September 5, 2017 at 3:32 p.m.

Happy June dairy month

By Lee Mielke- | Comments: 0 | Leave a comment

June Dairy Month starts in positive territory, pricewise, though well below a year ago. The Agriculture Department announced the May Federal order Class III benchmark milk price at $16.19 per hundredweight (cwt.), up 38 cents from April but $6.38 below May 2014, $1.56 above California's comparable 4b cheese milk price, and equates to about $1.39 per gallon, up from $1.36 last month. The five-month Class III price average stands at $15.84, down from $22.94 at this time a year ago and compares to $17.69 in 2013.
Class III futures portend more climb to come. The June contract was trading late Friday morning at $16.68. July was at $16.88; August, $17.03; September, $17.20; October, $17.22; November, $17.28; and December, $17.15. That would put the year's average at $16.55, down from $22.34 in 2014 and $17.99 in 2013.
The May Class IV price is $13.91, up 40 cents from April but $8.74 below a year ago. The five-month Class IV average stands at $13.65, down from $23.08 in 2014 and compares to $18.02 in 2013.
California's May Class 4b cheese milk price was announced by the California Department of Food and Agriculture at $14.63 per cwt., up 41 cents from April but $4.71 below May 2014, and $1.56 below the Federal order Class III price. The Class III has averaged $1.77 per cwt. above the California 4b price so far this year, down from an average of $2.01 a year ago. The five month 4b average stands at $14.07, down from $20.94 a year ago and compares to $16.08 in 2013.
The Class 4a butter-powder price reversed two months of decline and is at $13.91, up 55 cents from April but $8.66 below a year ago. The 4a average, at $13.45, is down from $22.89 a year ago and compares to $17.84 in 2013.
There wasn't much encouragement in this week's Global Dairy Trade (GDT) auction which saw the weighted average for all products offered drop 4.3 percent, following a 2.2 percent decline in the May 19 event, and a 3.5 percent decline May 5. This is the sixth consecutive session of loss.
All products offers were down, led by butter, down 10.0 percent, following a 3.2 percent decline in the last event. Anhydrous milkfat was next, down 7.4 percent, following a 4.8 percent decline last time. Buttermilk powder down 7.0 percent, following a 3.2 percent gain last time, lactose was down 6.9 percent, after a 0.9 percent gain last time. Rennet casein was off 4.4 percent, after inching 0.4 percent lower last time. Whole milk powder was down 3.1 percent, following a decline of 0.5 percent in the last event. Skim milk powder rounded out the declines, off 1.3 percent after a 3.6 percent decline last time. No cheese was offered this week.
FC Stone reports the average GDT butter price Tuesday equated to about $1.1882 per pound U.S., down from $1.3205 per pound in the May 19 event ($1.1592/lb. on 80% butterfat, down from $1.2883/lb.). Contrast that to CME butter which was at $2.0050 on Monday but closed Friday at $1.90 per pound. GDT skim milk powder, at 89.92 cents per pound U.S., is down from 90.36 cents per pound, and the whole milk powder average at $1.0473 per pound U.S., compares to $1.0841in the last event. CME Grade A nonfat dry milk price closed Friday at 88 cents per pound.
Regarding the absence of cheese this week, FC Stone dairy broker Dave Kurzawski says "The one thing that seems safe to say is that the Cheddar auction is not bullish. The question is: is it bearish or just quiet? I side with the latter." He says "Reduced volume offerings during the slow milk production time are not unusual. I would think offers on Cheddar also light this time of year in part because of a push to make more mozzarella. Moreover, Cheddar demand is likely going towards European product due to price discounts there."
HighGround Dairy's Eric Meyer warned in his latest New Zealand Dairy Report that "Too much milk is still a concern across the globe and therefore difficult to justify dairy commodity prices rising in the coming months.
Taking a long-term view, it is likely that global dairy consumption growth rates will exceed production over the next six months creating a more balanced market. Exactly how long it takes for markets to come back to equilibrium will depend on the extent of which stocks have built throughout the supply chain."
In other global trade news; National Milk Producers Federation (NMPF) President and CEO, Jim Mulhern took on the global "food fight" in his monthly editorial, stating that "NMPF, the U.S. Dairy Export Council, and the Consortium for Common Food Names have been sounding the alarm bells for several years about how the European Union and it's mainly just a subset of food companies and countries within Europe want to restrict trade by monopolizing common foods names for their exclusive use."
He said he spent a week in May traveling to Brussels, Berlin and Dublin to "deliver the message to a variety of EU policymakers and dairy stakeholders that these efforts to bastardize the concept of geographic indicators are indeed a very bad thing. If pursued by the EU's trade negotiators, this effort will doom the prospects for a U.S.-EU Transatlantic Trade and Investment Partnership. This blatantly anti-competitive approach is something that America's policymakers just won't swallow.
Another important message to make clear was that, from the U.S. perspective, some use of geographic indicators can be moderation," Mulhern wrote. "But the legitimate use of compound names is very different than restricting the use of common, generic names, including parmesan, feta, asiago and havarti, just four examples where the EU has been fighting hard to monopolize these names for some member states (even though feta and havarti do not refer to any city or region in the world, let alone a region of Europe). You can read Mulhern's entire editorial at
