Friday Closing Dairy Market Update - April Income Over Feed Is $7.13

MILK:

Class III milk futures in the front months closed substantially lower for the week. June fell $0.85, July fell $0.90 with August down $0.61. Milk futures have fallen drastically over the past three weeks. The concern over escalating feed prices was alleviated to some extent, but certainly has not been eliminated. Much can happen over the growing season to impact crop production and milk prices. USDA released the April Agricultural Prices report today which surprisingly showed an increase of income over feed from March. The average price of corn for April was $5.31, an increase of 42 cents per bushel from March. This compares to a corn price of $3.29 in April 2020. The Central Illinois soybean meal price reached $413.36 per ton in April, up only $3.34 per ton from March. Last year, the soybean meal average price was $295.39 per ton. The blended alfalfa hay price averaged $199 per ton. This blend consists of an alfalfa hay price of $187 per ton and a premium/supreme hay price of $211.00 per ton. This blend is used in the calculation of the income over feed. Hay prices have not changed much over the year. The alfalfa hay price a year ago was $180 per ton. The supreme/premium alfalfa hay price a year ago was $209 per ton. The All-milk price for April was $18.40 per cwt, up $1.00 from March. This compares to an All-milk price a year ago of $14.40. This puts the income over feed cost at $7.13. One year ago, the income over feed cost was $6.03. One would think that income over feed should be lower than last year. Grain prices were less expensive, but the All-milk price was substantially lower. Those who chose the $9.50 level under the DMC program will receive a payment of $2.37 per cwt.

Average Class III Prices:

3 Month:	$18.08
6 Month:	$18.46
9 Month:	$18.48
12 Month:	$18.34

CHEESE:

Block cheese price quickly fell to the bottom end of the trading range it has been in since November. There has been volatility with price ranging from a high of $1.9625 for a brief period of time after the beginning of the year and a low of $1.51. Unfortunately, current block price is only 2 cents from the low and threatening to break lower. For the week, blocks declined 4 cents with 36 loads traded. Barrel declined 3.75 cents with 33 loads traded. Dry whey declined 2.25 cents with 3 loads traded.

BUTTER:

For the week, butter declined 6 cents with 20 loads traded. Grade A nonfat dry milk price slipped 0.50 cent with 23 loads traded. As you can see, trading activity is generally all categories has increased. Butter has been able to hold well at a higher price as supply and demand seem to be balanced.

OUTSIDE MARKETS SUMMARY:

July corn declined 7.75 cents, ending at $6.5675. July soybeans declined 6.50 cents, ending at $15.3050, with July soybean meal up $5.20 per ton, closing at $395.50 per ton. July wheat fell 12.75 cents, closing at $6.6350. June live cattle declined $0.47, closing at $115.87. July crude oil declined $0.53, closing at $66.32 per barrel. The Dow closed 65 points higher at 34,529, while the NASDAQ gained 12 points, ending at 13,749.

Friday Midday Dairy Market Summary - Cheese Prices Fall

Block cheese price declined 3.75 cents, closing at $1.53 with six loads traded. All the loads were traded at the closing price. Barrel cheese price declined 5 cents, closing at $1.57 with six loads traded. Barrel price is at the lowest level since April 6. As with blocks, all the loads were traded at the closing price. There were two uncovered offers for blocks remaining at the close. There was an unfilled bid for a load of blocks. Butter price remained unchanged at $1.81 with no loads traded. Grade A nonfat dry milk rebounded 2 cents, closing at $1.2925 with one load traded. Dry whey price remained unchanged at 62.25 with no loads traded. Class III futures are again being hit hard with contracts 12 to 42 cents lower. Class IV futures are 12 to 20 cents higher. Butter futures are 0.75 cent lower to 1.05 cents higher. Dry whey futures are 0.75 cent lower to 0.25 cent higher. USDA will release the April Agricultural Prices report Friday, which should show a significantly lower income over feed level, resulting in a large Dairy Margin Coverage payment.

Dairy Market - Fluid Milk and Cream - Western U.S. Report 21

Milk is steady and flat in California. Class I orders are down, but Class III demand is     increasing. Drought emergency has been declared in 41 of California’s 58 counties. There     are some reports of dairy farmers fallowing fields that would have been used to grow feed     and focusing available water on other, more permanent, crops. Conditions vary by farm,     however, and milk production does not yet appear to be significantly impacted. 

In Arizona, milk production and Class I demand are steady. In addition to local milk, dairy     manufacturers with available capacity have also been working through a steady supply of out     of state milk. 

Milk output in New Mexico is flat. Class I and II demand are down a little. Milk is heavy in the Pacific Northwest. Double-digit overbase programs are working to help keep the abundance in check. Class I demand is level, and some bottling plants are operating at capacity. 

Weather is favorable for cow comfort in the mountain states of Idaho, Utah, and Colorado, and milk production is strong. Bottling orders are flat. Class III sales are healthy. Contracted condensed skim is steady, and limited spot loads are available around flat class pricing. 

Available cream supplies are meeting dairy manufacturing demands. Butter production is seasonally lower, but generous volumes of cream are being absorbed by active ice cream and cream cheese production. This week, cream multiples dropped one point at the top of the range.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2900


     Information for the period May 24 - 28, 2021, issued weekly

     Secondary Sourced Information:

     PACIFIC NORTHWEST MARKET ORDER
Milk delivered to the Pacific Northwest Order 124 totaled 610.7 million pounds in April     2021. Class I utilization was 137.8 million pounds and accounted for 22.6 percent of     producer milk. The uniform price was $16.28, up $1.13 from March 2021, and $3.13 above the     same month a year ago.

