Friday Closing Dairy Market Update - March Income Over Feed Was $6.46

MILK

Milk futures settled back into the close erasing the gains seen much of the day. Grain prices increased significantly, but the strength did not translate over into the dairy complex. However, all Class III futures contracts closed higher for the week except for front-month April. The April contract has two days remaining to trade with the Federal Order prices to be announced on Wednesday. USDA released the March Agricultural Prices report Friday. Now, I know that some will express some disbelief to the prices as it feels like feed prices have been high for a while. However, you need to go back and look at the price charts to see price movement during March. The income over feed price for the month was $6.46, up $0.24 from February. Those who chose the $9.50 level for the Dairy Margin Coverage program will receive at payment of $3.04 per cwt. The average corn price was $4.89 per bushel, up $0.14 from February and up $1.21 per bushel from a year earlier. The alfalfa hay price was $181 per ton, up $6 from February and up $9 from March 2020. The supreme/premium hay price was $210 per ton, down $1 per ton from February, but up $5 per ton from a year ago. This resulted in an alfalfa blend price used in the income over feed calculation of $195.50 per ton. The Central Illinois soybean meal average price was $410.02 compared to a February price of $427.28 per ton. The all-milk price increased $0.30 to $17.40 per cwt.

AVERAGE CLASS III PRICES

3 Month:	$18.89
6 Month:	$19.29
9 Month:	$19.14
12 Month:	$18.86

CHEESE

For the week, blocks increased 0.75 cent with 24 loads traded. Barrels increased 3 cents with 12 loads traded. Dry whey price increased 4 cents with six loads traded. Block cheese has had a fairly flat week, keeping prices in a sideways range it has been in for nearly a 1 1/2 months. The market seems balanced at the present time with buyers and sellers comfortable doing business at the current price level.

BUTTER

For the week, butter declined 1.75 cents with 21 loads traded. Grade A nonfat dry milk price gained 7.25 cents with 16 loads traded. Price has been struggling since reaching a high of $1.9050 on April 12. The question is whether butter is an indicator as to the eventual direction of cheese prices.

OUTSIDE MARKETS SUMMARY

May corn jumped 38 cents, closing at $7.40. May soybeans gained 28.50 cents, ending at $15.71, with May soybean meal up $3.40 per ton, closing at $426. May wheat increased 5 cents, closing at $7.4250. June live cattle increased $0.52, closing at $116.57. June crude oil declined $0.71, closing at $53.09 per barrel. The Dow declined 186 points, closing at 33,875, while the NASDAQ lost 120 points, closing at 13,963.

Friday Midday Dairy Market Summary - Butter Falls Back

Block cheese price slipped 0.25 cent closing at $1.80 with 7 loads traded. Sellers seemed intent on moving supplies. One unfilled bid remained at the close. Barrel cheese price increased 2 cents closing at $1.8350 with 2 loads traded. Butter price declined 5.25 cents closing at $1.7525 with 9 loads traded. Grade A nonfat dry milk gained 0.50 cent ending at $1.3250 with 9 loads traded. Dry whey price declined 1.50 cents closing at 66 cents with one load trade. Class III futures are mixed ranging from 7 cents lower to 7 cents higher. Class IV futures have not yet traded. Butter futures are 1.20 -- 2.75 cents lower. Dry whey futures are 0.05 -- 0.90 cent lower. USDA will release the March Agricultural Prices report Friday, providing average prices of commodities that will be used to determine income over feed.

Friday Morning Dairy Market Update - Milk Futures Might Show Weakness

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Lower
Soybean Futures:	5 to 10 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	2 to 5 Lower

MILK:

July through December continued to make new contract highs Thursday as there is concern over the impact of high grain prices on milk production. It is still too early to tell how much impact this will have due to the fact that the crop has been planted, is being planted, or still in the bag, depending on the area of the country. The drought monitor map shows a large section of the western half of the country in some form of drought. However, grain prices have recently backed off and may hold for a bit as weather as weather reports across the world are monitored. The demand for cows and replacement heifers is strong right now as farmer desire to keep barns full and milk production strong. This will keep production above year earlier levels during spring flush. USDA will release the March Agricultural Prices report Friday. The income over feed price should be similar to February due to the sharp rise of grain prices that did not begin until the end of the month triggered by the acreage report.

CHEESE:

Cheese prices are expected to hold, but not move significantly higher either. The rise of spot prices seems to have slowed as buyers are becoming a bit more cautious. There is sufficient supply to keep the market comfortable, but prices are high enough to limit buying in order to limit inventory is case price weakness unfolds. Demand is strong and supplies sufficient to meet that demand.

BUTTER:

Price looks like it will remain right in line with cheese prices. Nonfat dry milk continues to slowly work higher, improving Class IV prices. Churns are active with sufficient cream available. So far, there has been limited diverting of cream from butter production in order to take advantage of higher cream prices. Butter demand remains strong with plants wanting to meet that demand seeing no need to limit production.

Thursday Closing Dairy Market Update - Lackluster Trading Activity

MILK

Class III futures are slowly trying to creep back up to $20. Underlying cash prices have not seen much weakness with any weakness short-lived. Demand from bottlers and cheese plants is steady, utilizing the heavier volumes of milk that are coming in. There have not been any reports of discarded milk yet. Hopefully, there will not be any. However, there are longer waits at some manufacturing plants, which has slowed some milk movement. There is concern over the apparent difficulty of finding sufficient milk jugs due to the difficulty sourcing resin to manufacture those jugs. Sourcing the resin is becoming a greater concern for many businesses relying on plastics. There may be a shortage of net wrap, plastic wrap and plastic twine for baling. This would also extend over into silage bags as well. It may not necessarily be due to a shortage of resin but getting it delivered to the proper manufacturing facilities due to shipping issues. This will not have an impact on milk production unless prices for many products used, in addition to already high feed prices, will be enough to reduce income below cost of production and increase the rate of culling. Dairy cattle are bringing good prices at cattle auctions with high demand. This does not indicate any interest in reducing cattle yet.

