The October Federal order Class III benchmark milk price hit a five year high this week at $18.72 per hundredweight, up 41 cents from September, $3.19 above October 2018, and the highest Class III since November 2014. It equates to about $1.61 per gallon, up from $1.57 in September and $1.34 a year ago.
    It is $3.29 above California’s October 2018 4b cheese milk price. The nation’s largest milk producing state marked the one year anniversary of entering the Federal order Milk Marketing Order system on November 1.
    Late Friday morning Class III futures portended a November price at $20.18 before heading to $19.60 in December. The 2020 peak was $18.07 in January.
    The 2019 Class III average stands at $16.37, up from $14.72 at this time a year ago and $16.18 in 2017.
    The October Class IV price is $16.39, up 4 cents from September and $1.38 above a year ago. The 2019 average stands at $16.23, up from $14.06 a year ago and $15.44 in 2017.
    Most cash dairy prices ended October strong. Block Cheddar climbed to $2.1750 per pound the day after Halloween but closed Friday at $2.1550, up 3.25 cents on the week, after gaining 15.5 cents the previous week, and is 69.75 cents above a year ago.
    The Cheddar barrels closed at $2.3250, up 7.5 cents on the week on unfilled bids, after pole vaulting 25 cents the previous week, are 98.5 cents above a year ago, and the highest they have been since September 25, 2014. They’re also an inverted 17 cents above the blocks. 24 cars of block traded hands on the week and 69 on the month, up from 63 in September. No barrel was sold this week but 66 cars sold on the month, down from 80 in September.
    Speaking of Halloween, the Oct. 31 Daily Dairy Report states that pizza is a key driver in cheese consumption and a study conducted by Under Armor’s MyFitnessPal indicates that Halloween may surpass Super Bowl as the biggest pizza consumption day of the year. Who would have thought?
    Central cheesemakers continue to report steady, somewhat tight milk supplies, according to Dairy Market News. Spot milk markets were quiet early in the week, as prices continue to fall in the $1-over Class area. Cheese production is still slightly slower than this time in recent years. Cheese demand is good for short term needs. Barrel makers continue to report mostly bullish demand and some process cheese manufacturers say they are oversold week to week. Cheese market tones are “bullish,” says DMN, but cheesemakers are concerned about how bullish. They say $2+ cheese is “creating a short-term or necessity-based purchasing environment. Buyers are not looking for anything longer term.”  
    The CME barrel pricing topping the blocks was a surprise to many, according to DMN, and contacts credit a tightness of barrels. Increased governmental cheese purchases seem to be helping that trend. Demands for the holiday are surfacing “bit by bit,” says DMN, but domestic sales out west were close to the previous week’s levels. Export sales have improved slightly. Inventory is sufficient and cheese output is active, prompted by a stable to increasing milk supply.
    CME butter closed Friday at $2.08 per pound, up 2 cents on the week but 22 cents below a year ago. 29 cars traded hands on the week, 115 on the month, up from 102 in September.
    FC Stone reported in its Oct. 28 Early Morning Update that “Eurostat keeps revising up European Union butter production data. Each state submits data on their own schedule, so data drips in, along with revisions to historical data, but presently the data looks like EU butter stocks will be up 20% by year end.”
    DMN says there was concern that cream availability for churning could dwindle as Class II and Class III producers took more cream for holiday-related items but butter makers say that was not the case this week. Bulk butter supplies are generally available and market tones are “maintaining a steadiness that market participants are accustomed to.” Some analysts expect to see a sub-$2 price point prior to seeing $2.25 again. Others expect continued steadiness, explaining that with Thanksgiving falling later this year, Nov. 28, it will assist the market later into the season.
    Western retail butter sales are seasonally strong but bulk demand is mixed. Cream is adequate for most processing and butter production is steady. Butter stocks are getting pulled lower but the latest cold storage report did not match the typical expectation of a large decrease for the month. A few butter purveyors are unloading butter on the CME, an occurrence that some contacts say is unusual for this time of year. Some feel the market signals bestow a bearish tone and the strength of retail sales the next few weeks may be the true determinant of direction for the butter.
    Grade A nonfat dry milk saw a Friday finish at $1.1825 per pound, 3 cents higher on the week, highest since Feb. 18, 2015, and 28.25 cents above a year ago. 16 cars sold on the week, with 60 for the month, up from 49 in September.
    CME dry whey fell to 26.75 cents per pound Tuesday, lowest since March 13, 2018, but it closed Friday at 28.25 cents, unchanged on the week but 16.25 cents below a year ago. Product continues to make its way to Chicago, with 48 loads traded this week and 305 on the month, up from just 50 in September.
    Chinese milk equivalent imports for September were very close to forecast, according to FC Stone, up 1.7% from last year, but FC Stone predicted; “The growth rate for October should pick up quite a bit (into the 5-10% range). Food-type imports are still doing pretty good, but feed-type items, especially lactose, are holding back total milk equivalent imports.”
    “Milk equivalent imports aren’t growing like they were in 2013/2014. First quarter 2014 total milk equivalent imports were up 43% with feed up 14% and food-type products up 52% (on top of 25% growth in first quarter 2013,” says FC Stone.
    Cheese imports were down 58.7% from August and down 2.9% from September 2018. Butter imports were down 56.3% from August and 7.4% below a year ago. Combined whole milk and skim milk powder imports were down 25.4% from August but were up 25% from a year ago. Whey imports were off 9.7% from August and 12.6% below a year ago.
    Whey purchases have been impacted by the African Swine Fever, a highly contagious disease that is spreading through Southeast Asian and is now costing the Philippine hog industry nearly $20 million per month, according to Reuters.
