The Agriculture Department announced the July benchmark Class III milk price at $17.55 per hundredweight, up $1.28 from June, $3.45 above July 2018, and the highest Class III price since December 2014. It equates to $1.51 per gallon, up from $1.40 in June and $1.21 a year ago. California’s July 4b cheese milk price a year ago was $14.09, $3.46 below this year’s FO Class III price,
    Late Friday morning Class III futures portended an August price at $17.29; September, $17.77; October, $17.78; November, $17.57; and December at $17.12. Looking ahead, the bottom for 2020 was $16.59 in March.
    The seven month Class III average stands at $15.58, up from $14.37 at this time a year ago and $16.02 in 2017.
    The July Class IV price is $16.90, up 7 cents from June, $2.76 above a year ago, and the highest Class IV since November 2014. Its seven month average is at $16.11, up from $13.73 a year ago and $15.30 in 2017.
    The August 1 Dairy Products report shows June total cheese output slipped to 1.07 billion pounds, down 3.3% from May but 0.6% above June 2018. Year-to-date output was at 6.48 billion pounds, up 0.8% from a year ago.
    Wisconsin produced 279.1 million pounds of that total, down 2.2% percent from May and 0.7% below a year ago. California produced 206.6 million pounds, down 5.2% from May but 0.8% above a year ago. Idaho contributed 85.8 million pounds, up 9.6% from May and 2.8% above a year ago. Minnesota output totaled 61.0 million pounds, down 5.1% from May and 1.1% below a year ago. New Mexico produced 76.9 million, down 6.0% from May but 3.6% above a year ago.
    Italian cheese totaled 468.95 million pounds, down 1.3% from May but 4.0% above a year ago. YTD Italian stands at 2.8 billion pounds, up 2.9%. Mozzarella output also jumped, hitting 375.8 million pounds, up 5.8% from a year ago, with YTD at 2.2 billion pounds, up 4.9%.
    American type cheese totaled 426.5 million pounds, down 3.9% from May and 0.6% below a year ago, with YTD at 2.6 billion pounds, down 1.6%.
    Cheddar output, the cheese traded at the CME, fell to just under 307 million pounds, down 14.7 million pounds or 4.6% from May and 5.9 million pounds or 1.9% below a year ago. YTD Cheddar is at 1.85 billion pounds, down 2.7%.
    Revisions added 2.3 million pounds to the May total, now put at 321.7 million, up 0.9% from a year ago, compared to the originally reported 0.2% increase.
    Butter output fell to 146.5 million pounds, down 14.4 million pounds or 8.9% from May but 4.4 million pounds or 3.1% above a year ago, ending fourth consecutive months that output was below a year ago. YTD butter is at 999.8 million pounds, down 1.9% from 2018.
    Revisions reduced last month’s butter total by 2.1 million pounds, to 160.9 million, 5.4% below a year ago.
    Yogurt output, at 360.8 million pounds, was down 3.3% from a year ago, with YTD at 2.2 billion pounds, down 2.1%.
    Dry whey totaled 81.1 million pounds, up 2.0% from May but 6.3% below a year ago, with YTD at 468.1 million pounds, down 11.6%. Stocks totaled 68.1 million pounds, up 3.8% from May but 0.9% below those a year ago.
    Nonfat dry milk production totaled 155.6 million pounds, down 8.8% from May but 2.2% above a year ago. YTD powder is at 981.8 million pounds, down 0.4% from 2018 Stocks moved higher to 288.7 million pounds, up 4.6 million pounds or 1.6% from May but were 14.6 million pounds or 4.8% below the 2018 level.
    Skim milk powder soared to 44.4 million pounds, up 19.2 million or 76.2% from May but was 15 million or 25.3% below a year ago. YTD skim hit 236.7 million pounds, down 16.5% from a year ago.
    Cash dairy traders are perhaps more concerned over President Trump’s announcement Thursday that the U.S. will impose an additional 10% tariff on $300 billion in Chinese imports starting September 1.
