The Agriculture Department announced the July Federal order Class III benchmark milk price at $16.49 per hundredweight, down 72 cents from June and $8.05 below the inflated price a year ago when Uncle Sam’s Food Box program was buying lots of cheese. Last year’s July Class III price was the second highest ever, at $24.54, 6 cents shy of the record set in September 2014. The seven month Class III average stands at $16.90, down from $17.30 at this time a year ago and compares to $15.58 in 2019.
    Late Friday morning Class III futures portended August at $16.02; September, $16.55; October, $17.05; November, $17.75; and December at $17.76.
    The July Class IV price is $16.00 per cwt., down 35 cents from June but $2.24 above a year ago. Its seven month average is at $15.01, up from $13.78 a year ago, and compares to $16.11 in 2019.
    You’ll recall that USDA’s preliminary data pegged June milk production at 18.96 billion pounds, up 2.9% from June 2020. The latest Dairy Products report shows where that milk ended up, though StoneX Dairy reminds us that the year over year changes are mostly driven by the anomalies of last year’s COVID pandemic.
    Starting with cheese; June output totaled 1.12 billion pounds, down 2.9% from May and just 0.2% above June 2020. Year to date (YTD) total cheese output hit 6.8 billion pounds, up 3.3% from the same period in 2020.
    Italian style cheese totaled 473.1 million pounds, down 1.7% from May and 2.6% below a year ago. YTD Italian was at 2.9 billion pounds, up 1.0%.
    American type cheese, at 453.9 million pounds, was down 5.1% from May but 5.1% above a year ago. YTD American was at 2.8 billion pounds, up 6.1%.
     Mozzarella output totaled 370.2 million pounds, down 4.9% from a year ago, with YTD mozzarella at 2.2 billion pounds, up 0.4% from 2020.
    Cheddar totaled 327.9 million pounds, down 18.1 million pounds or 5.2% from May, but 24.9 million or 8.2% above a year ago. YTD Cheddar hit 1.99 billion pounds, up 5.6% from 2020.
    U.S. churns produced 160.7 million pounds of butter, down 24.2 million pounds or 13.1% from May, but up 11.6 million pounds or 7.8% from a year ago. YTD butter output reached 1.12 billion pounds, down 2.1% from 2020.
    Yogurt totaled 386.1 million pounds, down 3.2% from a year ago, with YTD at 2.4 billion pounds, up 3.9%.
    Dry whey totaled 80.6 million pounds, up 2.9 million pounds or 3.7% from May, but 1.1 million or 1.3% below a year ago. YTD dry whey was at 472 million pounds, down 3.2%.
    Dry whey stocks climbed to 80.6 million pounds, up 2.9 million or 3.7% from May, but were 1.1 million pounds or 1.3% below a year ago.
    Nonfat dry milk output fell to 184.6 million pounds, down 20.8 million pounds or 10.1% from May but up 30.6 million or 19.9% from a year ago. Production YTD was at 1.1 billion pounds, up 11.4% from 2020.
    Stocks crept up to 349.5 million pounds, up 1.3 million or 0.4% from May, as shipping challenges at U.S. ports continue, and were 68.4 million pounds or 24.3% above those a year ago.
    Skim milk powder production totaled 32.6 million pounds, down 3.1 million pounds or 8.7% from May and 27.9 million pounds or 46.1% below a year ago. YTD skim milk powder, at 222.6 million pounds, was down 26.9% from 2020.
    June regular hard ice cream output totaled 66.5 million pounds, down 8.6% from a year ago, with YTD output at 378.3 million pounds, up just 0.9% from 2020.
    Speaking in the Aug. 9 Dairy Radio Now broadcast, StoneX broker Dave Kurzawski said Dairy Product reports don’t tend to move markets, though he admitted June cheese output was 12 million pounds less than they expected while nonfat dry milk stocks were 20 million pounds heavier than they forecast.
    He said the report was basically neutral for cheese and bearish on butter and powder but added; “As we walk into August, we’re getting into a different time of year demand wise. If you look at the GDT numbers, which have been weak for eight events in a row, if you look at the dollar value, $3,000 a metric ton is somewhat of a benchmark. If you’re below that, you’re in kind of a bear market,” he said, “and if you’re above that you’re in kind of a bull market,” adding that he views the summer as a “correction in prices both domestically and globally.”