     ARIZONA MARKET ORDER
Milk delivered to the Arizona Order 131 totaled 351.6 million pounds in April 2021. Class I     utilization was 113.7 million pounds and accounted for about 32.3 percent of producer milk.     The uniform price was $16.43, up $0.88 from March 2021, and $3.10 above the same month a     year ago.

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 1.913 billion pounds in April 2021. Class I     utilization was 406.7 million pounds and accounted for about 21.3 percent of producer milk.     The uniform price was $15.91, up $1.06 from March 2021, and $2.97 above the same month a     year ago.

     MONTHLY MILK PRODUCTION 

The NASS Milk Production report noted April 2021 milk production in the 24 major states was     18.4 billion pounds, 3.5 percent higher than a year ago. Milk cows in the 24 selected     states totaled 8.98 million head, 121,000 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:

     April 2021 Milk Production, (USDA-NASS)

                 (Million Pounds)    % Change From
                                     1 Year Ago

      Arizona         424  - 1.6

      California      3646  + 4.1
      Colorado         444  + 6.0
      Idaho           1366  + 1.0
      New Mexico       713  + 2.9
      Oregon           222  + 0.9
      Utah             185  - 1.1
      Washington       560  - 1.4

Friday Morning Dairy Market Update - Markets Show Little Direction

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 3 Lower
Soybean Futures:	Mixed
Soybean Meal Futures:	Mixed
Wheat Futures:	2 to 4 Lower

MILK:

There is not too much expected for price movement in milk futures prior to spot trading. Market fundamentals have changed little over the past week. Overall milk production is strong and should remain that way for the near term. Feed prices have become less expensive, which will ensure continued strong milk production. Crops have been planted in a timely manner, which should result in good yields if weather remains average. USDA will release the April Agricultural Prices report Friday afternoon. It is expected to show a significantly lower income over feed due to the steep rise of corn and soybean meal prices relative to the All-milk price during the month. Markets will be closed on Monday for the observance of Memorial Day.

CHEESE:

Cheese prices may have limited upside potential in the near-term as more milk is becoming available for manufacturing. Some plants will be running on full schedules this holiday weekend in order to process the milk and to take advantage of significantly lower priced spot milk.

BUTTER:

Price is expected to continue to chop within a range. Buyers are interested in purchasing ahead for expected upcoming fall demand and would like to increase inventory. Higher prices bring sellers to the market more aggressively as supply is readily available and plants do not want to hold large inventory. This should keep the market balanced.

Thursday Closing Dairy Market Update - Spring Flush Alive and Well

MILK:

Generally, it has been reported that the peak of milk flush is behind us. However, some reports indicate milk production in the Central Region has still not peaked. In fact, there are reports milk production is holding stronger than expected. Weather has been good for cow comfort and the current cooler weather will delay any impact from heat. This higher level of milk production in the region has resulted in some large discounts for spot milk recently and is running $4.50 to $6.00 below class. The next event on the calendar that could impact milk output is hot summer weather. Until that happens, milk production will continue at a higher level than last year and previous years. Class IV futures are lower due to another decline of nonfat dry milk. Price is back to the lowest level it has been in a little over a month. USDA will release the April Agricultural Prices report on Friday, which is expected to show a substantially lower income over feed price. This will mean a larger payment under the Dairy Margin Coverage program.

Average Class III Prices:

3 Month:	$18.32
6 Month:	$18.65
9 Month:	$18.66
12 Month:	$18.48

CHEESE:

This week it was reported demand for cheese in the Western Region of the U.S. has slowed across both retail and the food service industry. It is not that demand in general has slowed, but the fact that the food service pipeline had been depleted and has been filled with buying is settling down to maintenance requirements. Cheese production remains strong as milk available for manufacturing is plentiful. More milk will be available on the spot market over the Memorial Day holiday weekend.

BUTTER:

Ice cream production has been absorbing quite a bit of cream, but that has not slowed butter production much, if any. There remains sufficient supply for all manufactured products. Some plants and buyers would like to increase inventory to be prepared for the increase of demand in the fall. This should keep butter price within a range for a period of time with the potential of price to reach $2.00 before the year is finished.

OUTSIDE MARKETS SUMMARY:

July corn jumped limit up, closing at $6.6450. July soybeans jumped 33.50 cents, closing at $15.37 with July soybean meal up $6.50 per ton, closing at $390.30. July wheat jumped 27.75 cents, ending at $6.7625. June live cattle slipped $0.10, closing at $116.30. July crude oil gained $0.64, closing at $66.85 per barrel. The DOW gained 142 points, closing at 34,465 while the NASDAQ slipped 2 points, closing at 13,736.

Thursday Midday Dairy Market Summary - Cheese Runs Out of Steam

Block cheese price traded higher during spot trading, but once business was done, a late offer pushed price back to unchanged. Barrel cheese declined 2.25 cents ending at $1.62 with 9 loads traded. Price did trade higher at 1 cent before selling pressure reduced price. Butter increased 2.50 cents, closing at $1.81 with one trade setting the price. Grade A nonfat dry milk price declined 1.75 cent settling at $1.2725 with 6 loads traded, Dry whey price declined 3 cents closing at 62.25 cents with one load traded. This is the lowest dry why price since April 23rd. Class III futures are 33 cents lower to 6 cents higher. Class IV futures are 3 cents to 12 cents lower. Butter futures are 1.05 cents lower to 2.50 cents higher. Dry whey futures are 0.50 cent to 1.25 cents lower.

Thursday Morning Dairy Market Update - Trades to Focus on Cash

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	4 to 8 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	8 to 12 Higher

MILK:

There is no doubt milk output will remain higher for much of this year. Increasing cow numbers and higher output per cow will continue unless the summer turns hotter than usual. Higher feed prices will likely not impact overall milk production as higher milk prices may be realized due to the likelihood of significantly lower or no negative Producer Price Differentials. This may increase milk income over last year. Also, the Dairy Margin Coverage program will make up for lower income over feed on many smaller farms. There is strong demand for dairy cattle and replacement heifers, indicating the desire to keep barns full. Class III milk futures should see some strength early until further direction is seen from cash.

