April’s Cold Storage data put the brakes on cheese prices falling last week, but only for a day. After plunging 15.50 cents the previous week, the Cheddar blocks closed the last Friday of May at $1.53 per pound, down 4 cents on the week, 27 cents below where it was on May 3, and 70 cents below a year ago when they pole vaulted 29.25 cents to $2.23 per pound.
The barrels entered the Memorial Day Weekend at $1.57 per pound, down 3.75 cents on the week, down 24.25 cents on the month, 45.25 cents below a year ago when they jumped 13.25 cents, but at an inverted 4 cents above the blocks.
There were 36 cars of block traded last week, 123 for the month of May, up from 85 in April. Barrel sales totaled 33 for the week, 110 for the month, up from 81 in April.
The markets were closed Monday for the Memorial Day holiday but came to life Tuesday with the blocks dropping 2 cents on 10 trades, to $1.51 per pound, duplicating the Feb. 18, 2021 price, and the lowest it has been since May 12, 2020.
The barrels were up 0.50 cents Tuesday to $1.5750, on 6 trades, 6.50 cents above the blocks.
Cheese demand remains mixed, according to Dairy Market News. Some retail Cheddar producers say buyer interest is and has been quite busy while other varietal cheesemakers were less busy. Barrel prices topping the blocks is viewed with “a skeptical eye,” says DMN.
Cheese demand in the West has slowed in both retail and food service. Cheese production has remained strong, causing supplies to outpace demand. The weaker CME prices are favorable for exports, according to some, and could lead to an increase in demand. Cheese intended for export however continues to face delays due to congestion at ports and delays reportedly vary week to week.
Cash butter wasn’t helped by the Cold Storage data and fell to $1.7850 last Wednesday but finished Friday at $1.81, still down 6 cents on the week, up 5.75 cents on the month, and 15 cents above a year ago. There were 20 sales reported last week, 56 for the month of May, down from 101 in April.
Tuesday’s butter was down 2 cents, hitting $1.79.
Food service butter demand shot up to pre-pandemic levels with the reopening of restaurants and public events earlier in the spring, says DMN, but once pipelines were closer to being refilled demand waned. There were positive notes last week in food service demand from butter producers in the Central region. Cream was widely available ahead of the holiday weekend. Some plants were running normal schedules, while others were down for Memorial Day. Early last week, contacts continued to report paying the extra costs for cream from the West, but by midweek some plants found loads within the region at multiples in the low 1.20s. Butter demand is better than some contacts expected for this time of the year, says DMN, but market tones are uncertain.
Western cream is in steady supply. Ice cream continues to absorb much of the cream but there’s still plenty for butter makers. Butter inventories are stable, with some Southwestern butter makers working to grow inventories for later this year. Retail orders are lower but steady. Food service sales are picking up but some contacts report hesitation from buyers. Demand is not crystal clear, and it is difficult to accurately forecast needs, says DMN.
Grade A nonfat dry milk climbed to $1.3025 per pound last Tuesday but slid back to a $1.2925 per pound close Friday, 0.50 cents lower on the week, 2.75 cents lower on the month, but 26.25 cents above that week a year ago. Sales totaled 23 for the week, 76 on the month, up from 58 in April.
The powder inched up 0.25 cents Tuesday to $1.2950.
CME dry whey saw its biggest single day drop since April 23 on Thursday, down 3 cents, and closed Friday at 62.25 cents per pound, down 2.25 cents on the week, down 3.75 cents from May 3, but 31.75 cents above a year ago. There were 3 sales on the week, 12 for the month, down from 17 in April.
The whey lost 2.25 cents Tuesday on 2 sales, slipping to 60 cents per pound, lowest since Mar. 16, 2021.
StoneX cautioned in Tuesday’s Early Morning Update; “A willingness to make cheese is not in short supply. And fluid milk is not in short supply. Not yet at least. In short, the prospect of good U.S. demand, increased export business, general inflation, or all three, is running headlong into an impressive supply reality. That’s a recipe for conflicting sentiment out there today, and reluctant futures price declines.”
GDT down 0.9%International dairy trade continues to slip. Tuesday’s Global Dairy Trade auction saw the weighted average down 0.9%, following a 0.2% slip on May 18 and 0.7% loss on May 4. While the slippages are small, likely due to China remaining in the market, it was the fourth consecutive event to lose ground.
Buttermilk powder led the losses, down 7.5%, after not trading in the last event. Butter was down 5.4%, after dropping 2.2%. Anhydrous milkfat was off 0.8%, after inching 0.1% lower. Lactose was down 1.6%, following a rise of 1.6% last time. Skim milk powder and whole milk powder were both down 0.5%, after skim powder inched up 0.7% last time and whole milk powder was off 0.2%. GDT Cheddar was up 0.5%, following a 1.0% rise last time.
StoneX Group says the GDT 80% butterfat butter price equates to $2.0757 per pound U.S., down 10.6 cents, and compares to CME butter which closed Tuesday at a bargain $1.79. GDT Cheddar, at $1.9615, was up fractionally, and compares to Tuesday’s CME block Cheddar at $1.51. GDT skim milk powder averaged $1.5491 per pound, down from $1.5634, and whole milk powder averaged $1.8426 per pound, down from $1.87. CME Grade A nonfat dry milk closed Tuesday at $1.2950 per pound.
Margin slide pauses A jump in the April all milk price offset increased feed costs to pause the slide in the milk feed ratio. The USDA’s latest Ag Prices report shows the April ratio at 1.75, same as March, but down from 1.85 in April 2020.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk would purchase 1.75 pounds of dairy feed of that blend.
The US All-Milk price averaged $18.40 per hundredweight (cwt.), up $1 from March and $4 above the March 2020 average.
California’s All Milk price climbed to $16.70, up 90 cents from March and 2.80 above a year ago. Wisconsin’s, at $18.80, was up $1.30 from March and $4 above a year ago.
The national average corn price hit $5.31 per bushel, up 42 cents per bushel from March and was priced $2.02 per bushel above April 2020.
Soybeans averaged $13.90 per bushel, up 70 cents from March and was a whopping $5.55 per bushel above April 2020.
Alfalfa hay averaged $187 per ton, up $6.00 from March and $7 above a year ago.
Looking at the cow side of the ledger; the April cull price for beef and dairy combined averaged $71.10 per cwt., up $4 from March, $7.10 above April 2020, and 50 cents below the 2011 base average of $71.60 per cwt.
Milk cow replacements averaged $1,310 per head in April, down $50 per head from January but $60 per head above April 2020. Cows averaged $1400 per head in California, up $50 from January and $100 per head above a year ago. Wisconsin’s average, at $1,310 per head, was down $50 from January but $60 per head above April 2020.
“Feed cost increases through mid-May were concerning,” warns HighGround Dairy, “with the expected dairy income over feed cost tightening to levels not seen in years and threatening profitability. Corn and soybean price declines in the past two weeks have reduced expected feed costs and provided opportunities for farmers to lock in better prices for feed needs in the coming months, but there are signs feed prices could climb as volatility persists, pressuring the dairy margin outlook again. The weather outlook, most notably a hot and dry forecast throughout the first half of June, have contributed to the price rally in recent trading days,” says HGD.
