September 5, 2017 at 3:32 p.m.
Cheese imports down significantly
It's the highest November price in four years and put the 2011 average at $18.33, up from $14.46 at this time a year ago and a disastrous $11.03 in 2009. But Class III futures late Friday morning portended a decline in December, to $18.61. Looking to First Quarter 2012; the January contract was trading at $17.29, February $17.15, March $17.09, and April $16.95.
The November Class IV price is $17.87 per hundredweight, down 54 cents from October but $4.62 above a year ago.
The NASS-surveyed cheese price averaged $1.8415 per pound, up 9.4 cents from October. Butter averaged $1.7824, down fractionally. Nonfat dry milk averaged $1.4522, down 5.9 cents, and dry whey averaged 63.8 cents, up 2.3 cents.
California's 4b cheese milk price is $17.19, up $1.41 from October, and $4.05 above a year ago. The 2011 4b average now stands at $16.48, up from $13.25 a year ago. The 4a butter-powder price is $17.70, down 59 cents from October, but $1.36 above a year ago. The 2011 average is now $19.02, up from $14.82 in 2010. FC Stone dairy broker Borris Maslovsky warned in his December 5 eDairy Insider Opening Bell that "Cheese buyers are still out there but the holiday buying season is winding down." eDairy economist Bill Brooks added that "dwindling margins for butter and powder plants have probably shifted some milk into cheese vats." "Butter demand is likely filling pipelines following holiday buying," he said. "Butter has to be in distribution centers by now or on its way to stores."
The Agriculture Department's Dairy Market News said that "Cheese interest is light though lower prices may stimulate extra late year promotions." It reported that a number of packagers needed overtime, some just to make up for the holiday reduced schedules last week. Process interest is about steady at lighter seasonal levels. Cheese production was heavier over the Thanksgiving weekend and back to regular schedules following. Cheese yields remain at solid seasonal levels, according to USDA.
Dairy analyst Jerry Dryer gave some insight into the butter situation in his December 2 Dairy and Food Market Analyst newsletter, stating; "Tis the season for the butter price to plunge; however, one or more manufacturers and/or marketers aren't ready to let it plunge. They want to protect inventory values, selling prices or both until all holiday orders are filled."
Dryer added that "two manufacturers reportedly had a supply agreement or have a supply agreement that is about to expire, so the buyer or the seller or both needed to come to the market and thirdly cream supplies may be just tight enough to put the squeeze on the available butter supply and force some to scramble for enough last minute butter to fill holiday orders."
He warned that "the butter price is about to correct lower. Holiday orders will be shipped within the next week to 10 days," but added a couple other thoughts. One, October butter production was at a record high 146 million pounds or 20 percent more than any previous October in recent history.
But, he also points out that October 31 butter Inventories stood at 130 million pounds versus a five year average of 160 million and international buyers are kicking tires and will likely place orders once the U.S butter price gets to $1.50 or less. Commercial disappearance of butter has been very strong, he said.
Butter movement remained robust in third quarter, according to Levitt. Commercial use was up 12.2 percent, "helping to clear very heavy production volumes." Disappearance was up almost 10 percent in the first three quarters of the year, according to USDA, and manufacturers were successful in moving powder in the third quarter:
USDA confirms that, reporting that dairy product commercial disappearance in the first nine months of 2011 totaled 147.4 billion pounds, up 1.1 percent from the same period in 2010. Butter was up 9.9 percent; American cheese, up 0.6 percent; other cheese was up 4 1/2 percent; nonfat dry milk, down 3.4 percent; and fluid milk products, were off 1 1/2 percent.
FC Stone dairy economist Bill Brooks said in Tuesday's DairyLine that October butter output was the highest since records were kept and he's a bit surprised that the price hasn't fallen much considering the huge volume that was traded the week of November 28. He warned however, if the price breaks below $1.60, it could be the straw that breaks the camel's back.
He sees cheese prices dipping to $1.60 or so as well and reminds us that we started 2011 in the $1.30s but saw the $2 level maintained for some time. He also pointed to the growing milk supply across the Southern Hemisphere and said "that's not real positive given our economic situation we have out there across the world that we're going to be able to use up all that at these current price levels and it could very well be that we'll have to push those prices down a little bit further to move the product."
Looking "back to the futures;" the Class III average for the first six months of 2012 stood at $16.63 on November 4, $16.72 on November 11, $16.78 on November 18 and $17.16 on December 2.
Many manufacturing plants operated on heavier schedules over the long holiday weekend though the volume was lighter than expected in the Northeast, according to USDA. Fluid use returned to normal levels after the weekend.
"Most areas of the country are seeing normal seasonal increases in milk," USDA reported. "Larger volumes of cream were churned over the holiday weekend while many other cream users were closed."
