Dairy markets had a feeding frenzy of information last week, starting with the Global Dairy Trade auction, and then the Milk Production, Cold Storage, and Slaughter reports.
The week ended with the USDA announcing that it was extending the Farmers to Families Food Box program through Dec. 31, while congressional agreement on another stimulus package had not materialized.
The Cheddar blocks closed the fourth Friday of October at $2.7725 per pound, up 5.25 cents on the week, fourth consecutive week of gain, and 64.50 cents above a year ago. Hard to believe they were in the $1 per pound range six months ago.
The barrels finished last week 25 cents higher, the sixth week of gain, hitting $2.4550 per pound, highest since July 21, and 20.50 cents above a year ago when they jumped 25 cents and were at an inverted 12.25 cents above the blocks. This year they were 31.75 cents below the blocks but the gap was narrowing.
There were only 3 sales of block last week at the CME and 11 of barrel.
Cheese was unchanged Monday and the blocks held firm Tuesday while the barrels slipped a quarter-cent Tuesday, rolling to $2.4525, first loss since Sept. 23.
Midwest cheese production rates remain steady and closer to normal, according to Dairy Market News. Cheese producers are not trying to add inventory in case buying slows or markets ebb. COVID-19 is affecting some plants, as employees are quarantining but market tones continue to show steadiness to slight bullishness.
Western cheese manufacturers are working hard to keep up with orders. Retail demand is active as stores prepare to fill holiday needs and while some contacts believe foodservice orders are slowly recovering, restaurants continue to face challenges of space and operational restrictions. Large volumes of cheese are moving to pizza and government purchases, supporting the higher prices, but have hindered export sales.
A few contacts suggest processors have even increased cheese imports to fill some processed cheese needs. Contacts are speculating what government purchases and subsequent cheese demand will look like as government buying winds down. Block inventories are tight, and to a lesser extent, so are barrel supplies, but contacts suggest stocks are increasing. Western buyers are also hesitant to take on cheese at current prices. Cheese output remains active as ample milk supplies are keeping the vats full.
Cash butter didn’t do so well last week, falling to $1.4350 per pound, 7.50 cents lower on the week and 62.5 cents below a year ago, with 13 sales reported.
The butter was up a half-cent Monday but backed down 3.25 cents Tuesday, to $1.4075.
Butter producers continue to churn steadily as cream remains available and cream suppliers are negotiating ahead of time for the week of Thanksgiving. Butter demand remains positive from retail and foodservice demand continues to edge up weekly, but it's pale in comparison to recent years. Butter markets continue with a softness, says DMN.
Western butter output is variable. Projected orders are coming in at expected levels and being satisfied. Cream supply has not been a problem and availability is ticking higher, even as seasonal competition from Class II manufacturing takes form. Export orders continue to advance butter to offshore customers, says DMN, and “The market underscores firmness as butter prices incrementally climb.”
Grade A nonfat dry milk also saw weakness, closing Friday at $1.0975 per pound, down 4.25 cents, ending 10 consecutive weeks of gain, and 5.5 cents below a year ago; 23 sales were reported for the week.
Monday’s powder was down a half-cent and it fell 1.50 cents Tuesday, to $1.0775, lowest since Sept. 22.
StoneX stated in Friday’s Early Morning Update, “U.S. nonfat dry milk is at an enormous discount to world skim milk powder prices, it is surprising to see this much weakness after only a slightly weaker GDT.”
Dry whey finished Friday at 38.50 cents per pound, down a quarter-cent on the week but 10.25 cents above a year ago, with only one sale reported on the week.
The whey inched up a half-cent, both Monday and Tuesday, hitting 39.50 per pound.
Class I up $2.84
The Agriculture Department announced the November Federal order Class I base milk price at $18.04 per hundredweight, up $2.84 from October but 10 cents below November 2019. The price equates to about $1.55 per gallon, up from $1.31 in October.
The 2020 Class I average stands at $16.64, down from $16.78 at this time a year ago and compares to $14.82 in 2018.
Butter stocks draw
Americans spread on the butter in September, likely due to restaurants recovering. The Agriculture Department’s latest Cold Storage report shows Sept. 30 butter stocks fell to 343.9 million pounds, down 27.6 million pounds or 7.4% from August, but were still a weighty 53.3 million or 18.3% above September 2019, 15th consecutive month they topped the level of a year ago.
American type cheese stocks slipped to 772.6 million pounds, down 17 million pounds or 2.2% from August, and 2.2 million pounds or 0.3% below a year ago.
The “other” cheese inventory totaled 566.9 million pounds, down 771,000 pounds or 0.1% from August, and 5.8 million pounds or 1.0% below a year ago.
The total cheese inventory slipped to 1.36 billion pounds, down 17.6 million pounds or 1.3% from August, and 13.6 million pounds or 1% below September 2019, ending five consecutive months that total cheese stocks topped the prior year level.
Culling down from 2019
Dairy cow culling jumped in September, according to the latest Livestock Slaughter report, but was below a year ago. An estimated 249,900 head were sent to slaughter under federal inspection, up 24,600 head or 10.9% from August but 5,700 or 2.2% below September 2019. A total of 2.3 million head have been culled in the first 9 months of 2020, down 115,500 head or 4.8% from 2019.
In the week ending Oct. 10, 57,200 dairy cows were sent to slaughter, down 600 from the week before, and 5,800 head or 10.1% below that week a year ago.
Fluid sales rise then fall
The Agriculture Department is still playing catch-up in reporting U.S. fluid milk sales. The latest data is from July and August. July sales hit 3.7 billion pounds, up 2.4% from July 2019, likely due to the effects of COVID-19.
Unfortunately, August sales fell to 3.66 billion pounds, down 5.8% from August 2019.
Conventional product sales totaled 3.4 billion pounds, down 6.4% from a year ago. Organic products, at 232 million pounds, were up 4.2% and represented 6.3% of total sales for the month.
Whole milk sales totaled 1.26 billion pounds, down 2.7% from a year ago. Sales for the eight-month period totaled 10.4 billion pounds, up 4.1% from 2019, and made up 34.3% of total milk sales for August and 34% thus far for the year.
Skim milk sales, at 228 million pounds, were down 17% from a year ago and were down 14.3% year to date.
Total packaged fluid milk sales, January through August, hit 30.7 billion pounds, up 0.6% from 2019. Conventional product sales so far totaled 28.8 billion pounds, down 0.1%. Organic products, at 1.1 billion pounds, were up 10.7% and represented 6.2% of total fluid milk sales so far for the year.
The figures represent consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92% of total fluid milk sales in the U.S.
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