    He also said that USDA’s solicitations this week for fresh milk and string cheese for fourth quarter food assistance and school lunch programs exceeded his expectations and should provide some degree of support for the market.
    The USDA will spend $20 million to purchase ?uid milk and announced Thursday that it would buy another 3.6 million pounds of cheese through Section 32 in Cheddar chunks and shreds, plus Swiss blocks and slices. StoneX says “This is to say nothing of the potential 15 million pounds of cheese that could be purchased for fourth quarter through the Emergency Food Assistance Program.”
    Tuesday’s Global Dairy Trade saw its weighted average fall for the eighth consecutive session, down 1.0%, following a 2.9% drop July 20 and 3.6% on July 6.
    Traders brought 53.1 million pounds of product to market, up from 49.4 million. The average winning price was $3,784 U.S., down from $3,839.
    Buttermilk powder was down 8.0%. Whole milk powder was down 3.8%, following a 3.8% decline, and lactose was down 3.1%, after an 8.9% drop.
    Butter led the gains, up 3.8%, after it inched 0.8% lower last time. Anhydrous milkfat was up 1.3%, after it slipped 0.3%. Skim milk powder was up 1.5%, after dropping 5.2%, and Cheddar inched 0.7% higher after it gained 1.3% last time.
    StoneX says the GDT 80% butterfat butter price equates to $2.0308 per pound U.S., up 7.5 cents, and compares to CME butter which closed Friday at $1.6475. GDT Cheddar, at $1.8437, was up 1.9 cents, and compares to Friday’s CME block Cheddar at $1.6350. GDT skim milk powder averaged $1.37 per pound, up from $1.3476. Whole milk powder averaged $1.6322 per pound, down from $1.6920. CME Grade A nonfat dry milk closed Friday at $1.2550 per pound.
    Meanwhile, June U.S. dairy exports remained strong. Nonfat dry milk was up 7.4% from June 2020, with most going to Mexico, according to HighGround Dairy, and to Indonesia. Shipments to China were the highest since August 2014.
    HGD says the first half of 2021 translated into record exports to China, Egypt and South America, helping offset losses to Japan and Southeast Asia. China’s demand has been particularly strong for whey and other proteins and powders.
    Cheese exports were down 12.9% but HGD says the losses are skewed by the pandemic-driven volumes observed last year.
    CME prices started August scattered. The Cheddar blocks parked at $1.6350 per pound on July 27 and stayed there for 8 successive sessions. Traders apparently took this week off, with no activity. The blocks are priced 7 cents below a year ago when they plunged 54.75 cents, largest week to week block price fall ever.
    The barrels fell to $1.3075 per pound on Wednesday, lowest since May 11, 2020, but closed Friday at $1.31, down 8 cents on the week and 20.75 cents below a year ago when they plunged to $1.5175 per pound, a record 71.75 cent crash.
    The spread expanded to 32.75 cents on Tuesday, huge but not close to the record $1.0125 difference on Sept. 21, 2020 when blocks were trading at $2.6475 and barrels at $1.6350. Only 19 cars of barrel were sold on the week.
    Midwest cheesemakers tell Dairy Market News week to week sales remain strong as product moves quickly into food service and grocery channels. Milk remains available at discounts but not as low as previous week. Bottling demand increases are chipping away at fluid supplies as schools ramp up. Cheese output remains busy and Midwest inventories are not overly concerning, says DMN.
    Western retail and food service cheese markets remain steady and international demand remains strong but port congestion continues to cause delays.
    Spot butter shot up 5.75 cents Monday, then plunged 8 cents Tuesday, and closed Friday at $1.6475 per pound, a half-cent higher on the week and 11.75 cents above a year ago. There were 19 sales reported for the week.
    Butter plants report cream is still attainable with multiples remaining in the low 1.20s and readily available from Western states. Retail sales have picked up a bit following a mid-summer lull but butter market tones are anything but stable.
    Western cream production is trailing off. More abundant cream supplies, particularly in the Southwest, are supporting busier butter output. Churns are less active in other areas where cream is short or cream cheese production is taking more of the supply. Retail sales are strengthening and food service is steady.