AVERAGE CLASS III PRICES

3 Month:	$18.87
6 Month:	$19.29
9 Month:	$19.16
12 Month:	$18.88

CHEESE

Cheese plants indicate there is sufficient milk supplies for manufacturing needs. Cheese demand is strong, but recently, buyers have been a bit hesitant to go overboard with purchases. The void in the pipeline of the foodservice industry may have been filled and will now settle down to maintaining supply. Block cheese price has settled in a sideways pattern.

BUTTER

The weekly cold storage report shows butter inventory in selected warehouses had increased so far this month. That would indicate that supply has finally caught up with demand from the foodservice industry. Churning remains active as there is sufficient supply for demand. However, supply is tightening, and price is increasing as more is being utilized in the production of ice cream.

OUTSIDE MARKETS SUMMARY

May corn jumped 15.75 cents, closing at $7.02. May soybeans fell 15.25 cents, ending at $15.4250, with May soybean meal up $1.20 per ton, closing at $422.60. May wheat gained 12.25 cents, ending at $7.3750. April live cattle gains $0.52, closing at $119.47. June crude oil gained $1.15, closing at $65.01 per barrel. The Dow gained 240 points, closing at 34,060, while the NASDAQ gained 32 points, ending at 14,083.

Fluid Milk and Cream - Western U.S. Report 17

Some industry contacts report that California’s peak flush is likely in the rearview mirror.     Milk production is following seasonal patterns; while April is up slightly year over year,     the rate of output is very slowly decreasing. Class I orders are level. Spot milk sales and     requests are limited as the market is still tight. 

Milk output is steady, and Class I demand in Arizona is high. Bottling plants and other dairy manufacturers are active. 

Milk production is steady in New Mexico, and Class I orders are flat. High holdover numbers and limited tanker availability have created some hauling and processing delays. However,     balancing plants are maintaining busy production schedules, and contacts have not relayed     any instances of milk discarding. 

Weather in the Pacific Northwest is optimal for cow comfort, and milk is in good supply. After an accidental fire recently damaged an Oregon dairy plant, partner plants and other regional dairy processors have been working to help clear milk originally destined for the damaged plant. Class I demand is strong, and bottling is active despite some lingering milk jug resin sourcing difficulties. 

Milk production in the mountain states of Idaho, Utah, and Colorado is strong. Some industry contacts say there is a slight decline in Class I demand. 

Spot sales of condensed skim are limited, but contracts are steady. There is some slight tightening of cream, but available supplies are still meeting the demands of seasonal butter and ice cream production schedules. Cream multiples for all classes are unchanged from last week.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2800


     Information for the period April 26 - 30, 2021, issued weekly

     Secondary Sourced Information:

     PACIFIC NORTHWEST MARKET ORDER
Milk delivered to the Pacific Northwest Order 124 totaled 627.3 million pounds in March     2021. Class I utilization was 139.2 million pounds and accounted for 22.2 percent of     producer milk. The uniform price was $15.15, up $0.72 from February 2021, but $0.96 below     the same month a year ago.

     ARIZONA MARKET ORDER
Milk delivered to the Arizona Order 131 totaled 357.1 million pounds in March 2021. Class I     utilization was 113.1 million pounds and accounted for about 31.7 percent of producer milk.     The uniform price was $15.55, up $0.86 from February 2021, but $1.01 below the same month a     year ago.

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 2.037 billion pounds in March 2021. Class I     utilization was 429.8 million pounds and accounted for about 21.1 percent of producer milk.     The uniform price was $14.85, up $0.86 from February 2021, but $1.17 below the same month a     year ago.

Thursday Midday Dairy Market Summary - Milk Futures Extend Gains

Block cheese price remained unchanged at $1.8025 with no loads traded. Barrel cheese price increased 0.25 cent closing at $1.8150 with 1 load traded. Butter price remained unchanged at $1.8050 with no loads traded. The light trading activity has been a bit usual relative to the past few weeks. No definite conclusions can be made by this as far as price direction is concerned. Grade A nonfat dry milk increased a penny to $1.32 with 3 loads traded. Dry whey price remained unchanged at 67.50 with one load traded. Class III futures are 8 cents lower to 15 cents higher. Both June and October post the strongest gain. Class IV futures are 4 cents higher. Butter futures are unchanged to 1.62 cents lower. Dry whey futures are unchanged to 0.52 cent lower.

Dairy Groups Announce Federal Milk Pricing Proposal

Four Midwestern dairy groups this week announced a Federal Milk Marketing Orders proposal. The proposal aims to create long-term stability in fluid milk pricing and reducing the likelihood of negative producer price differentials that cut into farmers' revenue last year during the pandemic. The proposal from the Dairy Business Association, Edge Dairy Farmer Cooperative, Minnesota Milk and Nebraska State Dairy Association comes after the groups began studying options early this year. They say the proposal, which they are calling "Class III Plus," aims to build upon the current pricing system, recent proposals by dairy cooperatives, and dairy farmer petitions to define a better Class I pricing system. The Class III Plus proposal would, among other things, tie the Class I fluid skim milk price to the Class III cheese skim milk price plus an adjuster and do away with advanced pricing, a cause of the negative Producer Price Differentials last year. The proposal is also revenue-neutral, therefore more equitable among farmers, processors and customers.