    The Cheddar blocks closed the first Friday of August at $1.82 per pound, down a half-cent on the week but 23 1/4-cents above a year ago. The barrels finished at $1.6925, down 2 3/4-cents, 21 3/4-cents above a year ago, but 12 3/4-cents below the blocks. Sales amounted to 3 cars of block on the week, 53 for the month of July, down from 71 in June. 24 cars of barrel traded places on the week, 115 on the month, down from 159 in June.
    FC Stone stated in its July 29 Early Morning Update that “Dairy product demand seems to have slumped somewhat this month, but that doesn’t eliminate issues with milk production or cow culling on US dairy farms.” It adds that US milk production was flat versus last year through June but “Dairy producers have done a great job of increasing component production, particularly fat, for several years now. Component production bumps US milk production to 0.8% growth for the first six months of this year. Still that’s down from last year.”
    Dairy Market News says most Midwest cheesemakers report that demand is meeting expectations but some say the early summer upticks have steadied somewhat. Curd and process cheesemakers continue to report positive sales numbers. Cheese production has slowed, as spot milk availability is dwindling. Those looking for spot milk are finding discounts harder to find. Prices ranged from $1 under to $2 over Class. Cheese stocks are balanced regionally.
    Western cheese production remains active with plenty of milk on hand and plants are running near full capacity. Some parts of the region saw a few milk loads at $4 to $5 under Class. Cheese inventories are generally comfortable as steady end user and consumer demand has been able to offset production.
    Spot butter, hurt from the higher than expected Cold Storage data, fell to $2.3275 per pound Tuesday, regained some, then fell again to close the week at $2.32, down a nickel, 11 1/2-cents below the July 16 high, and dead even with a year ago. 10 cars traded hands on the week, 77 on the month, down from 115 in June.
    Regional butter makers are either not taking on cream from the spot market or are finding spots in the West and paying freight costs. Churning, therefore, is slow or slowing. Butter sales are slower and more bulk butter has become available in recent weeks. Butter producers suggest buyers are waiting on potential price drops. Contacts suggest July’s cold storage data will be the yardstick for butter markets the rest of 2019.
    The western butter market varies by area. Some processors report solid sales, others say demand has taken a step back. Retail demand is down a bit but food service sales are strong. Butter output remains active, but decreased somewhat as more cream continues to move to ice cream plants. Butter stocks are plentiful.
    Grade A nonfat dry milk closed Friday at $1.02 per pound, down a penny on the week but 19 1/4-cents above a year ago. 8 cars sold on the week, 41 on the month, up from 25 last month.
    Ears to the rail reportedly say cheese plants in the upper-Midwest are fortifying their vats with nonfat dry milk as fluid milk is in shorter supply.
    Spot dry whey lost 1 1/4-cents Monday, falling to 34 cents per pound, and stayed there the rest of the week, 9 1/2-cents below a year ago. Only 2 cars were sold on the week, 18 on the month, down from 31 a month ago.
    Higher feed prices and just a small gain in the All Milk Price resulted in another slip in the June milk feed price ratio. The USDA’s latest Ag Prices report puts it at 2.08, down from 2.10 in May but it is up from 1.98 in June 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. One pound of milk today purchases 2.08 pounds of that ration.
    The U.S. All-Milk price averaged $18.10 per hundredweight (cwt.), up a dime from May and $1.80 above June 2018. California’s All Milk price was 20 cents higher than Wisconsin’s.
    The national average corn price averaged $3.98 per bushel, up a whopping 35 cents from May and follows an 11 cent jump in May. Corn was up 40 cents per bushel from June 2018. Soybeans averaged $8.31 per bushel, up 29 cents from May, after dropping 26 cents in May, but is 1.24 per bushel below a year ago. Alfalfa hay averaged $193 per ton, down $11 from May but $12 per ton above a year ago.
    Looking at the cow side of the ledger; the June cull price for beef and dairy combined averaged $65.90 per cwt., up 30 cents from May, 40 cents below June 2018 and $5.70 below the 2011 base average of $71.60 per cwt.