    Grade A nonfat dry milk closed Friday at $1.2550 per pound, down 1.25 cents on the week but 30 cents above a year ago, with 10 sales reported on the week.
    Dry whey fell to 47.50 cents per pound Thursday, lowest since Jan. 4, but rallied to a Friday close at 54 cents per pound, up 3.75 cents on the week, highest since July 2, and 22 cents above a year ago. 7 sales were reported for the week.
    A lower all milk price and higher corn price continued the slide in the U.S. milk feed ratio. The USDA’s latest Ag Prices report showed the June ratio at 1.60, down from 1.69 in May, and compares to 2.38 in June 2020.
    The U.S. all milk price averaged $18.40 per cwt., down 80 cents from May but 20 cents above the June 2020 average.
    The national average corn price climbed to $6.00 per bushel, up 9 cents from May, after jumping 60 cents from April, and $2.84 per bushel above May 2020.
    Soybeans averaged $14.50 per bushel, down 30 cents from May and the first decrease since August 2020, after jumping 90 cents last month, but are still $6.16 per bushel above June 2020.
    Alfalfa hay averaged $199 per ton, up $5 from May and $20 above a year ago.
    Looking at the cow side of the ledger; the June cull price for beef and dairy combined averaged $73.90 per cwt., up $3.10 from May, $2.90 above June 2020, and $2.30 above the 2011 base average of $71.60 per cwt.
    Milk cow replacements averaged $1,310 per head in July, unchanged from April and unchanged from July 2020. Cows averaged $1350 per head in California, down $50 from April and unchanged from a year ago. Wisconsin’s average, at $1,480 per head, was down $10 from April but $130 per head above July 2020.
    The Aug. 3 Daily Dairy Report points out that dairies are also dealing with rising transportation and labor costs. The DDR cited U.S. No. 2 retail diesel for the week of Aug 2 at $3.37 per gallon, 94 cents higher than a year ago.
    The June margin under the Dairy Margin Coverage program dropped 65 cents from May to $6.24 per cwt, which will generate a June payment of $3.26 for $9.50 per cwt. coverage, according to National Milk. The feed cost calculation for June was lower by 16 cents per cwt. of milk from May, mostly on lower soybean meal prices, while the all-milk price took a larger than expected drop.
    NMPF says the futures-based price outlook indicates that the DMC margin will not rise much above $7.00 per cwt. through the summer and remain below $9.50 through the end of 2021. USDA reported that estimated DMC payments for the 2021 program exceed $543 million as of July 26.
    The latest Crop Progress report showed 91% of the corn crop was silking, as of the week ending Aug.1, up from 79% the previous week, dead even with a year ago, and 5% ahead of the five year average. 38% is in the dough stage, up from 18% the previous week, 1% ahead of a year ago, and 5% ahead of the five year average. 62% of the crop was rated good to excellent, down 2% from the previous week however, and 10% below a year ago.
    Looking at soybeans; 86% were blooming, up from 76% the previous week, 2% ahead of a year ago, and 4% ahead of the five year average. 58% were setting pods, 1% ahead of a year ago and 6% ahead of the five year average. 60% were rated good to excellent, up 2% from the previous week, 13% below a year ago.
    Checking Capitol Hill, dairy processors praised the approval of a funding bill passed this week by the U.S. Senate Committee on Appropriations. Michael Dykes, President and CEO of the International Dairy Foods Association (IDFA), called the bill “a win for the health and wellness of all Americans.”
    IDFA says “The Committee voted to triple the amount of funding going to support the SNAP Healthy Fluid Milk Incentives Projects as part of the fiscal year 2022 appropriations bill for the USDA, FDA, and related agencies. This program incentivizes SNAP beneficiaries to purchase fluid milk, making it easier for families to get more of the nutrition benefits of milk similar to other programs that encourage purchase of fruits and vegetables. This show of support by the Senate and last week’s vote by the House demonstrates growing awareness in Congress about the important role dairy plays in family health and nutrition especially among our most economically and nutritionally vulnerable families.” It also preserves school’s ability to offer 1% flavored milk to students, says IDFA.