Thursday Morning Dairy Market Update - Slightly Lower Futures Expected Before Cash

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 5 Higher
Soybean Futures:	1 to 8 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	3 to 5 Higher

MILK:

There has been little change fundamentally with the exception of high feed prices. This is causing a crunch to farms that have been purchasing feed on an as-needed basis. It is too early to tell how the crop will turn out this year as planting has basically just gotten underway with soil temperatures in the Corn Belt still rather cold. That can change quickly as the calendar rolls over into May this weekend. Even with a good crop, farmers will look at higher grain prices than last year likely through the coming year. Higher milk prices will offset some of that or maybe all of it if milk prices increase. Typically, higher feed prices mean higher milk prices, but it will take some time before this becomes evident. Cow numbers are large and milk production is strong. This may not change anytime soon. The market has an upward bias for the time being.

CHEESE:

Even though cheese output is strong, and inventory is increasing, demand has been pulling substantial amounts of cheese to the market. First quarter sales for McDonald's surpassed sales numbers of two years ago before there was COVID-19. The restaurant industry in general has rebounded more quickly than anticipated increasing demand for cheese.

BUTTER:

A few years ago, McDonald's switched to using butter in their restaurants and increasing traffic is good for butter demand. Other restaurants followed suit after McDonald's did. So even if there is less consumption at home, it is being offset by consumption away from home. Recently, retail sales of butter have slipped, but overall demand is strong.

Wednesday Closing Dairy Market Update - Plants Continue to Process Heavier Supply

MILK:

Milk production increases are varying across the country. Some areas indicate production is fairly steady, while others indicate milk receipts continue to increase. This keeps processing facilities running on full schedules. So far, plants have been able to handle the milk, but some plants are urging farmers to hold the line on milk production to avoid having to implement strict supply management for a period of time. Fluid milk sales are steady. Retail dairy sales are generally steady with some slowing indicated as restaurant traffic increases. Some restaurants indicate business has returned to pre-pandemic levels. The larger problem they are having is finding sufficient employees. USDA will release the March Agricultural Prices report Friday, which will show a lower income over feed that it did in February. However, it may not be too much different due to March being a period during which corn price and soybean meal prices were relatively stable. The real increases of grain prices took place in April.

AVERAGE CLASS III PRICES:

3 Month:	$18.83
6 Month:	$19.23
9 Month:	$19.11
12 Month:	$18.85

CHEESE:

Cheese plants indicate they are receiving sufficient milk supply to keep plants running at capacity and customers satisfied. Buyers of cheese are balancing the potential for higher prices with the apprehension of owning too much. There has been some interest in purchasing cheese ahead of time as a hedge against the potential for higher cheese prices later in the year due to the impact of high grain prices on milk production. However, there also is the potential for cheese prices to decline if weather is positive for crop development and more acres are planted and milk production remains strong. Buyers do not want to be left owning too much inventory.

BUTTER:

There are reports that retail orders have slowed somewhat. Demand still remains strong, but more people are eating meals away from home, increasing demand from the food service industry. Butter inventory remains significantly higher than last year, but strong demand has limited inventory build. Cream is still readily available, keeping churns active.

OUTSIDE MARKETS SUMMARY:

May corn declined 9.25 cents, closing at $6.8225. May soybeans gained 8 cents, closing at $15.5775 with May soybean meal down $4.20 per ton, closing at $421.30. May wheat declined 8.50 cents, ending at $7.2525. April live cattle gained $0.57, ending at $118.95. June crude oil gained $0.92, closing at $63.86 per barrel. The DOW gained 165 points, closing at 33,820 while the NASDAQ declined 39 points, ending at 14,051.

Wednesday Midday Dairy Market Summary - Cash Remains Supported

Block cheese price increased 0.25 cent closing at $1.8050 with 1 load traded. Barrel cheese price gained 1.50 closing at $1.8125 with 3 loads traded. Butter price gained 0.75 cent ending at $1.8050 moving slightly above blocks again. There was one load traded. Grade A nonfat dry milk remained unchanged at $1.31 with no loads traded. Dry whey price increased 1.50 cents closing at 67.50 cents with 1 load traded. Dry whey is trying to regain the loss of last week. Class III futures are 2 cents lower to 25 cents higher with August showing the greatest gain. Class IV futures are 2 cents to 15 cents higher. Butter futures are 0.50 cent lower to 0.30 cent higher. Dry whey futures are 0.68 cent lower to 0.73 cent higher. Grain futures are diverging with old-crop futures higher while new-crop futures are lower. This is causing some confusion as to what this could mean for milk prices as the year progresses.

Wednesday Morning Dairy Market Update - Market Uncertainty May Pressure Futures

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	5 to 12 Lower
Soybean Futures:	10 to 20 Lower
Soybean Meal Futures:	$2 to $4 Lower
Wheat Futures:	12 to 18 Lower

MILK:

The increasing of milk futures Tuesday was a bit subdued as traders were unsure what to do based on the movement of underlying cash. Cash prices traded both higher and lower depending on the commodity before closing spot trading. This sent mixed signals about the market keeping traders rather cautious. There is information that spot milk prices are lowering as there is some difficulty finding enough trucks to haul milk from one area to another. Increasing milk production is resulting in increased wait times for trucks to unload at plants. This may only become worse as spring flush progresses. Demand from bottlers is steady with demand for cheese remaining strong.

CHEESE:

Cheese output is keeping pace with demand while some is moving to inventory. Increasing milk receipts at manufacturing plants that are already at capacity, is beginning to cause a problem. Plants are receiving offers for spot milk at attractive prices but are turning them away due to the inability to process any more. So far, this has not had a significant impact on the market.

BUTTER:

Price may have a difficult time reaching back up to the highs again for a period of time. Demand from the food service industry has been growing, but the pipeline of supply may have been filled to the point where it will need to be maintained from here. This may allow churning to keep up with demand. Price is expected to move in a sideways pattern for a bit.