CHEESE:

The rebound of spot cheese prices Wednesday was tied to the fact that prices were low enough for buyers to pick up supply for expected upcoming demand. It does not indicate a tightening supply. In fact, cheese output is increasing as more milk is becoming available to manufacturing. The holiday weekend and schools closing for the summer will keep spot milk readily available.

BUTTER:

Price may be headed to the recent low from earlier in the month of $1.7450. Overall demand remains strong, but supply is sufficient for demand. Cream is available even though ice cream production is high. The food service industry pipeline is filled, leaving demand steady from that sector

Wednesday Closing Dairy Market Update - Cheese Output Increases

MILK

Milk futures were finally able to post a nice bounce, which was able to move the November contract back above $19.00. Futures are making a retracement following underlying cash. There is concern cheese prices will have limited upside, but any upside will be welcomed. Milk production has reached its peak in mostly all areas with some dropping back a bit. Other areas may hold production near those peaks for a while as long as weather is mild for cow comfort. Class I fluid milk sales are lower due to schools and colleges closing for the summer. The positive aspect for fluid milk will be the continuation of school food programs during the summer. Each meal available for students will contain a serving of milk. Pressure will be put on Canada in reference to their Tariff Rate Quotas that have been hindering access of U.S. milk and dairy products being imported into the country. U.S. trade officials and dairy industry advocates say a large share of those quotas have been allocated to processors rather than producers. That is not allowable under the agreement of the USMCA, however, Canada holds to the belief that it is. This is why a dispute settlement panel is being formed with the purpose of listening to both sides in order to put this situation to rest. There is no way of knowing how long that will take or how much it will impact our market.

AVERAGE CLASS III PRICES

3 Month:	$18.49
6 Month:	$18.77
9 Month:	$18.73
12 Month:	$18.53

CHEESE

Many cheese plants report that spot loads of milk are increasing which is requiring them to run through much of this upcoming Memorial Day weekend. Some loads are being offered at a substantial discount in the effort of finding manufacturing capacity. Cheese demand is term as mixed. This likely depends on the variety and the venue being supplied. With heavier cheese production and schools closing soon for the summer, it is doubtful cheese prices will find much upside in the near term.

BUTTER

There is a sufficient supply of milk and cream available for butter production. Some plants are not purchasing extra cream in their attempt to balance their current production and supply with demand. Demand from restaurants is strong and slowly improving. Retail demand has slowed to some extent. Price is expected to move within a range for a period of time.

OUTSIDE MARKETS SUMMARY

July corn gained 4.25 cents, closing at $6.2450. July soybeans declined 8.25 cents, ending at $15.0350, with July soybean meal down $2.50 per ton, closing at $383.80. July wheat declined 8 cents, ending at $6.48.50. June live cattle declined $0.27, ending at $116.45. July crude oil increased $0.17, settling at $65.96 per barrel. The Dow gained 11 points, ending at 34,323 ,while the NASDAQ gained 81 points, closing at 13,738.

Wednesday Midday Dairy Market Summary - Cheese Moves Higher

Block cheese price increased 4.75 cents closing at $1.5675 with 10 loads traded. Trading did not begin until the market was higher and then continued with good volume. Barrel cheese price increase 2.75 closing at $1.6425 with 4 loads traded. Butter price declined 3.50 cents ending at $1.7850 with 2 loads traded. Grade A nonfat dry milk declined 1.25 cents settling at $1.29 with 8 loads traded. Dry whey price remained unchanged at 65.25. The increase of cheese prices gave Class III futures a shot in the arm, pushing price up as much as 37 cents in July. Futures contracts are 3 cents lower to 37 cents higher. Class IV futures have not yet traded. Butter futures are steady to 1.05 cents lower. Dry whey futures are 0.27 lower to 0.35 cent higher.

USTR Begins USMCA Dispute Panel on Dairy Trade with Canada

U.S. Trade Representative Katherine Tai Tuesday announced the U.S. has requested and established a dispute settlement panel under the United States-Mexico-Canada Agreement regarding dairy trade. The request seeks to review measures adopted by Canada that “undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers.” The U.S. is challenging Canada’s allocation of dairy tariff-rate quotas, specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors. Agriculture Secretary Tom Vilsack responded, “This is an important step for American agriculture and one that brings the U.S. dairy sector closer to realizing the full benefits of the USMCA.” Vilsack adds the action “puts our other agricultural trading partners on notice that they must play by the rules.” Praising the announcement, National Milk Producers Federation President and CEO Jim Mulhern states, “Canada has failed to take the necessary action to comply with its obligations under USMCA by inappropriately restricting access to its market.”

Wednesday Morning Dairy Market Update - Limited Price Movement Expected Before Cash

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	6 to 9 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	4 to 6 Lower

MILK:

Class III milk futures were at least able to bounce a bit Tuesday, but that was little consolation given the pressure the market has been under. Milk production is on track to remain strong this year as cow numbers continue to increase as well as production per cow. Schools will be closing soon, which will put more milk on the market to be absorbed by manufacturing. However, the change will not be as much as previous years due to a percentage of schools having continued with at-home instruction to some extent. This milk will be absorbed easily as current supply has been utilized without any dumping of milk as of yet. Futures are expected to trade in a tight range until cash provides direction.

CHEESE:

There is hope the increase of barrel cheese price Tuesday may indicate the market has found a bottom. However, blocks did not provide support to that idea as early strength gave way to lower price. The recent pattern has been that a bounce in cheese prices has been short-lived. Thus, traders will be cautious over the increase Tuesday.

