal slowdown. “Global tightness on milk fat has some buyers purchasing butter ahead of an increasing export demand.”
Western butter output is generally steady but larger pulls of cream from ice cream manufacturers are allowing butter makers to ease output.
The cheddar blocks hit $1.67 per pound Tuesday, then slipped back, recovered, and closed Friday at $1.67, up 3 1/2-cents on the week, 35 1/2-cents above a year ago, and the highest price since Feb. 6, 2017.
The barrels finished at $1.47, down 6 cents on the week but 11 1/2-cents above a year ago.
The blocks lost 2 cents Monday and a half-cent Tuesday, slipping to $1.6450. The barrels gained a penny Monday but gave back three-quarters Tuesday, and were at $1.4725, a still-too-high 17 1/4-cents below the blocks.
FC Stone says they continue to hear of better cheese demand, in particular from food service. “This combined with short-term tightness of 30-day or fresher block cheese is why we have a big block-barrel spread,” wrote broker Dave Kurzawski, who also asks, “Why are U.S. spot prices able to rise during one of the greatest cheddar cheese builds in U.S. history?” Like a broken record, DMN reports there is no shortage of milk for cheesemakers in the Midwest.
Western output remains at or near capacity. The grilling season has begun and domestic retail demand is steady but some feel price increases could choke off export opportunities.
Cash Grade A nonfat dry milk ended the week at 91 1/2-cents per pound, 5 1/4-cents higher than the previous week and 10 cents above a year ago.
Powder was up a penny Monday and a half-cent Tuesday, reaching 93 cents, highest price since Feb. 9, 2017.
Milk output up
Preliminary data pegs April milk output in the top 23 producing states at 17.2 billion pounds, up 2.0 percent from April 2016. The 50-state total is 18.3 billion pounds, also up 2.0 percent. The most bearish part is cow numbers, up for the seventh consecutive month, totaling 9.39 million head in the 50 states and 8.72 million in the 23 states, 8,000 more than March and 81,000 more than a year ago. Output per cow was above the prior year for the 18th consecutive month, averaging 1,967 pounds, up 20 pounds from a year ago.
California output was below a year ago for the fourth month in a row, off 1.1 percent, on a 10-pound loss per cow and 11,000 fewer cows. Wisconsin was only up 0.6 percent. Output per cow was only up 10 pounds and cow numbers were up 1,000 head.
Texas again showed the biggest gain, up 12.8 percent, thanks to 45,000 more cows and 55 pounds more per cow. New Mexico was up 7.5 percent, on a 40-pound gain per cow and 17,000 more cows.
Gains in milk per cow were not as great as some expected but still evidence that producers know how to get more blood out of a turnip.
Arizona saw a 40-pound gain per cow and 4,000 more cows push the state’s output 3.8 percent higher than a year ago. Michigan cows produced 50 pounds more each and there were 8,000 more of them to move the state up 4.2 percent.
Minnesota saw a 40-pound gain per cow and, while cow numbers were down 1,000, overall output was up 2 percent. New York was up 3.6 percent, on a 65-pound gain per cow and 3,000 more cows. Pennsylvania was up 2.5 percent, thanks to a 60-pound gain per cow outweighing a loss of 5,000 cows.
Idaho found itself in the negative column, output per cow was off 30 pounds and even though cow numbers were up 5,000, the state’s overall output was down 0.7 percent. Washington state’s output per cow was off 30 pounds, cow numbers were down 3,000, and total output was down 2.5 percent.
Lots of cheese
U.S. cheese stocks are climbing. USDA’s April Cold Storage report shows American stocks at 835.1 million pounds, up 32.7 million pounds, or 4 percent, from March and 101 million pounds, or 14 percent, above a year ago. The total cheese inventory hit 1.33 billion pounds, up 42 million, or 3 percent, from March and 125.3 million, or 10 percent, above a year ago.
The butter inventory stood at 292.3 million pounds, up 19.8 million pounds, or 7 percent, from March but 3.5 million, or 1 percent, below April 2016, first time inventory fell below a year ago in 25 months.
Source: Capital Press