Tuesday Closing Dairy Market Update - Fluid Milk Sales Decline 3.2%

MILK

The front-month April Class III futures contract was 2 cents lower as it adjusts slightly from day to day. This contract is priced with limited movement taking place over the next week until the price announcement next Wednesday. May was down 8 cents, which was a bit surprising, as it is carrying very little premium to spot prices. Choppy price movement is keeping this contract subdued. February fluid milk sales were lagging last year. It seems that the huge increase in milk demand and consumption was only for a brief period early in the pandemic. Total fluid milk sales in February were 3.2% lower than what they were in February 2020. Remember, there was one less day this year than last year, as well, but this is recording sales, which may not make much difference. Conventional milk sales declined 3.8%. Whole milk sales declined 3.2%, flavored whole milk increased 5.0%, reduced-fat increased 3.4%, low-fat sales fell 6.2%, fat-free skim fell 17.4%, flavored fat-reduced sales fell 31.0% with buttermilk down 5.9%. Organic sales increased by 6.8%. Organic whole milk increased 4.1%, organic reduced fat increased 9.8%, organic low fat increased 7.1%, organic fat-free skim gained 2.3% and organic flavored fat-reduced milk sales increased 25.8%. The reason for the overall decline of sales is the fact that organic sales volumes are substantially less than conventional.

AVERAGE CLASS III PRICES

3 Month:	$18.79
6 Month:	$19.13
9 Month:	$19.03
12 Month:	$18.79

CHEESE

Milk remains readily available for manufacturing. Plants are doing the best they can to absorb increasing milk receipts as spring flush is upon us. Production schedules are full. Cheese demand is good both through retail and foodservice industry channels. The market may have moved into a period of uncertainty as the restaurant pipeline is supplied with demand somewhat more steady.

BUTTER

Demand for butter is improving for the foodservice industry but has also been lower at the retail level. This would stand to reason as more people eating out again will translate into less consumption at home. Inventory continues to remain large despite only a minor increase of inventory in March.

OUTSIDE MARKETS SUMMARY

May corn gained 15 cents, closing at $6.9550. May soybeans fell 19.25 cents, closing at $15.4975, with May soybean meal down $3.30 per ton, closing at $425.50. May wheat declined 5.75 cents, ending at $7.3375. April live cattle slipped $0.12, closing at $118.37. The Dow gained 3 points, closing at 33,985, while the NASDAQ declined 49 points, lower at 14,090.

Tuesday Midday Dairy Market Summary - Cash Trades Steady to Higher

Block cheese prices remained unchanged at $1.80 with 8 loads traded. Barrel cheese price increase 0.25 cent closing at $1.7975 with 4 loads traded. Blocks traded 1.75 cents lower before aggressive buying brought price back up to unchanged. Buyers and sellers seem comfortable doing business at these levels. Butter price increased 2.75 cents closing at $1.7975 with 11 loads traded. Price moved up to $1.83, but then fell back to the closing price. Grade A nonfat dry milk gained 2 cents closing at $1.31 with 2 loads traded. This is the highest price since Oct. 24, 2014. This will provide increasing support to the Class IV price. Dry whey price increased 1.50 cents, closing at 66 cents with no loads traded. Class III futures are 14 cents lower to 17 cents higher. Class IV futures are 7 cents higher. Butter futures are 0.70 cent to 2.25 cents higher. Dry whey futures are 0.13 cent to 3.50 cents higher.

U.S. milk output up 1.8% over March 2020

U.S. milk output grew for the 10th consecutive month and set a bearish new monthly high in March.

The Agriculture Department’s preliminary data shows output hit 19.75 billion pounds, up 1.8% from March 2020. Output in the top 24 states, at 18.84 billion, was up 2.0%. Revisions added 37 million pounds to the February 50-state estimate, now put at 17.7 billion pounds, up 2.3% from a year ago, after adjusting for the Leap Day.

March cow numbers were up for the 14th consecutive month, totaling 9.468 million head in the 50 states, up 8,000 from February’s count, which was revised up 2,000 head, and up 77,000 from March 2020.

Output per cow averaged 2,086 pounds, up 20 pounds or 1% from a year ago.

California was up 1.5% from a year ago, thanks to a 35-pound gain per cow, but with 2,000 fewer cows. Wisconsin jumped a tank busting 97 million pounds or 3.7% from March 2020, thanks to a 65-pound gain per cow and 7,000 more cows.

Idaho was up 0.8% on 5,000 more cows but output per cow was unchanged. Michigan was up 3.5%, on 14,000 more cows and a 5-pound gain per cow. Minnesota was up 7.6%, on a 70-pound gain per cow and 17,000 more cows. New Mexico, still recovering from winter storm Uri, was down 1.1%, due to a 30-pound drop per cow, though cow numbers were up 1,000 head.

New York inched up 0.5%, on a 10-pound gain per cow. Cow numbers were unchanged.

Oregon was off 0.9%, on 2,000 fewer cows but output per cow was up 10 pounds. Pennsylvania was down 1.5%, on a drop of 10,000 cows, though output per cow was up 10 pounds.

South Dakota took back the title of the biggest gain, up 13.4%, thanks to 18,000 more cows outweighing a 10-pound drop per cow. Indiana wasn’t far behind, up 10%, thanks to 17,000 more cows milked and a 5-pound per cow gain.

Texas, which was also hit hard by Uri, was up 3.9%, on 27,000 more cows but output per cow was down 15 pounds. Washington state was down 1.2% on 2,000 fewer cows, and a 10-pound drop per cow.

Murky outlook

Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter, pointed out in the April 26 "Dairy Radio Now" broadcast that the report was far from bullish though it did point out some regional items of interest.

Milk output growth slowed in the Southwest and actually fell in the Northeast, according to Gould, and both regions were impacted by processor level supply management programs. Other regions saw unhindered growth in output.

Dairy demand, of course, is the crucial factor and Gould pointed out that, prior to the COVID pandemic, we consumed more cheese and butter via restaurants than at home. We’re seeing more people traveling and eating out again, he said, so dairy demand at retail is shifting back to foodservice.

“That begs the question,” he concluded, “Can we grow dairy demand fast enough to keep up with supply. So far the answer is yes, but as we move forward it becomes a bit more murky.”