BUTTER:

Price is expected to hold and potentially move in a sideways pattern for a period of time. There seems to be sufficient production and supply to meet demand leaving buyers less aggressive in the spot market. It may be difficult for price to reach $2.00 any time soon as demand is steady.

Tuesday Closing Dairy Market Update - Panel to Look Into Canada's Tariff Rate Quotas

MILK

Class III futures were unchanged to higher in all contracts except March and April 2022. The strength of barrels offset the weakness of blocks, allowing for some selling pressure to be lifted from the market. It is unclear whether cheese prices have found a bottom, but more aggressive buying in barrels was certainly a welcome sight. The Office of the U.S. Trade Representative had made a formal request for a dispute settlement panel to challenge Canada's dairy tariff-rate quotas. The panel will pursue and hopefully rectify the inequalities and ensure that Canada will uphold its commitment as specified under the Unites States-Mexico-Canada (USMCA) agreement that began in July 2020. This should result in the realization of the full benefits of the trade agreement and open up for more dairy products to move to Canada. Dairy cattle slaughter in April fell quite significantly from March. Dairy cattle slaughter totaled 257,500 head, a decline of 44,700 from March and 21,900 below April 2020.

AVERAGE CLASS III PRICES

3 Month:	$18.29
6 Month:	$18.61
9 Month:	$18.60
12 Month:	$18.43

CHEESE

The inability of block cheese price to hold the gain Tuesday during spot trading does not bode well for price. The minor gains of Class III futures indicate traders remain cautious over price strength. The April Cold Storage report provided a positive demand picture for cheese, which will hopefully not be a one-month event only to see supplies build again. Milk production remains strong, leaving plenty of milk available for manufacturing.

BUTTER

Demand is steady from the foodservice sector now that supply pipelines have been filled. Reports are that retail demand is slower, which stands to reason as more people are going out to eat again. Cream has been sufficient to meet manufacturing needs for both ice cream and butter with few plants selling cream due to market price and demand.

OUTSIDE MARKETS SUMMARY

July corn fell 37 cents, closing at $6.2025. July soybeans lost 11 cents, ending at $15.1175, with July soybean meal down $13.90 per ton, closing at $386.30. July wheat declined 5.75 cents, ending at $6.5650. June live cattle slipped $0.02, closing at $116.72. July crude oil gained $0.02, ending at $66.07. The Dow declined 82 points, closing at 34,312, while the NASDAQ slipped 4 points, ending at 13,657.

Milk production up from last year

U.S. milk output grew for the 11th consecutive month in April and saw the biggest spike since November, thanks to increased cow numbers and increased milk per cow.

The Agriculture Department’s preliminary data show output hit a bearish 19.3 billion pounds, up 3.3% from April 2020. Output in the top 24 states, at 18.4 billion pounds, was up 3.5%.

Revisions added 30 million pounds to the March 50-State estimate, now put at 19.78 billion pounds, up 1.9% from a year ago.

April cow numbers were up for the 15th consecutive month, totaling 9.49 million head in the 50 states, up 16,000 head from the March count, which was revised up 6,000 head, and is up 113,000 head from April 2020.

April output per cow averaged 2,033 pounds, up 40 pounds or 2% from a year ago.

California milk was up a whopping 144 million pounds or 4.1% from a year ago, thanks to an 85-pound gain per cow, but 1,000 fewer cows. Wisconsin was up 117 million pounds, or 4.6%, on a 70-pound gain per cow and 14,000 more cows.

Idaho was up 1.0% on 5,000 more cows and 5 pounds more per cow. Michigan was up 4.5%, on 15,000 more cows and a 20-pound gain per cow. Minnesota was up 6.9%, on a 55-pound gain per cow and 17,000 more cows. New Mexico was up 2.9%, thanks to a 40-pound gain per cow and 3,000 more cows.

New York saw a 2.2% rise on a 45-pound gain per cow but cow numbers were unchanged. Oregon inched 0.9% higher on 1,000 more cows but output per cow was unchanged. Pennsylvania was down 1.0%, on a drop of 10,000 cows, though output per cow was up 20 pounds.

Texas output was up 7.7%, on 29,000 more cows and a 55-pound gain per cow.

Washington state was down 1.4% on 3,000 fewer cows, and a 10-pound drop per cow.

Culling drops

Rising milk prices spurred April milk output but also resulted in a drop in dairy cow culling from the previous month and year. The USDA’s latest Livestock Slaughter report shows an estimated 257,500 head were sent to slaughter under federal inspection, down 44,700 head from March and 21,900 or 7.8% below April 2020.

Culling in the first four months of 2021 totaled 1.1 million head, down 29,700 or 2.6% from the same period a year ago.

Butter aplenty

The fridge is far from empty but the Agriculture Department’s latest Cold Storage report shows inventories are not getting out of hand, at least on cheese.

American type cheese stocks fell to 830.8 million pounds, down 3.6 million pounds or 0.4% from March, which was revised up 2.6 million pounds, and they were 3.5 million pounds or 0.4% below those a year ago.

The “other” cheese category saw stocks dip to 601.2 million pounds, down 10.7 million pounds or 1.7% from March and 17.5 million or 2.8% below a year ago.

The total cheese inventory stood at 1.45 billion pounds on April 30, down 15.9 million pounds or 1.1% from March and 25.5 million pounds or 1.7% below a year ago, ending five consecutive months that total cheese stocks grew.

The decline in cheese stocks in April is a rare occurrence during the Spring Flush, says HighGround Dairy (HGD), “and especially notable following expanded cheese production capacity that has come online in recent months. It was the first April stocks decline since 1993 and signifies that cheese demand was extraordinary in the month, likely driven by both retail and foodservice channels as the economy quickly reopened.”

