Hemorrhaging continues in the cash cheese market.
The Cheddar blocks closed Friday the 13th at $1.9175 per pound, down 42.50 cents on the week, adding to the 44-cent drop the previous week, but were still 27.50 cents above a year ago.
The barrels plunged to $1.61 per pound Friday, following significant drops almost daily, including a record single-day loss of 29 cents on Friday. They dropped 70.75 cents on the week, 58.75 cents below a year ago, and 30.75 cents below the blocks. Fourteen cars of block were sold last week at the CME and 32 of barrel.
Monday saw the blocks hold steady, as traders anticipated Tuesday morning’s Global Dairy Trade auction and Wednesday afternoon’s October Milk Production report. But, they plunged 14.75 cents Tuesday, to $1.77, lowest since Aug. 24.
The barrels plunged 21 cents Monday and stayed put Tuesday at $1.40, also the lowest CME price since Aug. 24, and 37 cents below the blocks.
Orders for cheese for the Food Box program are slowing and there’s no word of the program being extended into 2021. StoneX says Round 4 food boxes have started to be delivered. Deliveries of Round 3 boxes have slowed, 16 million out of 19.1 million have been delivered for round 3, Sept. 22 to Oct. 31 but “questions remain as to whether the target will be reached but only time will tell.”
Midwestern cheese producers reported a notable slowdown in orders again last week, the impetus being the drops in prices, according to Dairy Market News. Customers were waiting for the bottom to begin purchasing anything more than necessary. COVID related staffing shortages continue to be reported, but plants are operating. Limiting manufacturing is keeping stocks in check in the region but spot milk was readily available and at a discount.
Western cheese supplies are loosening as the hesitancy to hold cheese at elevated prices continued. Strong retail demand and government purchases continued to pull large volumes. End users say cheese supply pipelines are filled and starting to back up. Cheese output is active due to the heavy milk supply.
COVID-19 cases are increasing as the colder months are upon us and government mandated shutdowns will mount. Add Washington state to the list. The Nov. 13 Dairy and Food Market Analyst reported that “before the pandemic, more than half of cheese and butter consumption occurred through foodservice, so this will be a price-negative development. But the new government restrictions will likely coincide with a stimulus bill, with still-unknown (possible price-supportive) details and consequences for dairy.”
Cash butter climbed to $1.4375 per pound last Wednesday but finished Friday at $1.40, down 3 cents on the week and 66.75 cents below a year ago, on 25 sales.
The butter lost 2 cents Monday and 1.75 cents Tuesday, dropping to $1.3625, lowest since May 12.
Cream appears to remain plentiful in the Midwest and offers have increased in recent weeks, says DMN. Churning remains busy but more contacts reported COVID testing and quarantines are leading to employee shortages, putting a crimp on scheduling and churn rates. Butter is moving strongly in holiday orders, particularly into retail grocers, but supplies are far from short.
Western churns remain active. Thanksgiving orders are out the door and buyers are looking to supply needs for the remaining holidays. Orders are “good.” Feature activity continues at retail and is expected to clear large volumes of butter in the week.
Foodservice orders are unchanged, however. Manufacturers are keeping a close eye on production and inventory. Cream offerings are available but producers are more cautious with purchases as they anticipate the butter price will decline, says DMN.
Grade A nonfat dry milk climbed to $1.0975 per pound last Wednesday but closed Friday at $1.0875, 2.25 cents higher on the week but 13 cents below a year ago, with 17 sales reported.
The powder was down a half-cent Monday, with 12 cars trading hands, and stayed there Tuesday, at $1.0825 per pound.
Dry whey finished Friday at 43 cents per pound, up 0.75 cents on the week, highest since Jan. 22, 2019, and 11 cents above a year ago, on 1 sale for the week.
Monday’s whey was unchanged but it lost 0.75 cents Tuesday, slipping to 42.25 cents per pound.
GDT reverses
Tuesday’s Global Dairy Trade auction, Event number 272, reversed gears and saw its weighted average head up 1.8%, after falling 2.0% on Nov. 3.