Culling jumps

March dairy cow culling topped the previous month and year. The USDA’s latest Livestock Slaughter report shows an estimated 302,200 head were sent to slaughter under federal inspection in March, up 37,000 head from February and 14,200 or 4.9% above March 2020.

Culling in first quarter 2021 totaled 844,700 head, down 7,800 or 0.9% from the same period a year ago.

Lots of butter & cheese

March butter stocks didn’t shrink but they didn’t build either, according to USDA’s latest Cold Storage report, and that was good news.

The March 31 inventory totaled 354.6 million pounds, virtually unchanged from the February level which was revised 1.9 million pounds higher, but was 45 million pounds or 14.5% above March 2020. March was the 21st consecutive month that butter stocks topped those a year ago.

StoneX Dairy’s Dustin Winston says, “The report will heighten interest in the dairy products report as we look to see if strong demand or a lack of butter production triggered the unchanged stocks.”

American type cheese climbed to 831.8 million pounds, up 14.6 million pounds or 1.8% from February, which was revised up 1.2 million pounds, and is a whopping 55.4 million pounds or 7.1% above a year ago.

The “other” cheese category hit 611.8 million pounds, up 14.4 million pounds or 2.4% from February and 36.9 million or 6.4% above a year ago.

The total cheese inventory stood at 1.47 billion pounds, up 30 million pounds or 2.1% from February and a hefty 91.8 million pounds or 6.7% above a year ago. March was the fifth month in a row that total cheese stocks grew.

The April 22 Daily Dairy Report says the increases in American and other stocks suggest that “cheese demand has been lackluster across both retail and foodservice channels,” adding that “lighter than-anticipated government purchases may also have contributed to the accumulation.”

Prices searching

CME cash block Cheddar hit $1.80 per pound last Monday but finished Friday at $1.7925, up 1.25 cents on the week and 72.25 cents above a year ago.

The barrels closed Friday at $1.8050, up 11.50 cents, highest since Nov. 12, 2020, 75.50 cents above a year ago, and an inverted 1.25 cents above the blocks, first time since July 30, 2020; 22 cars of block and 26 of barrel were sold last week.

The blocks ticked up 0.75 cents Monday and stayed there Tuesday at $1.80, with 8 cars exchanging hands both days.

The barrels were down a penny Monday but inched up a quarter-cent Tuesday, to $1.7975.

The StoneX dairy Group wrote in Monday’s Early Morning Update: “It was surprising to see the spot strength following the bearish milk production and cold storage reports but looking at how well food service sales performed in the month of March, a solid 10% above 2019 levels, it seems as though cheese makers lean on the side of optimism on their cheese sales and are no longer afraid to restrict production.”

No doubt the climbing corn price is adding to the pricing mix as well.

Midwest cheese plant managers told Dairy Market News last week that spot milk remains available with prices at or around $5 under Class III. Some plants were reselling milk on some days while other days they were trying to stay ahead of the robust supply. Schedules are full and record-setting in some cases while others have only recently upped their output to fulfill demand. Cheese demand is mostly positive but market tones are uncertain, says DMN, with barrel prices overtaking blocks, “which creates questions about near-term trends.”

Foodservice cheese demand has increased in the West as more areas loosen COVID restrictions. Some contacts report a shift in production focus from retail orders, which have remained steady, to growing restaurant/foodservice. Changes in government programs regarding the purchase of cheese and dairy products in general have caused some market instability. The block-barrel inversion also left contacts with uncertainty. Production schedules are full as there continues to be plenty of milk available, according to DMN.

Butter got back to $1.87 per pound last Monday, fell to $1.74 Thursday, and closed Friday at $1.77, 8 cents lower on the week but 62.50 cents above a year ago.

Forty-four cars were sold, highest since December 2020. Outside a few temporary blips, you’d have to go back to November 2019 to find butter consistently above $2 a pound.

Monday’s butter was unchanged but it was up 2.75 cents Tuesday, hitting $1.7975, with 11 carloads finding new homes.

DMN says, “Since roughly the ides of March, Central foodservice butter sales have incrementally shifted higher week after week,” however, contacts last week reported sales were “somewhat subdued though churning was busy.”

Western cream is abundant with “a few pockets of seemingly tightening output,” says DMN, but even in those areas, cream supply is meeting demand. Limited tanker availability continues to stymie greater movement of cream within and out of the region. Butter makers are maintaining seasonally active schedules and inventories are stable. Foodservice demand is “booming,” says DMN, some cafeterias, restaurants, and other foodservice outlets are nearing pre-pandemic levels of operation and retail sales are steady. But some contacts report that export demand is beginning to decline as U.S. prices are becoming less competitive.

Grade A nonfat dry milk climbed to a Friday close at $1.2525 per pound, up 3.75 cents on the week and 44.25 cents above a year ago. There were 8 sales reported on the week.

Traders jumped the powder 3.75 cents Monday and added 2 cents Tuesday, pushing the price to an eye catching $1.31 per pound, highest since Oct. 20, 2014.

CME dry whey set a new CME record at 70.25 cents per pound last Tuesday, but backed down to a Friday close of 62 cents, down 5.50 cents on the week and 23.50 cents above a year ago. There were 4 sales on the week at the CME.

The whey gained back 2.5 cents Monday on 3 trades, and added 1.50 cents Tuesday on unfilled bids, ascending to 66 cents per pound.

