The Federal order benchmark milk price fell for the second month in a row. The Agriculture Department announced the September Class III price at $16.43 per hundredweight, down $3.34 from August and $1.88 below September 2019. The 2020 Class III average stands at $17.48, up from $16.11 a year ago and $14.62 in 2018.
However, Monday’s futures settlements portended an October price at $20.63, November at $19.71 and December at $17.86.
The Class IV price is $12.75, up 22 cents from August but $3.60 below a year ago. That is the lowest September Class IV price since 2009. Its 2020 average stands at $13.53, down from $16.21 a year ago and $13.95 in 2018.
GDT up 2.2%
Dairy fat propelled this week’s Global Dairy Trade auction’s (GDT) weighted average up 2.2%, following the 3.6% boost on Sept. 15.
Buttermilk powder led the gains, up 9.1%, after not trading in the previous event. Butter followed with an 8.4% rise, after falling 1.4%, and anhydrous milkfat was up 5.4%, after a 2.0% gain last time. Whole milk powder was up 1.7%, after gaining 3.2%, and GDT Cheddar was up 0.4%, following a 7.2% rise last time.
Lactose led the losses, down 7.4%, after a 2.7% decline, and skim milk powder inched 0.9% lower, after shooting up 8.4% on Sept. 15.
StoneX Group equated the GDT 80% butterfat butter price to $1.5758 per pound U.S., up 12.3 cents from the last event. CME butter closed Tuesday at $1.4725. GDT Cheddar cheese equated to $1.6755 per pound, up fractionally, and compares to Tuesday’s CME block Cheddar at a pricey $2.65. GDT skim milk powder averaged $1.2996 per pound U.S., down from $1.3104, and whole milk powder averaged $1.3796 U.S., up from $1.3540. CME Grade A nonfat dry milk closed Tuesday at $1.13 per pound.
Cheese climbing
The markets took a jolt last week on news that President Trump had contracted the COVID-19 virus. Enemies and supporters alike waited with bated breath for updated information but fears were soon relieved by videos, texts and even an appearance by the president before supporters who had gathered at Walter Reed Medical Center where he was being treated.
Dairy markets pretty much ignored the political theater. CME block Cheddar closed the first Friday of October at $2.61 per pound, up 5.50 cents on the week, after dipping 7.25 cents the previous week, and were 61.75 cents above a year ago.
The barrels finished Friday at $1.9550 after jumping an exciting 29.50 cents on the week and 16.50 cents above a year ago. Nine cars of block sold last week at the CME and 12 of barrel.
Monday’s trading took the blocks up 2.75 cents and they added 1.25 cents Tuesday, hitting $2.65, the highest since July 21.
The barrels were up 3.50 cents Monday and an unfilled bid added the penny it needed Tuesday to hit $2 per pound, the highest they have been since Aug. 3. That put the spread at 65 cents.
Cheese sales are mixed but generally healthy, according to Dairy Market News. Some cheesemakers say the higher prices are creating buying hesitancy but, when inventories get low, buyers order heavily.
The western market is struggling to maintain a good balance. Overall sales are good but the market still faces uncertainties related to the pandemic and its impact on customers and sellers' behaviors. Block inventories are tighter than the barrels and that has translated into higher block prices. Government purchases are impacting prices and availability, according to contacts, and U.S. prices are not as competitive internationally as they were a few weeks ago.
Cash butter saw little change last week, inching up 0.75 cents to a $1.51 per pound close Friday, 67.50 cents below a year ago, on 10 sales for the week.
The butter gave up 3 cents Monday and lost 0.75 cents Tuesday, melting down to $1.4725, lowest since Sept. 1.
Butter production remains steady at Midwestern plants. Cream supplies have begun to tighten in the East but regional butter makers are still finding it locally or from the West. Plant managers expect cream to tighten in the near term. Retail and foodservice demand is stronger week to week. Retail customers, in some cases, have been given notice that butter quarters may be short in the final quarter of the year.
Western retail butter demand is showing signs of a seasonal bump and buyers are asking manufacturers about available supplies. Grocers have let processors know they plan to run in-store specials and want to make sure of coverage.
