By LEE MIELKE
Mielke Market Weekly
The USDA announced the March Federal order Class I base milk price Thursday, Feb. 19, at $15.56 per cwt., down 68 cents from February, $8.08 below March 2014, and the lowest Class I since July 2012. The price equates to about $1.34 per gallon, down from $1.40 last month. The three month Class I average is now at $16.79, down from $22.38 at this time a year ago and compares to $18.33 in 2013.
The two-week NDPSR-surveyed butter price used to calculate the Class I value was $1.6585 per pound, up 10.6 cents from February. Nonfat dry milk averaged $1.0213, down fractionally. Cheese averaged $1.5408, down 4.5 cents, and dry whey averaged 54.15 cents per pound, down 4.9 cents.
Speaking of fluid milk, December 2014 packaged fluid milk sales totaled 4.37 billion pounds, down 1.2 percent from December 2013, according to USDA’s latest data. December sales of conventional products, at 4.16 billion pounds, were down 1.5 percent from a year ago; organic products, at 210 million, were up 5.7 percent. Organic represented about 4.8 percent of total sales for the month.
January-December 2014 total packaged fluid milk sales, at 50.12 billion pounds, were down 3.0 percent from the same period a year earlier. Year-to-date sales of conventional products, at 47.64 billion, were down 3.6 percent. Organic products, at 2.47 billion pounds, were up 9.2 percent. Organic represented about 4.9 percent of total milk sales in 2014.
The figures represent consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the U.S.
Cash cheese prices were mostly steady in the President’s Day holiday-shortened week. The block Cheddar closed Friday, Feb. 20, at $1.5450 per pound, up 1.5 cents on the week but 61.75 cents below a year ago. The barrels closed at $1.4850, unchanged on the week but 67.25 cents below a year ago. Three cars of each traded hands on the week. The lagging NDPSDR-surveyed U.S. average block price hit $1.5258, down 1.2 cents. The barrels averaged $1.5251, up 0.7 cent.
Many Midwest commercial cheese buyers continue to have an active interest in building inventory at current cheese prices, according to Dairy Market News (DMN). Dairy manufacturers with multiple dairy product manufacturing options in their plants generally favor diverting milk into cheese over other dairy products at the present time for profitability reasons.
Relatively stable cheese prices are helping sustain manufacturer margins related to what is paid for milk compared with cheese sales prices. Moreover, with surplus milk in the Midwest selling at below Class prices, cheese manufacturing is at very heavy levels in most plants.
Cheese sales for Western manufacturers are good, both name brands and store brands. Production schedules are running full with cheese typically being the favored dairy product for manufacturers with multiple product manufacturing options in plants. Exports are not a significant factor in sales. Manufacturers of cheese have all of the milk they want. At current prices, there is noticeable interest among buyers in building inventory levels for retail sale as well as for cheddar and provolone aging programs. A number of manufacturers do not expect any significant divergence from current price levels in coming weeks.
Cash butter finished Friday, Feb. 20, at $1.7225 per pound, up a quarter-cent on the week but 6.25 cents below a year ago. Twelve cars were sold on the week. NDPSR butter averaged $1.6976, up 6.8 cents.
Central retail butter sales were slower in January but have been moving up, according to DMN. The market tone is steady. Many operators are churning heavily, taking advantage of plentiful cream supplies and the favorable pricing. Some manufacturers are focused on rebuilding stocks.
Some Western manufacturers are churning available internal cream this week, not selling or buying any cream for churning on spot markets. Print orders for retail sales are good ahead of the Easter/Passover season, a time when butter demand has a spike. Butter production is steady this week.
Cash Grade A nonfat dry milk reversed four weeks of gains, starting the week with a 5 cent gain only to give it back Thursday and lose another 4 cents Friday, Feb. 20, closing at $1.11 per pound, down 4 cents on the week. NDPSR powder averaged $1.0230, up 0.4 cent, and dry whey averaged 52.7 cents, down 3.3 cents.
Falling milk prices continue to incentivize heavier dairy cow culling. USDA’s latest Livestock Slaughter report issued Thursday shows an estimated 275,000 dairy cows were slaughtered under Federal inspection in the month, up 18,000 head from December and 5,000 head more than January 2014.
