The Agriculture Department announced the June Federal order Class III milk price at $17.21 per hundredweight, down $1.75 from May and $3.83 below last year’s COVID-driven benchmark.
The six-month Class III average is $16.96, up from $16.09 at this time a year ago and $15.25 in 2019.
Friday’s settlements showed a July price of $16.79; August, $16.71; September, $17.28; October, $18.11; November, $18.24; and December at $18.01.
The Class IV price is $16.35, up 19 cents from May, $3.45 above a year ago, and the highest Class IV price since January 2020. The Class IV average stands at $14.84, up from $13.78 a year ago, and compares to $15.98 in 2019.
Vats, churns, dryers busy
The USDA’s latest Dairy Products report showed May cheese output totaled 1.156 billion pounds, up 1.8% from April and a bearish 5.0% above may 2020. Year to date output hit 5.6 billion pounds, up 4.0% from the same period in 2020.
Wisconsin produced 295.6 million pounds of the May total, up 4.6% from April and 5.1% above a year ago. California delivered 207.3 million pounds, same as April but 1.9% below a year ago. Idaho contributed 79.5 million pounds, down 8.6% from April and 1.4% below a year ago.
StoneX Dairy reminds us that milk production last May was down from the previous year as co-ops and milk buyers put incentives into place to limit output, which led to big drops in butter and nonfat dry milk production. That wasn’t the case this year.
Italian style cheese totaled 481.3 million pounds, down 0.1% from April and 0.2% below a year ago. YTD Italian was at 2.4 billion pounds, up 1.7%.
American type cheese, at 473.1 million pounds, was up 0.1% from April and 7.2% above a year ago. YTD American was at 2.3 billion pounds, up 6.0%.
Mozzarella output totaled 376.7 million pounds, down 0.7% from a year ago, with YTD mozzarella at 1.9 billion pounds, up 0.5% from 2020.
Cheddar, the cheese traded daily at the CME, totaled 343.0 million pounds, up 8.9 million pounds or 2.7% from April, and a whopping 27.3 million pounds or 8.7% above a year ago. YTD Cheddar hit 1.66 billion pounds, up 5.0% from 2020.
Butter churns produced 185.4 million pounds of butter, up 1.5 million pounds or 0.9% from April, but was up 13.1 million pounds or 7.6% above a year ago. YTD butter climbed to 964.2 million pounds, down 3.5% from 2020.
Yogurt totaled 388.7 million pounds, up 4.2% from a year ago.
Dry whey totaled 77.7 million pounds, up 3 million pounds or 4.1% from April, but 6.4 million pounds or 7.6% below a year ago.
Dry whey stocks crept to 66.5 million pounds, up 6.3 million or 10.4% from April but were 19.7 million or 22.9% below those a year ago.
Nonfat dry milk output climbed to 205.3 million pounds, up 11 million pounds or 5.7% from April and 48.1 million pounds or 30.6% above a year ago.
Stocks jumped to 347.8 million pounds, up 30 million pounds or 9.5% from April and 9 million pounds or 2.7% above a year ago.
Skim milk powder production slipped to 35.7 million pounds, down 11.3 million pounds or 24.0% from April and 21 million pounds or 37.0% below a year ago.
GDT drops 3.6%
Sharp declines in cheese, powder, and butter resulted in the biggest drop in the Global Dairy Trade’s weighted average since March 16. Tuesday’s weighted average fell 3.6%, following a 1.3% slip on June 15, and the sixth consecutive loss.
The losses were led by buttermilk powder, down 9.8%. GDT Cheddar was down 9.2%, following a 0.2% gain on June 15. Skim milk powder and whole milk powder were down 7.0% and 3.0%, respectively, after skim milk powder fell 1.7% in the last event and whole milk powder was down 1.8%. Anhydrous milkfat was off 0.9%, after it inched up 0.6% last time.
StoneX Group says the GDT 80% butterfat butter price equates to $1.9728 per pound U.S., down 6.8 cents from the last event, and compares to CME butter which closed Tuesday at $1.74. GDT Cheddar, at $1.7913, was down 17.2 cents, and compares to Tuesday’s CME block Cheddar at $1.6225. GDT skim milk powder averaged $1.4182 per pound, down from $1.5222, or 10.4 cents.
Whole milk powder averaged $1.7525 per pound, down from $1.8128, or 6 cents. CME Grade A nonfat dry milk closed Tuesday at $1.2450 per pound.