Grade A nonfat dry milk shot up to $1.14 per pound last Wednesday, highest since February 21, but closed Friday at $1.1225, up 2.25 cents on the week and the eighth consecutive week of gain, but was 2.25 cents below a year ago, on 21 sales.
The powder was up 0.75 cents Monday and stayed put Tuesday at $1.13, with 20 cars exchanging hands.
Dry whey finished Friday at 39 cents per pound, 1.25 cents higher on the week on unfilled bids, and 6.25 cents above a year ago.
Monday’s whey added 0.75 cents but it inched back 0.25 cents Tuesday, to 39.50 cents per pound.
Butter output up
You’ll recall August milk production totaled 18.6 billion pounds, up 1.8% from August 2019. The August Dairy Products report shows where that milk went.
Total cheese output fell to 1.09 billion pounds, down 1.6% from July, and 2.1% below August 2019. Year-to-date output, at 8.7 billion pounds, is up 0.4% from a year ago.
Wisconsin produced 277.6 million pounds of the total, down 0.4% from July and 1.2% below a year ago. California output, at 193.0 million pounds, was down 4.6% from July and 9.2% below a year ago. Idaho contributed 81.4 million pounds, down 9.1% from July and 7.9% below a year ago.
Italian type cheese totaled 448.5 million pounds, down 1.2% from July and 3.9% below a year ago. YTD output is at 3.7 billion pounds, down 0.7%.
American type cheese totaled 446.0 million pounds, down 1.9% from July and 1.3% below a year ago. YTD American was at 3.5 billion pounds, up 1.4%.
Mozzarella output slipped to 354.2 million pounds, down 4.4% from a year ago, with YTD at 2.95 billion pounds, down 0.7% from 2019.
Cheddar, the cheese traded at the CME, slipped to 322.9 million pounds, down 1.1 million pounds or 0.3% from July but 1.7 million or 0.5% above August 2019. Year-to-date Cheddar stood at 2.5 billion pounds, up 1.6% from a year ago.
Butter churns spit out 152.3 million pounds, down 2.6 million or 1.6% from July’s total, which was revised 3.1 million pounds higher, but was 11 million pounds or 7.8% above a year ago. YTD butter is at 1.4 billion pounds, up 6.6% from 2019.
Dry whey totaled 80.3 million pounds, down 5.3% from July and 5.4% below a year ago, with YTD at 657.2 million pounds, up 2.5%. Dry whey stocks inched up to 85.8 million pounds, up 1.5% from July and a hefty 18.2% above a year ago.
Nonfat dry milk output fell to 144.2 million pounds, down 19 million pounds or 11.7% from July but 11.7 million or 8.8% above a year ago. YTD powder sits at 1.3 billion pounds, up 1.5% from 2019. Stocks slipped to 270.6 million pounds, down 40.7 million pounds or 13.1% from July and were 1 million pounds or 0.4% above 2019.
Skim milk powder output climbed to 59.6 million pounds, up 8.4 million pounds or 16.3% from July but was 1.2 million pounds or 2.0% below a year ago. YTD skim milk powder hit 378.9 million pounds, up 8.0% from a year ago.
Milk ratio dips
A large drop in the All Milk price and a higher soybean price served to lower the August milk feed price ratio, reversing two months of gain. The USDA’s Ag Prices report showed the ratio slipped to 2.50, down from 2.69 in July, but compares to 2.26 in August 2019.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. One pound of milk could purchase 2.50 pounds of dairy feed of that blend in August.
The U.S. All-Milk price averaged $18.80 per hundredweight, down $1.70 from July and 10 cents below August 2019.
California’s All Milk price slipped to $20.00, down 90 cents from July but $1.30 above a year ago. Wisconsin’s, at $19.40, was down $2.90 from July but was 30 cents above a year ago.
The national average corn price averaged $3.12 per bushel, down 9 cents per bushel from July and 81 cents per bushel below August 2019. Soybeans averaged $8.66 per bushel, up 16 cents from July, after jumping 17 cents the previous month, and were 44 cents per bushel above a year ago. Alfalfa hay averaged $172 per ton, down $2 from July and $7 per ton below a year ago.
Looking at the cow side of the ledger; the August cull price for beef and dairy combined averaged $70.70 per cwt., up 20 cents from July, $2.40 above August 2019, but was 90 cents below the 2011 base average of $71.60 per cwt.