April butter stocks climbed to 385.3 million pounds, up a hefty 27.9 million pounds or 7.8% above the March inventory, which was revised up 2.8 million pounds. They were 12.7 million pounds or 3.4% above April 2020, making April the 22nd consecutive month that butter stocks topped those of a year ago.

Keep in mind, a year ago COVID lockdowns had restaurants closing their doors, thus butter stocks grew quickly. It will be interesting to see what April butter output looked like in the next Dairy Products report issued June 4.

HGD warns that “butter stocks are at multi-decade highs and will only climb further in second quarter before reaching the yearly peak. Heavy inventories prevent meaningful price appreciation throughout the remainder of 2021 with plenty of product available to meet demand.

But, StoneX says that overall, they are still bullish on butter with expectations of stocks falling back below year-ago levels by August.

Cheese falling

The bearish Milk Production data and plenty of product coming to the CME last week added downward pressure on cheese prices.

Block Cheddar closed Friday at $1.57 per pound, down 15.50 cents on the week, third week in a row of decline, and 36.75 cents below a year ago when it jumped almost 16 cents to $1.9375.

The barrels saw their Friday close at $1.6075, an inverted 3.75 cents above the blocks, but down 12.25 cents on the week and 28.25 cents below a year ago when they gained 17 cents; 33 sales of block were reported last week at the CME and 46 of barrel.

The blocks dropped 4 cents Monday on 10 trades, as traders still had last week’s bearish Milk Production report in their minds and awaited the afternoon’s April Cold Storage report. They lost a penny Tuesday on 5 trades, slipping to $1.52, lowest since Feb. 18, 2021.

The barrels were down 2.75 cents Monday but gained 3.50 cents Tuesday, with 9 carloads exchanging hands, climbing back to $1.6150, 9.50 cents above the blocks.

Friday’s Dairy Market News reported that milk remained available for Central cheese production last week but some contacts expect potential tightness as spring flush milk yields recede. Cheese producers are taking advantage of milk discounts, though they are smaller than a few weeks ago. Cheese demand varies, depending on the variety but pizza cheesemakers continue to report steady sales.

Retail cheese demand held steady in the West last week but food service demand slowed slightly. Cheese producers continue to run full schedules with the available milk in the region. While CME prices have weakened, some contacts are optimistic that recent changes to CDC recommendations regarding COVID-19 and vaccinated individuals may contribute to higher food service sales in the coming weeks as people resume pre-pandemic activities, says DMN.

Butter closed Friday at $1.87 per pound, down 0.50 cents on the week, after gaining 10.5 cents the previous week, but is 27.75 cents above a year ago. There were 15 sales reported last week.

Monday’s butter lost a nickel and stayed put Tuesday at $1.82.

Central butter producers say cream is available if they look West or South and churning for fall demand is ongoing. Food service demand reports are still improved from last year when markets were in a chaotic situation, but were fluctuating in the downward direction last week, according to some. Retail sales were meeting expectations, says DMN, “but the bar is set seasonally low.” Contacts say there is market uncertainty as to the potentiality of future governmental bids.

Cream is steady in the West with much of it going to ice cream and other Class II manufacturing, but butter makers are receiving adequate volumes. Butter inventories are stable. Retail orders were flat to lower. Depending on the locale, restaurant dine-in restrictions vary from unrestricted to full capacity, to a 25% cap.

Grade A nonfat dry milk marched to $1.3125 per pound last Tuesday but closed Friday at $1.2975, 0.25 cents lower on the week and the lowest since April 26, but was 28.50 cents above a year ago. 13 cars were sold last week.

The powder was unchanged Monday but gained 0.50 cents Tuesday, hitting $1.3025.

CME dry whey finished Friday at 64.50 cents per pound, up 0.50 cents on the week and 28.25 cents above a year ago, with 5 sales reported on the week.

Monday’s whey was up 0.25 cents and tacked on another 0.50 cents Tuesday, hitting 65.25 cents per pound, highest since May 3.

From: Capital Press

Tuesday Midday Dairy Market Summary - Cheese Prices Diverge

Block cheese price initially increased 0.25 cents before selling interest became more aggressive and buyers held back. The result was price closing a penny lower at $1.52 with 5 loads traded. Barrel cheese price moved higher throughout the session gaining 3.50 cents closing at $1.6150 with 9 loads traded. This divergence has kept Class III milk futures mixed with contracts ranging from 5 cents lower to 9 cents higher. Butter price remained unchanged at $1.82 with 2 loads traded. Price initially increased 1.50 cents before a trade took place and offers pushed price lower. Grade A nonfat dry milk price gained 0.50 cents closing at $1.3025 with 8 loads traded. Dry whey price increased 0.50 cent closing at 65.25 with one load traded. Class IV futures have not yet traded. Butter futures are 1.25 cents lower to 1.00 cent higher. Dry whey futures are 0.25 cent to 0.85 cent lower.

Tuesday Morning Dairy Market Update - Milk Futures Point to Further Weakness

OPENING CALLS:

Class III Milk Futures:	Steady 6 Lower
Class IV Milk Futures:	10 to 15 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Lower
Soybean Futures:	2 to 8 Higher
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	Mixed

MILK:

Class III milk futures have been under substantial pressure taking closer months down to the lowest level they have been since late March. Later contracts have fared much better as they are not rising and falling as closely with grain prices. Cheese prices have been unable to find support, which has dragged milk futures lower. Traders are dealing with the numbers from a bearish Milk Production report and a friendly Cold Storage report, keeping them somewhat in a quandary. For now, as long as there is weakness in cheese and now potentially some weakness in butter, milk futures might remain under pressure for a period of time. Corn is 90% planted, according to the weekly Crop Progress report this is an increase of 3% over last year and 10% above the five-year average pace. Soybeans are 75% planted and 12% above a year ago and 21% above the five-year average.

