Dairy Market Review: May Class III: $22.57

2014-06-09T15:50:00Z Dairy Market Review: May Class III: $22.57 Agri-View
June 09, 2014 3:50 pm

Milk production varies noticeably across the country. Milk production is higher in the Midwest, steady in the Northeast and Pacific Northwest, and declining in California and the Southern states according to U.S. Department of Agriculture’s (USDA) Dairy Market News. This is seasonal, but increasing milk production in the Midwest is expected to continue longer than usual due to the late start to spring flush.

Manufacturing receipts are substantially higher as schools have closed for the summer. Milk supplies in the Southeast are heavy with milk haulers indicating wait times to unload as long as 24 hours at some plants. Some areas were able to command a premium for milk for quite some time. That is now history with extra milk commanding prices ranging from class price to as much as $5 under class. Manufacturers are quick to pick up less expensive milk to boost plant times and increase cheese production.

For the week ending June 6, Cheddar blocks closed at $2.05, up 9 cents with six loads traded. Barrel price closed at $1.9675, up 3.50 cents with 18 loads traded. Butter was not so fortunate with price declining 7.75 cents to $2.2225 with 29 loads traded. Current weakness of butter price may continue for a period of time as it attempts to balance lighter than desired stocks with lower world price.

Manufacturers are taking all of the milk and cream they can to take advantage of high price. Export demand is good, but is slowing. Grade A non-fat dry milk price ended the week at $1.8575, up 1.25 cents with 3 loads traded.

Class prices

USDA announced the May Federal Order class prices. Class II price was $24.44, down $0.30 from April. Class III price was $22.57, down $1.74. Class IV price was $22.65, down $0.69. These are still very good prices, but still somewhat hard to swallow due to it being lower than previous prices.

Dairy products varied

American cheese production in April totaled 377 million pounds, slightly higher than last year. Italian cheese totaled 414 million pounds, up 5.2 percent. Total cheese production reached 950 million pounds, up 2.2 percent.

Total dry whey production reached 74.5 million pounds, down 12.8 percent.

Butter production in April totaled 158 million pounds, down 4.9 percent from last year. This is why inventory is not catching up.

Exports were a steady draw on fresh production with various plants producing 82 percent butter specifically for the export market.

Non-fat dry milk production in April totaled 158 million pound, down 1.2 percent with skim milk powder production reaching 48.8 million pound, up 22.8 percent.

GDT auction lower again

World prices continue to decline overall. Various products on the auction, however, showed mixed prices. Whole milk powder price declined 8.5 percent to $3,584 per metric ton (mt) or $1.63 per pound. Anhydrous milk fat declined 5 percent to $4,058 per mt or $1.84 per pound. Skim milk powder increased 2.1 percent to $3,863 per mt or $1.75 per pound.

Butter was unchanged at $3,634 per mt or $1.65 per pound. Buttermilk powder declined 1.9 percent to $3,628 per mt or $1.65 per pound.

Cheddar cheese price gained 8 percent to $4,236 per mt or $1.92. Rennet Casein declined 10.2 percent to $10,672 per mt or $4.84 per pound. The trade weighted average declined 4.2 percent. This is the eighth consecutive event on which world prices declined.

AMS prices

For the week ending May 31, Agricultural Marketing Service (AMS) prices were mixed. Prices for 40-pound cheddar blocks declined 6.1 cents to $2.05.

The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $2.06, down 4 cents. USDA grade AA butter averaged $2.13 for the week, up 1.0 cent.

Non-fat dry milk averaged $1.89, up 7.6 cents. Dry whey averaged 67.2 cents, down 2.8 cents.

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in commodity trading that may not be suitable for recipients of this publication.

Robin Schmahl is the owner of AgDairy, LLC, a full-service commodity brokerage firm located in Elkhart Lake, specializing in marketing plans and trade execution in all agricultural markets. Contact him at 877-256-3253, rschmahl@agdairy.com.

Copyright 2015 Agri-View. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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