    The Daily Dairy Report however, says the US China trade dispute likely has more to do with the smaller figure. The DDR stated; “The United States was China’s largest whey trading partner in September, accounting for 28% of whey imports, matching November 2018 as the lowest share since September 2007. European countries benefited from lower U.S. imports, with volumes increasing 76% over the previous year, suggesting that smaller year-over-year volumes from the United States are related more to the trade dispute than ASF.”
    President Trump and China’s Xi Jinping were to meet at the November Asia-Pacific Economic Cooperation meeting in Chile but it was canceled due to unrest there. HighGround Dairy’s Lucas Fuess reported in the Nov. 4 “Dairy Radio Now” broadcast that Xi reportedly invited Trump to meet in Macau, China.
    Fuess says there is still hope that Phase 1 of the trade agreement between the US and China can be implemented and that agricultural purchases, including dairy products, will be made by the Chinese. China has made several promises of increased agricultural purchases, primarily corn and soybeans, says Fuess, but HighGround hopes they will include dairy products.
    “There is nothing yet in writing,” Fuess cautioned, and “China continues to hesitate to commit to exactly how many agricultural products they will purchase.” He adds there was a “good sign” in that President Trump has held off imposing additional tariffs on Chinese imports, as he had previously threated to do.
    Fuess also reported on Japan’s September dairy imports, which included record levels of cheese due to Japan’s declining domestic dairy production. He said that a lot of Japan’s dairy imports are from the US however we continue to compete with Europe and New Zealand. “If the price is right and the US can compete, we can ship product away from our shores and fulfill the needs of foreign countries and hopefully have a good impact on our US domestic prices.”
    Back home, a higher All Milk price pulled the September milk feed price ratio higher for the third month in a row. The USDA’s latest “Ag Prices” report put the ratio at 2.33, up from 2.26 in August and compares to 2.13 in September 2018.
    The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk today purchases 2.33 pounds of dairy feed containing that blend.
    The U.S. All-Milk price averaged $19.30 per hundredweight, up 40 cents from August and $2.40 above September 2018. California’s All Milk price was $18.60, down a dime from August but $2.04 above a year ago. Wisconsin’s, at $19.90, was up 80 cents from August and $2.40 above a year ago.
    The national average corn price averaged $3.80 per bushel, down 13 cents from August, after falling 23 cents from July, but is 40 cents per bushel higher than September 2018. Soybeans averaged $8.35 per bushel, up 13 cents from August, after dropping 16 cents from July, and are 43 cents per bushel below a year ago. Alfalfa hay averaged $181 per ton, up $2 from August and $2 per ton above a year ago.
    Looking at the cow side of the ledger; the September cull price for beef and dairy combined averaged $65.60 per cwt., down $2.70 from August, $4.80 above September 2018, but $6.00 below the 2011 base average of $71.60 per cwt.
    Milk cow replacements averaged $1,310 per head for the quarter in October, up $70.00 per head from July, and $80 per head above 2018. They averaged $1400 per head in California, up $100 from July and $200 above a year ago. Wisconsin cows averaged $1270 per head, up $60 from April and $90 above October 2018.
    Meanwhile, FC Stone points out that weekly slaughter did an about-face for the week ending October 19. After several weeks of running stronger than the prior two years even as Class III milk prices firmed, the latest data showed a 4.8% decline in slaughter to below 2018 levels.
    Checking the fields; this week’s Crop Progress report show the corn harvest at 41%, as of the week ending October 27, up from 30% the previous week but down from 61% a year ago and 20% behind the five year average. Some may not get harvested as standing water is keeping farmers out of their fields plus snow has fallen across the US plains and Great Lakes. 58% of the nation’s corn was rated good to excellent the previous week, down from 68% a year ago.
    62% of the soybeans are harvested, down from 69% a year ago and 16% behind the five year average and 46% of the cotton has been harvested, up 3% from a year ago and 3% ahead of the five year average. 40% is rated good to excellent, up from 35% a year ago.
    Cooperatives Working Together (CWT) members accepted eight offers of export assistance this week to help capture sales of 952,397 pounds of cheese and 224,872 pounds of cream cheese. The product is going to customers in Asia and Oceania and will be delivered from November through March 2020.
    In politics, the National Milk Producers Federation announced its support for the “Farm Workforce Modernization Act,” which they termed “a bipartisan immigration bill that advances agriculture immigration reform.”
    Sponsored by Judiciary Immigration Subcommittee Chair Zoe Lofgren (D-CA) and Congressman Dan Newhouse (R-WA), NMPF says “The legislation would provide legal status to current agricultural workers and their families and reform the H2A guest-worker visa program to permit year-round agriculture to participate, a crucial need for dairy. The efforts of Chairman Lofgren and Representative Newhouse, both longtime champions for agricultural labor reform, are greatly appreciated by dairy farmers, who cannot wait any longer for action.”
    “America’s dairy farmers are eager to advance and improve this legislation as it moves through the Congress,” said Mike McCloskey, a dairy farmer and chairman of NMPF’s Immigration Taskforce. “As producers of a year-round product, dairy farmers face a unique labor crisis because our jobs are not seasonal or temporary. From our years of work on these issues, we know first-hand just how hard immigration reform is. But we simply cannot and will not stop working to find a solution. Dairy needs workers for our industry to sustain itself. It’s that simple, and it’s that dire.”
    Jim Mulhern, NMPF President and CEO, thanked the lawmakers for “putting forward this essential step for agriculture labor reform, saying the bill is a critical first step in the legislative process.” “We have supported numerous efforts to address dairy’s acute labor needs. Passing legislation in the House is a critical step in the process. We urge the Senate to work with us on this important issue so we can get an ag worker bill across the finish line in this Congress,” Mulhern said. “The bipartisan Farm Workforce Modernization Act provides an important starting point for badly needed improvements to agriculture immigration policy.”