CHEESE:

The decline of cheese in inventory for the month of April from March is considered friendly. It is difficult to make a comparison to last year due to many areas of demand being shut down and the industry in a turmoil. This will leave market direction up to spot prices. Cheese buyers see sufficient supply right now and are willing to purchase, but at lower prices.

BUTTER:

The decline of butter Monday is likely just a day of the market when sellers were just more aggressive and not a change of trend. The significant amount of business is of greater concern as this may indicate sellers want to move product over concern of price weakness.

Monday Closing Dairy Market Update - Surprising Cold Storage Report

MILK:

Class III milk futures took a big hit with only October futures closing above $19.00. Closer contracts have fallen to the lowest level since March 30, the day the huge price rally began. This corresponds very closely with the rise and fall of grain futures as the strong correlation by the trade has resulted in them following the same pattern. It is hard to believe that July Class III futures were over $20.00 just two weeks ago and have fallen nearly $2.00 over that period of time. It was anticipated there would be substantial volatility this year, but to this magnitude is somewhat of a surprise for this time of year. It might be very difficult for closer milk futures to regain the losses anytime soon, if at all. However, we cannot rule anything out in this market. Milk production is strong, but demand remains strong as well and is keeping inventory from building.

AVERAGE CLASS III PRICES:

3 Month:	$18.22
6 Month:	$18.55
9 Month:	$18.54
12 Month:	$18.38

CHEESE:

American cheese inventory declined 3.6 million pounds for April compared to March. It is somewhat unusual to see a decline like this for this time of year. With this decline, it moves American cheese stocks to 3.5 million pounds below April 2020, totaling 830.8 million pounds. This may seem strange due to demand falling off the face of the earth a year ago. When demand fell, the manufacturing of cheese fell as well due to the lack of demand. But even with the disruption last year, it is positive to see that current inventory is below a year ago, indicating strong demand. Swiss cheese inventory declined 1.5 million pounds to the level of 21.2 million pounds. This is down 18% from a year ago. Other cheese inventory declined 10.7 million pounds to a level of 601.2 million pounds and 3% below a year ago. Total cheese inventory totaled 1.453 billion pounds, down 15.9 million pounds from April 2020 or 2% lower. This is supportive to the market.

BUTTER:

The surprise was the increase of butter stocks from March of 27.9 million pounds. This increase puts stocks 3% above the level it was a year ago. This stands to reason as butter inventory had grown substantially last April due to demand from the food service industry falling dramatically. Even though butter stocks are not much higher than a year ago, it still is the largest inventory since 1993.

OUTSIDE MARKETS SUMMARY:

July corn declined 2.25 cents, closing at $6.5725. July soybeans declined 3.50 cents, ending at $15.2275 with July soybean meal up $1.30 per ton, closing at $400.20. July wheat fell 12 cents, ending at $6.6225. June live cattle declined $0.92, ending at $116.75. July crude oil jumped $2.47, closing at $66.05 per barrel. The DOW gained 184 points, closing at 34,394 while the NASDAQ gained 190 points, closing at 13,661.

Monday Midday Dairy Market Summary - Cheese Unable to Find Support

Block cheese price declined 4 cents closing at $1.53 with 10 loads traded. Barrel cheese price declined 2.75 cents with 5 loads traded. All those who wanted to do business in blocks were satisfied with no unfilled bids or offers remaining. Barrel trading closed with an uncovered offer at a higher price with 3 unfilled bids remaining at lower prices. This weakness pushed July Class III futures down the daily limit of 75 cents. The other contracts are unchanged to 63 cents lower. Only the September and October contracts remain above $19.00. Butter price declined 5 cents closing at $1.82 with 15 loads traded. Grade A nonfat dry milk remained unchanged at $1.2975 with no loads traded. Dry whey showed the only increase of 0.25 cent closing at 64.75 with one load traded. Class IV futures have not yet traded. Butter futures are 0.50 cent to 3.75 cents lower. Dry whey futures are 0.75 cent lower to 0.02 cent higher. USDA will release the April Cold Storage report Monday afternoon, providing information on how supply and demand faired during the month.

Monday Morning Dairy Market Update - Traders Contemplate the Cold Storage Report

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	6 to 12 Lower
Soybean Futures:	8 to 14 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	10 to 15 Lower

MILK:

Sufficient milk supply for all manufacturing and bottling needs keeps a lid on futures prices. Added to that is continued weakness of grain prices. The strong correlation traders made between high corn price means high milk prices has had the rug pulled out from under it. That certainly does not mean that milk prices cannot diverge from corn prices, but it does show that traders should not focus on just one thing and all fundamental factors need to be taken into consideration. The next thing that could impact the market significantly would be hot weather that could reduce cow comfort and milk output. For now, it appears milk output will remain strong and cows that are culled will be replaced and then some, as seen on the Milk Production report last week. There will be light trading activity in milk futures prior to spot trading.

CHEESE:

Spot cheese prices have not yet reached a bottom. There were numerous days during which cheese price came back from their lows during spot trading, indicating some support. However, prices continued to weaken. USDA will release the April Cold Storage report Monday afternoon. Cheese inventory is expected to have increased during the month, but the important comparison will be to a year ago.

BUTTER:

Price continues to hold well even though inventories are large compared to a year ago. Again, this will be key to the inventory report that will be released Monday. The change of inventory from March to April will be important as it will indicate the level of supply and demand for the month, and that could go either way. However, it is likely there was limited growth due to increasing demand from the food service industry during the month.