From: Capital Press

Dairy Farmers to Seek Emergency USDA Hearing on Class I Mover Reform

The National Milk Producers Federation’s Board of Directors voted last week to request an emergency USDA hearing on a Federal Milk Marketing Order proposal. The proposal, NMPF says, would restore fairness for farmers in the Class I fluid milk price mover. The endorsement of the board, which represents dairy farmers and cooperatives nationwide, follows approval from the organization’s Executive Committee. The NMPF plan would ensure that farmers recover lost revenue and establish more equitable distribution of risk among dairy farmers and processors. The current mover was adopted in the 2018 farm bill and intended to be revenue neutral while facilitating increased price risk management by fluid milk bottlers. But the new Class I mover contributed to disorderly marketing conditions last year during the height of the pandemic and cost dairy farmers over $725 million in lost income. NMPF’s proposal would help recoup the lost revenue and ensure that neither farmers nor processors are disproportionately harmed by future significant price disruptions.

Tuesday Morning Dairy Market Update - Higher Prices Expected

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	10 to 30 Higher
Soybean Futures:	12 to 30 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	20 to 30 Higher

MILK:

Class III milk futures are headed back to the highs unless cash prices stall at current levels. Even without full support from underlying cash, futures are increasing as traders are looking at escalating grain prices. The question will be at what point culling will increase significantly and impact milk output. There will be a delayed reaction to this. The potential for higher milk prices will slow any quick decision to cull cattle unless there is a replacement that might increase profitability. Milk production is still expected to exceed the level of last year for the foreseeable future. This will keep sufficient milk supply to satisfy bottling and manufacturing needs. Grain prices continue to escalate with May corn reaching the expanded limit gain of 40 cents during overnight trade.

CHEESE:

There is interest in purchasing cheese, but there is also interest in selling to keep product moving due to strong a manufacturing pace. Many plants are running at capacity and trying to move cheese to the market as quickly as possible rather than build inventory. Increased demand from the food service industry is keeping product moving. Price could remain choppy.

BUTTER:

There has been some recent news that international interest might be slowing due to the higher price. However, that does not seem to be the only cause as world price is still quite a bit higher than the U.S. price. It is likely supply is catching up with demand, leaving buyers less aggressive. Price may drift in the current range for a period of time.

Monday Closing Dairy Market Update - Milk Futures Extend Gains

MILK

Milk futures pushed higher and then remained with double-digit gains through the close. Cheese prices were mixed, which did little to change the price calculation. But the fact that they held, and that dry whey bounced back a good amount from last week, was enough to extend the bullish momentum from Friday. The market has digested the milk production and cold storage reports and is looking ahead to upcoming demand and the potential for milk production. Right now, milk production is strong, and even with high grain prices, it will not be affected in the near term. There is feed on farms, and planting will continue as time progresses. The concern for corn and soybeans is the dryness in Brazil and some areas of the U.S. as well as the delay in planting so far. Corn planting progress is currently at 17% completed compared to 24% a year ago and 20% for the five-year average. Soybean planting is 8% complete compared to 7% a year ago and a five-year average of 5%. Soybeans are on a good pace, but corn is causing enough concern to push price higher. It is early, and there is no way of knowing how the weather will be throughout the growing season.

AVERAGE CLASS III PRICES

3 Month:	$18.79
6 Month:	$19.10
9 Month:	$18.99
12 Month:	$18.74

CHEESE

Barrel cheese weakness offset an increase of blocks, leaving pricing somewhat neutral. However, the gain of dry whey provided strong support under the market. Buyers of cheese are being proactive and are looking to increase ownership of product as a hedge against the potential of tightening milk supply and rising product prices. There are currently plentiful milk supplies with no indication of a tightening market. However, the perception and possibility are there and are having an influence on the market.

BUTTER

Cream supply varies. Western cream is available, while supply is tightening in some other areas of the country where ice cream manufacturing is increasing. However, even though supply is tightening, there is sufficient available for churning. The price for available cream is increasing. Foodservice industry demand is strong and continues to increase much faster than anticipated. There have been some rumblings that export interest is just beginning to slow due to higher prices.

OUTSIDE MARKETS SUMMARY

May corn jumped 25 cents, closing at $6.8050. May soybeans jumped 29.25 cents, closing at $15.69, with May soybean meal up $6.40 per ton, closing at $428.80. May wheat jumped 29.25 cents, closing at $7.3950. April live cattle gained $0.65, ending at $118.50. June crude oil increased $0.10, closing at $52.76 per barrel. The Dow slipped 62 points, ending at 33,982, while the NASDAQ gained 122 points, closing at 14,139.

Monday Midday Dairy Market Summary - Milk Futures Push Higher

Both block and barrel cheese prices initially moved lower than where they closed. Blocks gained 0.75 cent closing at $1.80 with 8 loads traded. Price initially declined to $1.7775 before buying interest moved it up from that level. Barrel cheese price declined a penny closing at $1.7950 with 2 loads traded. Price initially declined to $1.79 before buying interest brought it off the lows. This had little impact on Class III futures compared to where they had been prior to spot trading. However, futures have gained strength since spot trading closed due to dry whey price increasing 2.50 cents closing at 64.50 cents with 3 loads traded. Class III futures are 2 cents to 44 cents higher with July showing the greatest gain. Butter price remained unchanged at $1.77 with no loads traded. Grade A nonfat dry milk price increased 3.75 cents ending at $1.29 with 2 loads traded. Class IV futures are 12 cents higher. Butter futures are unchanged to 1.62 cents lower. Dry whey futures are 0.28 cent to 2.55 cents higher.

Monday Morning Dairy Market Update - Milk Futures Show Further Strength

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	5 to 8 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	7 to 14 Higher
Soybean Futures:	2 to 5 Higher
Soybean Meal Futures:	Steady to $1 Higher
Wheat Futures:	8 to 15 Higher

MILK:

The volatility of milk futures might be similar to last week if underlying cash prices move around similarly to what they did. Some major reports are behind us again providing some long-term market direction if the trends continue. However, there are factors that can influence markets significantly and make it look quite different in a short period of time. One major concern is the escalation of feed prices. Weather is having a large impact on grain prices as supplies are tightening and weather is delaying planting somewhat in the U.S. with dry conditions a concern for the Plains and Brazil. Feed prices are becoming a greater concern but will not have an immediate impact on milk production. Strong milk output is expected to continue through spring flush as cow numbers and milk per cow are high.

