CME block Cheddar climbed to $1.86 per pound last Monday, highest it has been since Jan. 14, 2021, but word of the end of the food box program sent shockwaves through the markets.
The blocks fell to $1.74 Thursday, only to rally to a Friday close of $1.78, down a nickel on the week but 76.75 cents above a year ago when they hit bottom at $1.0125.
The barrels got to $1.7650 last Monday, fell to $1.6575 Thursday, but closed Friday at $1.69, 0.25 cents lower on the week, 68.50 cents above a year ago, and a closer to normal 9 cents below the blocks. Sales totaled 18 cars of block and 30 of barrel.
Monday’s market took the blocks up 2 cents to $1.80 and stayed there Tuesday as traders weighed the morning’s Global Dairy Trade auction and anticipated Wednesday’s March Milk Production report.
The barrels jumped 5.25 cents Monday and added 6.25 cents Tuesday, hitting $1.8050, highest they’ve been since Nov. 12, 2020, and an inverted 0.50 cent above the blocks.
Midwest cheese output is busier than it was this time last month, according to Dairy Market News. A number of producers who were running four- and five-day workweeks have added a day to their schedules in light of stronger demand and strengthening prices. Some have remained active throughout most of the year and still report being behind on orders, says DMN. Spot milk is tightening a bit, though prices reported mid-week remained below Class III. With spring flush underway, contacts are unsure what to expect as the warmer weather will assuredly bring lower overall milk output.
Western foodservice cheese demand continued to grow last week while retail demand held steady. Some contacts reported improvements at ports with getting vessel space and shipping containers, making it possible to move exports more readily. DMN says, “The announcement of the cancellation of the food box program is causing manufacturers to closely monitor cheese markets, watching cheese futures for any signal of price direction and subsequent demand. With the uncertainty of what government purchases may look like, the market tone within cheese markets is more unsettled than what it had been a few weeks ago.”
Spot butter made it to $1.9050 per pound on last Monday, highest since Jun. 10, 2020, but finished Friday at $1.85, down 3 cents on the week, though 66.25 cents above a year ago; 13 cars found new homes on the week.
Monday’s butter was up 2 cents but it tumbled 7.25 cents Tuesday to $1.7975, with 21 carloads exchanging hands on the day.
The StoneX Dairy Group stated in their April 12 Early Morning Update: “We lean bullish for butter."
"Longer-term strength is debatable but for now we won’t concern ourselves with fourth quarter pricing. Re-opening demand coupled with strong global demand continues to drive market dynamics.”
DMN reports that churning remains busy for now, but some butter producers suggest the time for active churning may be limited. Cream availability was notably tighter last week and has been tightening the past month. Ice cream producers are ramping up production and keeping cream from the churns. Butter sales are steady to robust, particularly in foodservice, says DMN.
Western cream is still plentiful. While some cream is flowing eastward, limited availability of tanker trucks was a barrier but butter production is seasonally active. Inventories are stable. Week after week foodservice demand continues to swell; some, but not all, market participants feel strongly that rebounding food service orders are the main force behind the higher butter prices. Retail butter demand is stable to strong and export demand is steady as contacts report that port congestion issues seem to be improving.
Grade A nonfat dry milk closed Friday at $1.2150 per pound, up a penny on the week and 36 cents above a year ago, with 27 sales reported on the week.
The powder gained 2 cents Monday, hitting $1.2350, highest since Feb. 10, 2020, but slipped back 0.50 cent Tuesday, to $1.23.
CME dry whey climbed back to its record 66 cent per pound perch last Tuesday but added 1.50 cents on Friday, setting a new CME record of 67.50 cents per pound, up 4.50 cents on the week and 28.50 cents above a year ago, on 5 sales.
Monday’s whey was unchanged but two unfilled bids took it up 2.75 cents Tuesday to 70.25 cents per pound, highest CME price ever and the highest whey price since January 2012.
GDT down 0.1%
The Global Dairy Trade auction’s weighted average slipped 0.1% on Tuesday, following a 0.3% uptick on April 6. Traders brought 55.2 million pounds of product to market, down slightly from the last event, and the smallest amount since July 21, 2020. Tuesday’s average winning price was $4,110, up from $4,081.
Lactose led the losses, down 3.4% after plunging 6.5% in the last event. Anhydrous milkfat was down 3.3%, after inching 0.8% higher last time. Butter was off 0.6%, following a 2.0% advance.
GDT Cheddar was up 1.2%, after posting a 2.2% gain last time, and whole milk powder inched 0.4% higher.
StoneX Group says the GDT 80% butterfat butter price equates to $2.5382 per pound U.S., down 1.8 cents, and compares to CME butter which closed Tuesday at a bargain $1.7975. GDT Cheddar, at $2.0120 per pound, compares to Tuesday’s CME block Cheddar at $1.80. GDT skim milk powder averaged $1.5265 per pound, down from $1.5272, and whole milk powder averaged $1.8583 per pound, up from $1.8531. CME Grade A nonfat dry milk closed Tuesday at $1.23 per pound.
China shopping
The proverbial elephant was in the dairy aisle in March. China’s Customs Statistics show record highs for the month with notable gains from New Zealand, Germany, the U.S., Australia and Poland, according to HighGround Dairy’s analysis.
Whole milk powder imports totaled 182.6 million pounds, up 76.6% from March 2020, almost 93% of them from New Zealand. Skim milk powder totaled 69.6 million pounds, up 27.2%.
Whey imports amounted to a record 267 million pounds, up 76.7%, and while volumes from the U.S. were higher, the U.S. market share fell slightly from 2020. Other countries that reported a rise in market share were Poland, Belarus and Turkey, according to HGD.
China imported 25.5 million pounds of butter, up 41.5% from a year ago, and cheese imports totaled 44.8 million pounds, up 74.1%.
Fluid milk and cream demand remained strong with imports from New Zealand expanding, as well as from the E.U. The largest supplier within the E.U. was Germany, followed by Poland and France, says HGD.
Fluid sales struggle
U.S. fluid milk sales continued to struggle in February but eked out a small gain from a year ago. USDA’s latest data show 3.58 billion pounds of packaged fluid products were sold in the month, up 0.2% from Feb. 2020, when adjusted for the Leap Day, and follows a 4.9% drop in January.
Conventional product sales totaled 3.4 billion pounds, down 0.4% from a year ago. Organic products, at 227 million pounds, were up 10.9%, and represented 5.7% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, up 0.3% from a year ago, but year to date sales were 2.9% below a year ago.
Skim milk sales, at 203 million pounds, were down 14.3% from a year ago and down 16.3% year to date.
Total packaged fluid milk sales for the two months amounted to 7.5 billion pounds, down 4.1% from 2020. Conventional product sales totaled 7.0 billion pounds, down 4.8%. Organic products, at 481 million pounds, were up 7.5%.
The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.