Friday Closing Dairy Market Update - Class III Futures Sharply Lower for the Week

 MILK

Class III milk futures came under pressure following the weakness of cheese prices. The June contract fell $1.23 since the close last Friday, ending at the lowest level since March 30. It is interesting to see how futures jumped the following day on March 31 because of the sharp rise of grain prices as a result of the Prospective Plantings report. It was the beginning of trader perception of higher grain prices reducing milk production and tightening milk supply. That has been generally correct, but it does not happen immediately. Traders just wanted to get in on the ground floor of the price increase. Block cheese price actually declined on that day. The sharp gains of the following two weeks pushed June futures $2.19 higher. The market has now nearly eliminated all of that gain. Milk production in April was strong with an increase of 3.3% in the country. There were seven of the top 24 states that showed a decrease in milk production from a year ago. Florida declined 5.3%, Vermont declined 2.7%, Virginia declined 2.3%, Washington declined 1.4%, Utah was down 1.1% and Pennsylvania was down 1.0%. The strongest gain was seen in South Dakota with an increase of 13.4% followed by Indiana with an increase of 11.4%. The top two states of California and Wisconsin increased 4.1% and 4.6%, respectively.

AVERAGE CLASS III PRICES

3 Month:	$18.66
6 Month:	$18.94
9 Month:	$18.83
12 Month:	$18.61

CHEESE

For the week, cheese prices took a large hit. Blocks fell 15.50 cents with 33 loads traded. Barrels fell 12.25 cents with 46 loads traded. Dry whey was the only category that showed a gain. Price increased 0.50 cent with five loads traded. Both block and barrels have broken out of the sideways price ranges they had been in, moving to levels they had not been for some period of time.

BUTTER

For the week, butter declined 0.50 cent with 15 loads traded. Grade A nonfat dry milk price declined 0.25 cent with 13 loads traded. Churning remains active as there is sufficient cream supply for ice cream and the production of other products as well as butter production. USDA will release the April Cold Storage report on Monday, which is anyone's guess as to what the level of inventory will be for butter. Increased demand from the foodservice industry was partially offset by slowing retail demand.

OUTSIDE MARKETS SUMMARY

July corn declined 5 cents, closing at $6.5950. July soybeans declined 7 cents, closing at $15.2625, with July soybean meal down $2.20 per ton, closing at $398.90. July wheat slipped a penny, ending at $6.7425. June live cattle jumped $1.07, closing at $117.67. July crude oil jumped $1.64, closing at $63.58 per barrel. The Dow gained 124 points, closing at 34,208, while the NASDAQ declined 65 points, closing at 13,471

Friday Midday Dairy Market Summary - Cheese Slides Further

Block cheese price declined a penny to $1.57 with 6 loads traded. All 6 loads were traded at the closing price. Barrel cheese price declined 2 cents closing at $1.6075 with 4 loads traded. Again, barrel price moved lower before price came back off the lows into the closing price. Thursday, this was thought to indicate barrels had found a bottom, but apparently a bounce back from the low is not a strong indicator of support. Butter was able to carve out anther slight increase of 0.25 cent closing at $1.87. Grade A nonfat dry milk declined 0.50 cent ending at $1.2975 with no loads traded. Dry whey price remained unchanged at 64.50 with no loads traded. Class III futures are 21 cents lower to 4 cents higher with June again taking the brunt of the pressure. Class IV futures are 4 cents higher. Butter futures are 0.42 cent to 1.70 cents higher. Dry whey futures are 0.62 cent lower to 0.60 cent higher.

Friday Morning Dairy Market Update - Milk Production Report May Pressure Futures

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 6 Lower
Soybean Futures:	10 to 16 Lower
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	4 to 6 Lower

MILK:

The bearish implications of the April Milk Production report could have a significant impact on the market. Ultimately, the direction of milk futures will be determined by spot cheese movement Friday. The influence of the Milk Production report could extend further than the activity in milk futures. It could have an influence on the willingness, or the necessity, of buyers in the spot market to be aggressive. It is clearly seen that milk production is not going to slow down or cow numbers decrease any time soon due to higher feed prices. This may leave buyers of cheese less aggressive and sellers more aggressive as they want to move product. Class III futures will respond accordingly.

CHEESE:

It has been a somewhat brutal week for cheese, but the ability of barrels to finally post a gain may indicate the market may be near a bottom. However, the Milk Production report indicates that milk supply will remain strong despite higher feed prices. It will be interesting to see how aggressive buyers will be during spot trading.

BUTTER:

Price continues to hold well supported by strong demand from the food service industry. Retail demand has slowed somewhat but has not had an impact on the overall market. USDA will release the April Cold Storage report on Monday, which will shed some light on supply and demand for the month.

April Milk Production in the United States up 3.3 Percent

April Milk Production up 3.5 Percent 

Milk production in the 24 major States during April totaled 18.4 billion pounds, up 3.5 percent from April 2020. March revised production, at 18.9 billion pounds, was up 2.2 percent from March 2020. The March revision represented an increase of 30 million pounds or 0.2 percent from last month's preliminary production estimate. 

Production per cow in the 24 major States averaged 2,051 pounds for April, 42 pounds above April 2020. 

The number of milk cows on farms in the 24 major States was 8.98 million head, 121,000 head more than April 2020, and 15,000 head more than March 2021.

April Milk Production in the United States up 3.3 Percent 

Milk production in the United States during April totaled 19.3 billion pounds, up 3.3 percent from April 2020. 

Production per cow in the United States averaged 2,033 pounds for April, 40 pounds above April 2020. 

The number of milk cows on farms in the United States was 9.49 million head, 113,000 head more than April 2020, and 16,000 head more than March 2021.