CHEESE:

Cheese prices may be moving into a sideways range as lower price generate buyer interest while higher price increasing selling interest. Demand is steady now that the food service industry pipeline has caught up to demand. This will need to be maintained as buyers need to fill orders and sellers need to continue to move product to keep inventory from building.

BUTTER:

Demand is strong, but steady. Churning is active with sufficient supply available. Cream price is increasing with supply not as readily available as it had been. Ice cream production has increased pulling substantial amounts of cream from supply. Price is below cheese again but will remain in close proximity. Inventory increased slightly in March indicating strong demand, but it still remains substantially above a year ago.

Friday Closing Dairy Market Update - Class III Milk Futures, Cheese, Butter Rise Friday; Butter Slips From Prior Week

MILK:

To end the week, Class III Milk futures finished up $0.21 to close at $18.89 per cwt on the May, but down considerably from the $20.05 high set on April 13. For the week, Class III finished down 0.15 cents. Nonfat Dry Milk finished unchanged at $1.2525, with no trades but 1 bid and 4 offers. The weekly average of 1.2420 compared to the previous week at 1.2105. There were just eight trades for the week.

CHEESE:

Cheddar blocks closed up 1.75 cents per pound on the day at $1.7925 with four trades recorded. Cheddar barrels closed up 1 cent at $1.8050 with three trades, one bid and no offers. USDA NASS Cold Storage report on Thursday showed total natural cheese stocks in refrigerated warehouses on March 31, 2021, were up 2% from the previous month and up 7% from March 31, 2020.

BUTTER:

Butter closed up 3 cents at $1.77 with five trades, six bids and only two offers. USDA NASS Cold Storage report showed butter stocks were up slightly in March versus the prior month and up 15% from a year ago. The butter stocks surely had a negative impact on this week's trade, with the weekly average price of $1.7940 down sharply from the previous week's average of $1.8810. The volume of trade for the week was 44.

The March report was a surprise to the market in that butter inventories remain heavy by historical standards, with stocks at the end of March the highest since 1993 for that time of year. 

OUTSIDE MARKETS SUMMARY:

July corn closed up 1 3/4 cents per bushel, July soybeans are up 1 3/4 cents, July KC wheat finished up 5 3/4 cents, July Chicago wheat closed up 1 3/4 cents and July Minneapolis wheat is up 10 3/4 cents. The June U.S. Dollar Index is trading down 0.496 at 90.825. The Dow Jones Industrial Average is up 269.56 points at 34,085.46. June gold is down $5.80 at $1,776.20, May silver is down $0.15 at $26.03 and May copper is up $0.0685 at $4.3415. June crude oil is up $0.74 at $62.17, June heating oil is up $0.0134, June RBOB is up $0.0239 and May natural gas is down $0.023.

NMPF Supports Labeling Integrity Through DAIRY PRIDE Act

The National Milk Producers Federation commended lawmakers for reintroducing the DAIRY PRIDE Act. The legislation, NMPF says, would bring clear, accurate labeling information for consumers and end harmful mislabeling of dairy foods for plant-based products. The legislation requires the U.S. Food and Drug Administration to enforce its own existing standards of identity on imitation dairy products after decades of inaction. Senators Tammy Baldwin, a Wisconsin Democrat, and James Risch, an Idaho Republican, introduced a Senate version of the bill, and a companion bill was introduced in the House. NMPF President and CEO Jim Mulhern states, “FDA is responsible for the integrity and safety of our nation’s food, medicine, and medical devices, and it’s crucial that it enforce its own standards and requirements.” Standards of identity legally define what constitutes a specific food or food product, requiring the food product to carry certain qualities. When enforced, these legal standards protect consumers by helping to ensure the integrity of their food.

Friday Morning Dairy Market Update - Grains Weaken on Profit-Taking Overnight

OPENING CALLS:

Class III Milk Futures:	5 to 8 Lower
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	8 to 10 Lower
Soybean Futures:	4 to 6 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	3 to 6 Lower

MILK:

Class III milk futures took a beating Thursday with pressure from lower spot prices. The other factor was continued strong milk production during the month of March, according to the Milk Production report. Friday the market will contend with the potential for further weakness of cash prices as well as the negative implications of the Cold Storage report. There is plenty of milk available for both bottling and manufacturing demand. Plants report increasing milk receipts. Most plants are already running at capacity, increasing the anxiety over handling the milk during spring flush. Milk futures are expected to see further pressure Friday.

CHEESE:

Increasing cheese supplies in the face of strong demand does not make one feel warm and fuzzy about prices. The continued increase of American cheese stocks by 14.6 million pounds in March with inventory up 7% over last year, is a bit bearish. Swiss cheese stocks gained 1.0 million pounds being 2 percent below last year. Other cheese was up 14.4 million pounds and 6 percent over last year. This put total cheese up 30.0 million pounds and 7 percent above last year. Spot prices may weaken further Friday.

BUTTER:

Strong demand from the food service industry was very evident on the March Cold Storage report. Inventory only increased 29,000 pounds. This is the positive aspect of the market. The negative aspect is that inventory remains 15% percent higher than a year earlier. The market is expected to remain in a sideway range for a period of time.

Thursday Closing Dairy Market Update - Class III Milk Futures, Cheese and Butter Futures End Lower

MILK

For the first four days of the week, Class III milk has traded in a tight range, with the Thursday close of $17.65 so far the lowest close this week. The April 21 USDA NASS Milk Production report showed that, for the 10th month in a row, U.S. milk production grew, with the March report showing production up 2%.

