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Class III milk price are up and nearing a record
 

By Lee Mielke

 The USDA announced the April Federal order Class III milk price at $24.42 per hundredweight, up $1.97 from March, $6.75 above April 2021, highest Class III since July 2020, and 18 cents shy of the record high.

Late Friday morning Class III futures portended a May price at $25.05, which would be a record high, June at $24.47; and July at $24.19 per cwt.

The four-month Class III average stands at $22.04, up from $16.40 at this time a year ago, and compares to $15.84 in 2020 and $14.71 in 2019.

The April Class IV price set another record at $25.31 per cwt., up 49 cents from March, and $9.89 above a year ago. Its four-month average is at $24.31, up from $14.14 a year ago, $14.78 in 2020, and 15.69 in 2019.

You’ll recall March milk production was down 0.5 percent from March 2021 but the month’s Dairy Products report shows cheese vats and churns still got a workout.

Cheese production totaled 1.197 billion pounds, up 8.3 percent from February and 1.1 percent above March 2021. Cheese stocks were down 1 percent from a year ago. Cheese output for the first three months of 2022 totaled 3.5 billion pounds, up 3.0 percent from the same period a year ago, so we’re going through a lot of cheese.

U.S. churns produced 202.6 million pounds of butter, up 19.1 million or 10.4 percent from February, and 3 million or 1.5 percent above a year ago. That ended eight consecutive months output topped the previous year. But, YTD butter is at 580.1 million pounds, down 5.0 percent from a year ago. Butter stocks were down 20 percent from March 2021, according to USDA’s Cold Storage data.

March yogurt output totaled 434.7 million pounds, down 2.0 percent from a year ago, with YTD output at 1.2 billion pounds, down 2.5 percent.

Dry whey production climbed to 82.0 million pounds, up 11.7 million pounds or 16.6 percent from February’s total which was revised 4.7 million pounds lower, and was 5.1 million pounds or 6.6 percent above a year ago. YTD is at 232.7 million pounds, down 1.3 percent. Dry whey stocks crept up to 68.1 million pounds, up 5.1 million or 8.1 percent from February, and 4.5 million or 7.1 percent above those a year ago.

Nonfat dry milk output climbed to 190.5 million pounds, up 19.7 million pounds or 11.5 percent from February but was down 7.8 million or 3.9 percent below a year ago. YTD powder was at 531.6 million pounds, down 10 percent. Stocks totaled 288.0 million pounds, down 400,000 pounds or 0.2 percent from February and down 25 million pounds or 8.0 percent below those a year ago.

Skim milk powder output climbed to 33 million pounds, up 3.4 million or 11.4 percent from February but was down 19.6 million or 37.2 percent below a year ago. YTD SMP was at 106.0 million pounds, down 26.7 percent from a year ago. March was the ninth consecutive month of weaker powder production, says HighGround Dairy.

Fat provided the biggest pull on Tuesday’s Global Dairy Trade auction, which saw its fourth consecutive decline. The weighted average plunged 8.5 percent, biggest drop since Aug. 4, 2015, and follows the 3.6 percent drop on April 19. Traders brought 55.5 million pounds to the market, up from 48.9 million on April 19.

HighGround’s Lucas Fuess, in the May 9 Dairy Radio Now broadcast, said Fonterra increased its offer volumes Tuesday as it attempted to clear inventories before the start of the next new milk production season.

All products offered again lost ground, led by butter, down 12.5 percent, following a 3.7 percent dip on April 19. Anhydrous milkfat dropped 12.1 percent, after slipping 1.3 percent. GDT Cheddar was down 8.6 percent, following a 3.9 percent loss, and the powders followed. Whole milk powder and skim milk powder were both down 6.5 percent, following respective 4.4 percent and 4.2 percent drops last time Buttermilk powder was down 6.1 percent.

StoneX says the GDT 80 percent butterfat butter price equates to $2.5698 per pound U.S., down 36.9 cents, after dropping 11 cents in the last event, and compares to CME butter which closed Friday at $2.64, 7 cents above the GDT. GDT Cheddar, at $2.5635, was down 24.2 cents after losing 13 cents last time, and compares to Friday’s CME block Cheddar at $2.35. GDT skim milk powder averaged $1.8731 per pound, down from $1.9995, a drop of 12.6 cents. Whole milk powder averaged $1.7764 per pound, down from $1.9083, a loss of 13.2 cents. CME Grade A nonfat dry milk closed Friday at $1.74 per pound.

Nate Donnay, StoneX director of market intelligence, warned in last week’s ‘Udder Intelligence’ report that China’s imports in March were much lower than forecast, down 28.6 percent from 2021, and “When the largest buyer in the world is down 20-30 percent, we have a significant global demand problem.”

Thankfully, this week’s GDT saw a bit of an uptick from China, according to StoneX. “The slowdown came from the Middle East. We don’t know if that was related to Ramadan or if there is something else driving the weaker demand.”

The global market is vital for U.S. farmers and processors and March provided confirmation. Cheese exports totaled a record 91.9 million pounds, up 12.9 percent from March 2021. HighGround Dairy points out that volume was driven by product moving to Mexico, up 26 percent and the second largest monthly figure on record.

Butter exports totaled 13.5 million pounds, up 47.4 percent, highest since April 2014, thanks to Canada which imported a record amount for the month, up 26 percent.

Nonfat dry milk shipments totaled 176.7 million pounds, down 7.4 percent, but was measured against a strong year in 2021. Exports were the highest of any month since June 2021, according to HGD, but a 98 percent decline in product moving to Egypt negatively impacted the total. Powder moving to Mexico improved from the prior year and recent months, reaching the highest monthly volume since August 2021, up 9 percent, according to HGD.

Dry whey totaled 43.3 million pounds, down 17.9 percent and down 23.2 percent year to date.

Even as the U.S. experiences a baby formula shortage, CME dairy prices saw little reaction to Tuesday’s GDT fall or the Dairy Products report, buoyed perhaps by the strong export data. The Cheddar blocks closed Friday at $2.35 per pound, down 2 cents on the week but 60.25 cents above a year ago.

Cheese producers continue to report logistical issues to Dairy Market News, but more on the supply side. Shortfalls included production and packaging equipment but no shortness in milk. Spot prices mid-week were around $2 under Class III. Demand remains robust, according to Midwest cheese plants, and some expect demand to remain healthy through second quarter and beyond.

Domestic cheese demand was steady to lower in the West. Contacts report that purchases have begun to slow as schools approach summer break. Retail demand is steady and food service demand is increasing, according to DMN. Export demand is strong. Cheese output is steady, as milk is available, but port congestion and a shortage of truck drivers continues to cause delays.


5/17/2022