Thursday Midday Diary Market Update - Blocks Remain Under Pressure

Block cheese price declined 2.25 cents closing at $1.58 with 9 loads traded. This is the lowest price since Feb. 23. Barrel cheese price gained 0.25 cent, closing at $1.6275 with 12 loads traded. Barrels traded as much as a penny lower before more aggressive buying surfaced pushing price back up. This action is the overriding factor that is keeping Class III futures higher. Traders are looking for any sign of possible support in order to buy into the market in anticipation of stronger prices. Butter price increased 1.25 cents closing at $1.8675 with 1 load traded. Grade A nonfat dry milk price remained unchanged at $1.3025 with 1 load traded. Dry whey price increased 0.50 cent ending at 64.50 cents with no loads traded. Class III futures are 4 cents lower to 12 cents higher. Class IV futures are 11-14 cents lower. Butter futures are 1.07 cents lower to 1.20 cents higher. Dry whey futures are 0.45 cent lower to 0.20 cent higher. USDA will release the April Milk Production report Thursday afternoon. I estimate milk production to be up 2.0% from a year ago and cow numbers to be up 2,000 head from March.

Fluid Milk and Cream - Western U.S. Report 20

In California, milk output is following seasonal patterns and starting to ebb again after     flowing strongly earlier this month. Class I orders are level. 

Milk production is flat in Arizona. Class I demand is down. Some contacts have relayed instances of handlers pushing back on milk as customer inventories are growing. 

Output is level in New Mexico, and Class I and II demand are down slightly. Balancing plants are clearing heavy volumes, and holdover numbers continue to decrease. 

Weather in the Pacific Northwest is optimal for cow comfort, and milk is abundant. Industry contacts say a long tail is expected as peak flush begins to level off. Double-digit overbase programs are in place to help keep milk in check. Some bottling plants are running at capacity. 

Milk production is strong in the mountain states of Idaho, Utah, and Colorado. Class I orders are steady, and there is healthy Class II and III demand. Condensed skim spot sales are limited, but contracts are steady. 

Cream supply is meeting demand. Ice cream continues to soak up much of the available supply, but butter churns are attracting enough cream to maintain seasonally decreased production levels. There is some anxiety, particularly in the Southwest, about cream availability later this summer, but for now, plant managers are not relaying any sourcing difficulties. Cream multiples dropped a few points at the top of the range this week.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.3000

Thursday Morning Dairy Market Update - Market Awaits Milk Production Report

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 7 Higher
Soybean Futures:	4 to 8 Higher
Soybean Meal Futures:	$2 to $4 Higher
Wheat Futures:	1 to 3 Higher

MILK:

Class III milk futures held fairly well Wednesday in the face of further deterioration of spot cheese prices. There is a possibility some support may be found soon, and traders did not want to hold too many sold futures positions. Milk production remains strong with the next event that could impact production being hot weather. It does not appear higher grain prices will slow milk production down in the near term. USDA will release the April Milk Production report Thursday. The report is expected to show higher milk production and increased cow numbers. I estimate milk production to be 2.0% above a year ago and cow numbers to be 2,000 head more than March.

CHEESE:

There is no indication cheese prices are finished moving lower. Barrels tried to increase Wednesday, but just could not maintain the slightly higher price seen early in spot trading. There are plentiful supplies of cheese available to meet current demand. Some of the purchasing on the spot market is for aging programs and not immediate demand.

BUTTER:

Price continues to remain supported and about 25 cents above cheese. This continues to improve Class IV prices. It is interesting that butter is as strong as it is due to the fact that inventory is high. However, buyers feel comfortable purchasing supply at current levels to fill strong demand from the food service industry.

Wednesday Closing Dairy Market Update - Cheese Prices Continue to Decline

MILK:

Cheese prices continued to decline Wednesday but had limited effect on Class III futures. To some extent the weakness had already been factored in. But there also remains a certain element of bullishness under the market as some traders still believe higher grain prices will have an impact on milk production over time. It has been interesting making a comparison of milk to corn. July corn futures topped on May 7 while July Class III milk futures topped on May 12. Corn price has declined 74 cents per bushel since the day it topped while milk has declined 88 cents per cwt. That is a really similar price movement that one normally does not see due to it being two different markets. This is an indication as to how traders are perceiving the milk market. Corn may have a much larger and quicker influence on milk futures this year, but the bottom line will be the level of milk production and demand for that milk. USDA announced the June Class I price at $18.29. This is an increase of $1.19 from May. The April Milk Production report will be released Thursday and is expected to see continued strong milk production. I estimate milk production up 2.0% from the previous year with cow numbers up 2,000 head from the previous month.

AVERAGE CLASS III PRICES:

3 Month:	$18.78
6 Month:	$19.03
9 Month:	$18.87
12 Month:	$18.63

CHEESE:

There are plentiful supplies of milk available for cheese production. Demand for cheese is strong, which may result in greater competition for spot milk loads as milk production slowly recedes from the peak of spring flush. With cheese output higher, there is more supply available, which has resulted in some pressure on prices as plants want to move product rather than build inventory. This has put pressure on cheese prices. The downside of prices may be limited from the current level, but the period of time prices may remain at lower levels is unclear.

BUTTER:

There is greater demand for cream from ice cream manufacturers. However, churns are receiving sufficient supply to keep production strong. Retail butter demand has slowed to some extent. That is not a concern and was expected due to the substantial increase of demand from the food service industry.

OUTSIDE MARKETS SUMMARY:

July corn closed unchanged at $6.63. July soybeans plummeted 36 cents, closing at $15.3825 with July soybean meal down $7.60 per ton, closing at $403.20. July wheat fell 18.75 cents, closing at $6.7925. June live cattle closed $0.15 higher at $116.90. June crude oil fell $2.13 per barrel, closing at $63.36. The DOW declined 165 points, ending at 33,896 while the NASDAQ slipped 4 points, closing at 13,300.