Cash dairy markets didn’t have a lot to feed on the last week of July as there were no major USDA reports that the trade actively monitors. Because of that, weather, emotion and rumor ruled.
The Cheddar blocks climbed to $1.6350 per pound last Tuesday and stayed there, up a nickel on the week, but 61.75 cents below a year ago when they plunged 28.75 cents.
The barrels hit $1.4175 on Monday but rolled downhill from there to Friday’s close at $1.39, 1.25 cents lower on the week, 84.50 cents below a year ago, and 24.50 cents below the blocks.
There were 3 sales of block on the week and 22 for July, down from 82 in June. Barrel sales totaled 16 for the week and 111 for the month, down from 126 in June.
The blocks were unchanged Monday and held steady Tuesday for the fifth consecutive session. There was no activity either day, as traders weighed the morning’s GDT and anticipated the June Dairy Products report Wednesday afternoon.
The barrels plunged 8 cents Monday on 9 trades and inched 0.25 cents lower Tuesday on a trade, falling to $1.3075, lowest CME price since May 11, 2020. The spread climbed to 32.75 cents, highest since March 19.
StoneX Dairy’s Early Morning Update suggests “We’re in the foothills of what we believe will be better dairy demand overall. There will be more marginal buyers in the mix as schools re-open fully and businesses (both retail, foodservice and industrial or ingredient use) sees a modest surge at the very least. As long as we remain fixated on supply, however, these markets have headwinds.” They add that packaging issues on the block side is creating an additional supply of barrels.
Dairy Market News reports that Midwestern cheese producers’ sales remain generally healthy, with Italian style cheesemakers saying sales remain robust. Cheddar makers reported generally steady and healthy sales but customers have grown a little more hesitant as prices soften. Several cheesemakers were running flush with internally sourced milk but cheese stocks are not burdensome, says DMN.
Western cheese demand, both retail and foodservice, held steady last week and the lower prices remain favorable to international buyers. Port congestion, however, continues to delay loads, which are building in warehouses due to a shortage of truck drivers and limited available shipping supplies.
Butter fell to $1.6225 per pound last Wednesday, lowest since Feb. 26, but rallied some Friday to close at $1.6425, down 5.25 cents on the week but 3.50 cents above a year ago; 6 sales were reported last week and 55 for the month, down from 90 in June.
Monday’s butter jumped 5.75 cents, with 14 cars exchanging hands, then backtracked 8 cents to $1.62 on 2 trades.
Butter producers continue to say summer sales lag week to week but they are not overly concerned as orders are generally in line with seasonal expectations. Cream availability is sporadic, but butter plants are able to clear cream if they are willing to paying freight costs from Western states. That said, spot cream availability is up one week and down the next and lighter ice cream production, seasonally, is impacting that.
Cream is tightening in the West, according to DMN, but transporting it remains a challenge as tankers and drivers are still in high demand with limited availability. Some plants are reducing butter output while others are maintaining active schedules. Inventories are heavy, though much is under contract. Retail sales are steady but down from last year’s pandemic baking buys. Some grocers are advertising promotions to move more butter. Foodservice orders are level but, in light of recent CDC guidance, public health officials in several counties have issued, or are considering mask recommendations again and it remains to be seen what impact that might have.
Spot Grade A nonfat dry milk hadn’t seen much movement in recent sessions until last Thursday’s 1.50-cent jump. It added another 0.25 cents Friday to close at $1.2675 per pound, up 1.50 cents on the week and 29 cents above a year ago. CME sales totaled 6 for the week and 34 for the month, down from 76 in June.
The powder was up 0.75 cents Monday and gave it back Tuesday, returning to $1.2675.
CME dry whey lost 3 cents last Thursday and stayed there Friday at 50.25 cents per pound, down 3.50 cents on the week but 16 cents above a year ago; 4 sales were reported on the week and 17 for the month, up from 11 in June.
Monday’s whey was unchanged but it dropped 2.25 cents Tuesday to 48 cents per pound, lowest since Jan.4.
StoneX says stock level building is keeping pressure on the whey market and logistic issues continue to be a hurdle with movement of domestic product as well as getting product to port for shipment.
GDT down 1.0%
Tuesday’s Global Dairy Trade auction was down for the eight consecutive event. The GDT’s weighted average fell 1.0%, following the 2.9% drop on July 20 and 3.6% on July 6.
Buttermilk powder weighed heavy on the day, down 8.0%, after not trading on July 20. Whole milk powder was down 3.8% following a 3.8% decline last time, and lactose was down 3.1%, after an 8.9% drop last time.
Butter led the gainers, up 3.8% after it inched 0.8% lower last time. Anhydrous milkfat was up 1.3% after it slipped 0.3%. Skim milk powder was up 1.5%, after dropping 5.2%, and GDT Cheddar inched 0.7% higher, after it gained 1.3%.
StoneX Group says the GDT 80% butterfat butter price equates to $2.0308 per pound U.S., up 7.5 cents, and compares to CME butter which closed Tuesday at a bargain $1.62.
GDT Cheddar, at $1.8437, was up 1.9 cents, and compares to Tuesday’s CME block Cheddar at $1.6350. GDT skim milk powder averaged $1.37 per pound, up from $1.3476. Whole milk powder averaged $1.6322 per pound, down from $1.6920. CME Grade A nonfat dry milk closed Tuesday at $1.2675 per pound.
More margin slip
A lower all milk price and higher corn price continued the slide in the U.S. milk-feed ratio. The USDA’s latest Ag Prices report showed the June ratio at 1.609, down from 1.69 in May and compares to 2.38 in June 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 1.6 pounds of dairy feed of that blend.
The U.S. all milk price averaged $18.30 per cwt., down $1.40 from May and $1.50 below the June 2020 average.
California’s all milk price fell to $18.70, down 60 cents from May but was a dime higher than a year ago. Wisconsin’s, at $18.30, was down $1.40 from May and $1.50 below a year ago.
The national average corn price climbed to $6.00 per bushel, up 9 cents per bushel from May, after jumping 60 cents from April, and is a profit swallowing $2.84 per bushel above May 2020.
Soybeans averaged $14.50 per bushel, down 30 cents from May and the first decrease since August 2020, after jumping 90 cents last month, but are still a whopping $6.16 per bushel above June 2020.
Alfalfa hay averaged $199 per ton, up $5 from May and $20 above a year ago.
Cull prices increase
The June cull price for beef and dairy combined averaged $73.90 per cwt., up $3.10 from May, $2.90 above June 2020, and $2.30 above the 2011 base average of $71.60.
Milk cow replacements averaged $1,310 per head in July, unchanged from April and July 2020. Cows averaged $1,350 per head in California, down $50 from April and unchanged from a year ago. Wisconsin’s average, at $1,480 per head, was down $10 from April but $130 per head above July 2020.
.jpg)