Meanwhile; Cooperatives Working Together (CWT) accepted six requests for export assistance this week from Maryland & Virginia Milk Producers, Northwest Dairy Association (Darigold) and Upstate Niagara/O-AT-KA who have contracts to sell 3.702 million pounds of Cheddar, and Monterey Jack cheese, and 110,231 pounds of butter to customers in Asia and the Middle East.
The product has been contracted for delivery through November 2015 and put CWT's 2015 cheese exports at 35.18 million pounds plus 26.59 million pounds of butter, and 20.1 million pounds of whole milk powder to twenty eight countries.
The "global chickens may be coming home to roost." The CME block Cheddar, after climbing to $1.77 per pound Tuesday, highest price since November 20, 2014, backed down, likely due to this week's overall GDT downfall, and closed the first Friday of June at $1.7150 per pound, still 2 cents higher than the previous week and the fifth consecutive week of gain, but 33 1/2-cents shy of a year ago. The barrels closed at $1.6425, down 2 3/4-cents on the week, 32 1/2-cents below a year ago, and a higher than normal 7 1/4-cents below the blocks. Six cars of block traded hands on the week and 29 of barrel. The lagging NDPSR-surveyed U.S. average block price hit $1.6421, up 0.8 cent. The barrels averaged $1.6662 per pound, down 0.5 cent.
Cash butter, after jumping 13 1/2 cents last week and hitting $2.0050 per pound, revered gears quickly on Tuesday and closed Friday at $1.90 per pound, down 10 1/2-cents on the week and 32 1/4-cents below a year ago. Only two cars traded hands on the week. NDPSR butter averaged $1.9110, down 5.6 cents.
Butter has seen ups and downs of late but, where is the volatility coming from? The May 29 Dairy and Food Market Analyst says "It starts in the countryside. We've heard two distinct opinions emerge over the last several weeks. One camp believes the butter market is/will-be oversupplied and is predicting a significant price correction lower. The other side believes the market is headed for déjà vu; a 2014-like butter price run higher. Notably, we have not heard anyone say that the spot butter price should stay at these levels."
Grade A nonfat dry milk saw slippage as well, closing at 88 cents per pound, down 2 3/4-cents on the week and 98 cents below a year ago. Eight cars traded hands this week at the CME. NDPSR powder averaged 94.06 cents per pound, down 0.8 cent, and dry whey averaged 43.49 cents per pound, down 0.5 cent.
Dairy industry woes continue on the fluid side of consumption. March 2015 packaged fluid milk sales totaled 4.2 billion lbs., down 1.7 percent from March 2014, according to USDA's Dairy Market News.
March sales of conventional products totaled 4.0 billion pounds, down 1.8 percent from a year ago; organic products, at 211 million pounds, were down 0.8 percent. Organic represented about 5.0 percent of total sales for the month.
Looking, January-March, total packaged fluid milk sales, at 12.6 billion pounds, were down 2.2 percent from the same period a year earlier. Year-to-date sales of conventional products, at 12.0 billion pounds, were down 2.2 percent; organic products, at 619 million, were down 0.7 percent. Organic represented about 4.9 percent of total fluid milk sales in the first four months of 2015.
USDA released February data as well, and reported that February fluid sales totaled 3.96 billion pounds, down 2.0 percent from February 2014. Conventional fluid products totaled 3.8 billion pounds, down 2.2 percent; organic products, at 199 million, were up 1.8 percent. Organic represented about 5.0 percent of total sales for February. The figures represent consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the U.S.
One note of interest, Dairy Herd Management's, Dave Natzke, points out that "through the first quarter of 2015, whole milk seems to be coming back into favor: Both conventional and organic whole milk sales were up from a year ago."
You'll recall that April 2015 milk production totaled 16.6 billion pounds, according to USDA's preliminary data, up 1.7 percent compared to April 2014. USDA's latest Dairy Products report issued Wednesday shows where the milk went.
April butter production totaled 165 million pounds, up 0.3 percent from March but down 1.7 percent from April 2014. April was the fourth month in a row where output was below that of a year ago.
American type cheese, at 389 million pounds, was down 0.3 percent from March but 2.3 percent above a year ago. Italian type cheese output totaled 428 million pounds, down 2.1 percent from March but 2.5 percent above a year ago. Total cheese production amounted to 979 million pounds in April, down 1.7 percent from March but 1.9 percent above a year ago.
Nonfat dry milk output totaled 181 million pounds, up 0.8 percent from March and 13.1 percent above a year ago.
The report also shows nonfat dry milk stocks at 248.6 million pounds, as of April 30, down 1.0 percent from March but 3.7 percent above those a year ago. HighGround Dairy's Eric Meyer points out that, while the stocks are lower versus March, they're still near all time highs.
The 261 dairy producers who selected the highest coverage level of $8 per cwt. will receive a payment for the second coverage period of the new Margin Protection Program for dairy, according to the May 29 Daily Dairy Report (DDR).
"Based on data recently released in USDA's Agricultural Prices report, the margin for the March-April period was $7.50 per cwt.," the DDR states. "This translates into a payment of nearly 49.5 cents per cwt. for the producers who selected the maximum protection level. This is about 2 cents higher than the premium cost for producers covering less than 4 million pounds of milk. On average, the 261 producers will pocket $1,847 minus a 7.3 percent federal sequestration deduction."[[In-content Ad]]


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