Margin slide resumes
Continued rising feed prices could not be offset by a higher all milk price in May, so the slide in the U.S. milk feed ratio resumed after pausing a month ago. The USDA’s latest Ag Prices report showed the May ratio at 1.69, down from 1.75 in April and compares to 1.78 in May 2020.
The index is based on the current milk price in relationship to feed prices for a ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk would only purchase 1.69 pounds of dairy feed of that blend.
The U.S. all milk price averaged $19.20 per cwt., up 80 cents from April and $5.50 above the May 2020 average.
The national average corn price hit $5.91 per bushel, up 60 cents per bushel from April, after jumping 42 cents last month, and is a budget busting $2.71 per bushel above May 2020.
Soybeans averaged $14.80 per bushel, up 90 cents from April and follows a 70 cent rise a month ago, and is a whopping $6.52 per bushel above May 2020.
Alfalfa hay averaged $194 per ton, up $7 from April and $15 above a year ago.
Looking at the cow side of the ledger; the May cull price for beef and dairy combined averaged $70.80 per cwt., down 30 cents from April, $2.50 above May 2020, but 80 cents below the 2011 base average of $71.60 per cwt.
Dairy prices mixed
Dairy prices ended June and entered the July 4 holiday weekend a bit mixed. The Cheddar blocks closed Friday at $1.5550 per pound, up 6.50 cents on the week, highest since May 27, but $1.12 below a year ago.
The barrels finished at $1.50 per pound, up a penny, 91.50 cents below a year ago, and 5.50 cents below the blocks. Two cars of block were sold on the week and 17 of barrel.
The markets were closed Monday for the 4th of July holiday and resumed Tuesday, seemingly ignoring the morning’s GDT. The blocks jumped 6.75 cents on one trade, to $1.6225, highest since May 18.
The barrels gained a penny, with 18 cars exchanging hands, advancing to $1.51, highest since June 18, but a hefty 11.25 cents below the blocks.
Cheese production remains busy in the Midwest, according to Dairy Market News. Inventory growth is a concern but, given the amount of milk being produced, cheesemakers have no other option than to take advantage of the $6 under Class III discounts. Cheese sales remain mixed but steady and cheese market tones are a little steadier.
Cheese demand in the West was higher last week as contacts reported increased purchasing leading up to the holiday. Export demand was strong as the lower prices are favorable to international purchasers but market tones are steady to firming. Cheese producers are running full schedules as milk is readily available. A shortage of truck drivers and port congestion, however, continues to cause delays in the region.
Cash butter started last week strong, jumping a nickel, a likely response to the reports of the heat in the West, but it closed Friday at $1.74, up 2.25 cents on the week and 0.25 cents above a year ago, with 26 sales reported for the week.
Tuesday’s butter was unchanged, holding at $1.74, with no activity.
Midwest butter makers were finding cream at pre-holiday bargains, reports DMN, and showed a spike in availability as the holiday weekend approached. Butter demand has seemingly taken a holiday, says DMN, and buyers' interests edged lower last week.
Cream supplies are steady in the West despite the high temperatures but most cream is staying relatively local as tanker shortages continue to curtail movement. The record-setting heat caused some butter makers to run shortened schedules. Inventories are “fairly stable,” says DMN. Retail butter orders are seasonally soft but steady. Food service demand is strong but leveling off though a handful of full service outlets have not yet returned to pre-pandemic levels of operation.
Grade A nonfat dry milk saw its Friday closing at $1.2575 per pound, down 0.75 cents on the week but 24.75 cents above a year ago, with 11 cars sold.
The powder was down 1.25 cents Tuesday, slipping to $1.2450.
Dry whey finished Friday at 55 cents per pound, 2.75 cents lower on the week and the lowest since Feb. 25, but 22 cents above a year ago, on 3 sales.
Tuesday’s whey was down 2 cents, to 53 cents per pound, lowest since Jan. 27.
Exports strong
There was continued good news on the export front. May nonfat/skim milk powder milk exports climbed to a May record of 195.6 million pounds, up 9.4% from April and 12.1% above a year ago. Mexico remained the biggest customer, according to HighGround Dairy (HGD).
Dry whey totaled 46.9 million pounds, down 1.8% from April, but 29.8% above a year ago, as purchases from China are reported to be slowing.
Butter exports amounted to 9.7 million pounds, down 13.7% from April but 195% above those a year ago, while cheese exports totaled 68 million pounds, down 26.2% from April and 13.4% below a year ago. Export deals became more difficult, says HGD, as cheese prices strengthened in March and April.
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