CHEESE

Cheddar block closed down 2 cents on the day at $1.7750 with five trades and two offers. Cheddar barrel closed down 1 cent at $1.7950 with 10 trades and two offers. The USDA NASS Cold Storage report Thursday showed total natural cheese stocks in refrigerated warehouses on March 31, 2021, were up 2% from the previous month and up 7% from March 31, 2020.

BUTTER

Butter closed down 5.25 cents at $1.74 with eight trades, three bids and three offers. The USDA NASS Cold Storage report showed butter stocks were up slightly in March versus the prior month and up 15% from a year ago. The March report was a surprise to the market in that butter inventories remain heavy by historical standards, with stocks at the end of March the highest since 1993 for that time of year.

OUTSIDE MARKETS SUMMARY

July corn closed up its daily limit of 25 cents, and December corn was up 16 3/4 cents. July soybeans reached new contract highs, closing up 34 3/4 cents, and November soybeans were up 28 cents. July KC wheat closed up 37 cents, July Chicago wheat was up 35 1/2 cents and July Minneapolis wheat was up 29 1/2 cents. The June U.S. Dollar Index was trading up 0.25 at 91.38. The Dow Jones Industrial Average was down 301.78 points at 33,835.53. June gold was down $13 at $1,780.10, May silver was down $0.47 at $26.10 and May copper was down $0.0145. June crude oil was up $0.09 at $61.44, June heating oil was up $0.0075, June RBOB gasoline was down $0.0074 and June natural gas was up $0.057.

Thursday Midday Dairy Market Summary - Block and Barrel Cheese Down

Block cheese price was down 2 cents at $1.775 with 5 loads traded. Barrel cheese price was down 1 cent at $1.79 with 10 loads traded. Butter price was down 5.25 cents at $1.74 with 8 loads traded. Grade A nonfat dry milk price was up 1.25 cents at $1.2525 with 2 loads traded. Dry whey price was down 2.25 cents at 66.00 cents with 1 load traded. April Class III futures are unchanged at $17.65. Class IV futures have not yet traded.

Late Wednesday afternoon, the USDA released their March Milk Production reports showing milk production in the 24 major States during March totaled 18.8 billion pounds, up 2.0% from March 2020. February revised production, at 16.9 billion pounds, was down 1.1% from February 2020. However, production was 2.5% above last year after adjusting for the leap year. The February revision represented an increase of 36 million pounds or 0.2% from last month's preliminary production estimate.

Fluid Milk and Cream - Western U.S. Report 16

Milk production in California is approaching spring peak levels. Class I demand is level.     Facing another year of drought, Californians in some areas of the state have been asked to     voluntarily reduce residential water use. Cutbacks to irrigation water throughout the summer     are anticipated, and industry contacts are apprehensive that the cutbacks may be steep for     some farmers. 

Arizona milk output is plentiful. Class I demand is high, and some dairy processors with available capacity are bringing in additional milk from out of state. 

Milk production in New Mexico is steady. Class I demand is level. Some drivers and tankers are being diverted to other industries, which is creating some milk hauling delays within New     Mexico and throughout the Southwest. 

In the Pacific Northwest, component levels are high. Milk output is strong and so is Class I demand. Bottling and other dairy manufacturing operations are active, and overbase programs are also working to manage the abundance of milk. 

Week over week milk production is starting to decrease a little in the mountain states of Idaho, Utah, and Colorado. Class I orders are level. Local requests for condensed skim     spot sales are reported to be limited, although contracts are steady. Tanker availability is     a barrier to moving condensed skim out of the region. 

Cream supply is adequate to abundant in the West. Output is following seasonal patterns, with some areas starting to see slight decreases. However, supply is still meeting demand. Western cream multiples for all classes are steady.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2800


     Information for the period April 19 - 23, 2021, issued weekly

     Secondary Sourced Information:

     MONTHLY MILK PRODUCTION
The NASS Milk Production report noted March 2021 milk production in the 24 major states was     18.8 billion pounds, 2.0 percent higher than a year ago. Milk cows in the 24 selected     states totaled 8.95 million head, 93,000 head more than a year ago. The following table     shows western states included in the report and the monthly milk production changes compared     to a year ago:

     March 2021 Milk Production, (USDA-NASS)

                   (Million Lb.)   % Change From
                                     1 Year Ago

     Arizona           443            - 3.1
     California      3,732            + 1.5
     Colorado          451            + 4.4
     Idaho           1,392            + 0.8
     New Mexico        721            - 1.1
     Oregon            224            - 0.9
     Utah              187            - 2.6
     Washington        573            - 1.2

Thursday Morning Livestock Market Update - Cold Storage Report Coming Today

OPENING CALLS:

Class III Milk Futures:	Steady to 8 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	5 to 8 Higher
Soybean Futures:	12 to 19 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	5 to 9 Higher

MILK:

One thing is assured, and that is that milk production will continue to remain strong for a few months despite high feed prices. The Livestock Slaughter report will be released Thursday providing information of dairy cattle slaughter for March. However, even if slaughter has increased over the previous year or month, the Milk Production report showed an increase in cow numbers of 8,000 head over February. Production per cow was up 20 pounds and a moderate increase, but there is a strong potential for further increases as we move through spring flush. Most plants indicate they are already running at capacity and are urging patrons to hold the line on milk production. However, strong demand for dairy allows plants to move product quickly to the market, limiting the build of inventory. Rapidly increasing feed prices is a high concern moving into the growing year.

CHEESE:

Cheese prices are not expected to fall apart and trend lower, but they may have reached a level at which supply and demand may be somewhat balanced. There is sufficient cheese available for demand. Cheese plants are running at capacity, but having little difficulty moving product. The slight weakness of blocks and dry whey Wednesday might cause buyers to hold back for a bit.

BUTTER:

The March Cold Storage report will be watched for the amount of increase of butter inventory. Strong demand both domestically and internationally should have limited the growth of stocks. However, churning was active during the month with plentiful cream supplies. Price is expected to chop around at current levels.