Anhydrous milkfat led the gains, up 4.1%, after dropping 2.6% in the last event. Butter inched 0.4% higher, following a 3.9% jump last time. Skim milk powder was up 2.5%, following a 4.4% drop, and whole milk power was up 1.8%, after falling 2.0% last time.
Lactose led the losses, plunging 18.8%, after not trading last time, and Cheddar dropped 3.5%, after slipping 0.8% last time.
StoneX Group equated the GDT 80% butterfat butter price to $1.6984 per pound U.S., up fractionally from the last event. CME butter closed Tuesday, a steal at $1.3625. GDT Cheddar cheese equated to $1.6514 per pound, down 6.6 cents, and compares to Tuesday’s CME block Cheddar at $1.77. GDT skim milk powder averaged $1.2696 per pound, up from $1.2348, and whole milk powder averaged $1.3774, up from $1.3539. CME Grade A nonfat dry milk closed Tuesday at $1.0825 per pound.
Feed costs rising
The Agriculture Department’s latest Crop Production report and World Agricultural Supply and Demand Estimates says the U.S. corn outlook is for lower production, reduced feed and residual use, larger exports, and smaller ending stocks.
Corn production was forecast at 14.507 billion bushels, down 215 million or 1% from last month’s forecast but up 7% from 2019. Yields are expected to average 175.8 bushels per acre, down 2.6 bushels from the previous forecast but 8.3 bushels above a year ago. Area harvested for grain was forecast at 82.5 million acres, unchanged from the previous forecast, but up 1% from a year ago.
Corn exports were raised 325 million bushels to 2.65 billion, which if realized would be a record high. Projected feed and residual use was lowered 75 million bushels based on a smaller crop and higher expected prices. With supply falling and use increasing, corn ending stocks are down 465 million bushels to 1.7 billion, which would be the lowest since 2013/14. The corn price was raised 40 cents to $4.00 per bushel.
Soybean production was forecast at 4.17 billion bushels, down 98 million or 2% from a month ago but up 17% from last year. Yields are expected to average 50.7 bushels per acre, down 1.2 bushels from the last forecast but 3.3 bushels above 2019. Area harvested was forecast at 82.3 million acres, unchanged from last month’s forecast but up 10% from a year ago.
With reduced production, ending stocks were projected at 190 million bushels, down 100 million from last month. If realized, soybean ending stocks would be at the lowest level in seven years. Soybean and product prices were all higher. The U.S. season-average soybean price was forecast at $10.40 per bushel, up 60 cents. The soybean meal price was forecast at $355.00 per short ton, up $20.00.
Cotton estimates were virtually unchanged. The production forecast is marginally higher, at 17.1 million bales, up less than 1% from a month ago but down 14% from a year ago.
Fluid sales down 1%
The Agriculture Department latest data shows September U.S. fluid milk sales amounted to 3.7 billion pounds, down 1% from September 2019.
Conventional product sales totaled 3.5 billion pounds, down 1.6% from a year ago. Organic products, at 237 million pounds, were up 7.7% and represented 6.4% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, up 4.1% from a year ago. Sales for the nine-month period totaled 11.7 billion pounds, also up 4.1% from 2019, and made up 33.3% of total milk sales for September and 33.9% thus far for the year.
Skim milk sales, at 225 million pounds, were down 15.2% from a year ago and were down 14.4% year to date.
Total packaged fluid milk sales, January through September, hit 34.4 billion pounds, up 0.4% from 2019. Conventional product sales so far totaled 32.3 billion pounds, down 0.3%. Organic products, at 2.2 billion pounds, were up 12% and represented 6.3% of total fluid milk sales so far for the year.
Meanwhile, DMN reports that Class I demand remains mixed in the COVID-19 era for school districts. Orders are mostly steady week to week, although suppliers continue to report each state and region are very distinctive this year.
 |
| #completedairyprogram |
.jpg)