The global dairy auction was held on December 6 and prices were up, according to the CME's Daily Dairy Report. The trade weighted index was up 2.6 percent from the November 15 auction. The weighted average price for skim milk powder was $1.55 per pound, up 2.6 percent; whole milk powder was $1.65 per pound, up 2 percent; anhydrous milkfat was $1.82 per pound, up 12 percent and the highest since early September. The Cheddar cheese price was up 2.1 percent, to $1.62 per pound.
"International prices are still much weaker than domestic prices," according to FC Stone dairy broker Derek Nelson, and "World prices are still playing catch-up with U.S. prices." Broker Boris Maslovsky adds that "International dairy markets appear to have stabilized but U.S. prices are still at a premium to world prices. Typically international prices are higher," he said, and warned "We could see the traditional spread between world and U.S. dairy prices slowly reestablish itself."
Bill Van Dam, of California's Alliance of Western Milk Producers, says he has followed this auction since its inception with regard to skim milk powder and for the past two months the sale of it by DairyAmerica. He wrote in his weekly newsletter that "It is becoming clear that the whole range of products sold at those auctions have become a critical piece of information in establishing the value of the various products in the world market."
He also reported that Murray Goulburn, a cooperative that handles about 32 percent of the Australian milk supply, will be the first to offer lactose products at the auction. Lactose has become a valuable product in which there is a great deal of interest, Van Dam said. "The U.S. exports over 50 percent of the lactose made in this country and interestingly New Zealand is our most important customer." Murray Goulburn will offer products for the first time in April 2012 and that is the only products they will offer, according to Van Dam.
Meanwhile; National Milk's Third Quarter Import Watch shows dairy product imports continue a downward trend. NMPF's Jim Tillison said in Thursday's DairyLine that the imports they monitor have dropped 49 percent since 2005 and he pointed out that it's the high value products that are dropping off the most.
Cheese imports are down significantly, according to Tillison, but "reflects the strong demand for cheese outside the U.S." "The world middle class is growing," he said, "And as a result, there's a growing demand for dairy products offshore so the U.S. is no longer the place to dump dairy products. There's markets overseas and is why the CWT program is focusing its efforts on exports."
Butter imports are mixed, according to the Import Watch. Tillison said there was a big drop in butter substitutes, such as anhydrous milkfat, most of which was coming from Canada. Almost none was imported in the Third Quarter, he said.
"We're seeing a continuing shift away from imports toward products that are produced domestically and toward the world export market," Tillison charged.
On the other hand imports of casein are up from a year ago and appear to jump when the milk price rises. When the nonfat dry milk price goes up imports of casein go up as well and Tillison believes that's tied to the fact that casein can be a substitute in certain uses for nonfat dry milk powder.
Milk protein concentrate imports are down and isn't the "bug-a-boo" that some people think it is, according to Tillison. MPC imports are running about average to what they've been running, he concluded. " We're not seeing big increases in MPC, the big jump in milk protein imports is in casein."
Speaking of the CWT; the farmer-funded group accepted 13 requests for export assistance this week from Dairy Farmers of America and Darigold to sell a total of 3.2 million pounds of Cheddar and Gouda cheese to customers in Asia, Central America, the Middle East, and North Africa. The product will be delivered through May and raises CWT's 2011 cheese exports to 91.5 million pounds.
The International Dairy Foods Association (IDFA) has issued its annual Dairy Facts book. Vivian Godfrey talked about it in Wednesday's DairyLine and pointed out that the Milk Processor Education Program (MilkPEP) relies a great deal on gathering research about dairy trends and about Americans eating and drinking habits.
IDFA's Chief Economist Bob Yonkers has culled information from government and private market research sources to provide a summary of the overall health of the U.S. dairy industry, she said, and "There is some very good news."
U.S. farm milk production reached a record 192.8 billion pounds in 2010. And during the same period, U.S. exports of dairy products increased by 38.9 percent in volume with a 65 percent increase in value over 2009. She added that per person consumption of natural cheeses achieved a record high in 2010, reaching 33.29 pounds, which surpassed the previous record set in 2007.
On a less positive note the long-term trend of declining sales of packaged fluid milk products continued but MilkPEP still sees good opportunities ahead and is using research to fight aggressively to increase fluid milk consumption.
For example, MilkPEP's independent research shows that from breakfast to dinner, milk consumption at home represents close to 70 percent of all domestic milk consumption, with 2.7 billion gallons of milk being consumed at breakfast alone. Our data also shows that milk added to foods and beverages makes up about 40 percent of total fluid milk volume.
Another revelation from the study is that many Americans stop drinking milk in their teenage years. We have discovered through research a great opportunity to bring lapsed adults back to drinking milk by suggesting that they drink chocolate milk as a refuel beverage after exercise. There is strong scientific evidence from research with athletes that chocolate milk is the ideal recovery beverage if consumed within two hours of vigorous exercise.[[In-content Ad]]
To Submit an Event Sign in first
No calendar events have been scheduled for today.