    Milk cow replacements averaged $1,240 per head for the quarter in July, up $100.00 per head from April, but $80 below July 2018. Prices averaged $1300 per head in California, up $200 from April and unchanged from a year ago. Wisconsin averaged $1210 per head, up $80 from April but $40 below July 2018.
    The USDA’s latest Crop Progress report shows 58% of U.S. corn was silking, as of the week ending July 28, up from 35% the previous week but 32% below a year ago and 25% behind the five year average. 58% of the crop is rated good to excellent, down from 72% a year ago.
    57% of U.S. soybeans are blooming, up from 40% the previous week, 28% behind a year ago, and 22% below the five year average. 54% are rated good to excellent, down from 70% a year ago. 61% of the cotton crop is rated good to excellent, up from 43% a year ago.
    June trade data is indicative of China’s continuing increase of dairy imports, unfortunately it is of small benefit to U.S. dairy farmers, according to Lucas Fuess, director of dairy market intelligence with HighGround Dairy in Chicago.
    Speaking in the August 5 Dairy Radio Now broadcast, Fuess reported that whole milk and skim milk powder imports were strong. Fat imports, including anhydrous milkfat and butter, were down from a year ago, but last year was a very strong year, he said. The only area of “no hope in sight for recovery” is whey and lactose, due to the African Swine Fever outbreak.
    China also continues to diversify what countries it purchases dairy products from, according to Fuess. He cited skim milk powder as an example. June imports were up 27% from a year ago, he said, but the U.S. market share fell from 18% to just 2%. U.S. sales were down 88% from a year ago, he said.
    There will be a protein deficit in China, due to the slaughter of the pig herd there and some of that will be made up by dairy protein. Fuess says “That is the ray of hope we continue to look out for.” He says “Chinese consumers are shifting away from pork which is becoming expensive and hopefully moving to dairy products.” China is also culling some of their dairy herd to get that protein so that will increase imports as they cannot produce the product domestically. The best end is that the U.S. and China resolve their trade differences so the U.S. can export more of its dairy products to China, he concluded. The latest tariff threat surely puts that hope on hold.
    The Agriculture Department revised its April fluid milk sales report and while the correction is better news, it still begs for a change of direction. The revision shows 3.8 billion pounds of packaged fluid sales, up from 3.7 billion originally reported but still down 1% from a year ago versus a 3.1% drop originally reported. Conventional product sales totaled 3.6 billion pounds, down 0.4% from a year ago, instead of 2.4%. Organic products, at 188 million pounds, were down 11%, instead of 16.5%, and represented about 4.9% of total sales for the month.
    The July 26 Dairy and Food Market Analyst (DFMA) reports that fluid sales through all channels declined by 0.8% in May with conventional sales down 0.8% and organic sales down 0.7%. It adds that “Retail fluid milk sales fell at an accelerated pace during June and were down 4.2% in the four weeks ending June 16, according to IRI data. The activist video showing animal abuse at Fair Oaks Farms was released at the start of the month, which was a contributing factor. Non-dairy milk sales were up 4.2% year over year in those four weeks and had 8.1% market share,” according to the DFMA.
    In politics, the Senate Finance Committee convened a hearing Tuesday on the U.S.-Mexico-Canada Agreement (USMCA). The National Milk Producers Federation President and CEO Jim Mulhern praised testimony given by Tom Vilsack, president and CEO of the U.S. Dairy Export Council.
    Vilsack stated that “The USMCA delivers key wins for America’s dairy farmers and the exports that drive stronger sales. With USMCA, dairy farmers will see more export opportunities and greater trade certainty. Without USMCA, we lose out on $314 million in additional dairy exports. We also lose the benefit of the new rules this deal puts in place, such as key reforms to Canada’s dairy system and stronger safeguards for our cheese exports to Mexico.”
    Mulhern commend the Senate for spotlighting USMCA’s importance and strongly support the testimony offered by USDEC on how the agreement benefits dairy. To usher in USMCA’s improvements for dairy farmers and build momentum for additional trade agreements with key markets like Japan, we urge swift action to resolve any outstanding issues and secure approval of USMCA.”