By LEE MIELKE
Mielke Market Weekly 

The USDA announced the February Federal order Class III milk price March 4 at $15.46 per cwt., down 72 cents from January, $7.89 below February 2014, $1.68 above the comparable California Class 4b cheese milk price, and equal to about $1.33 per gallon, down from $1.39 in January. It is the lowest Class III price since May 2012’s $15.23.

Class III futures indicate this will not be the bottom for 2015 as the March contract was trading late Friday morning (March 6) at $15.40 and April was at $15.28. The turnaround begins in May at $15.31 and peaks at just $17.32 per cwt. in October, $7.28 less than the 2014 peak that occurred in September.

The February Class IV price is $13.82, up 59 cents from January but $9.64 below a year ago.

The California Department of Food and Agriculture announced the State’s February 4b cheese milk price March 2 at $13.78 per cwt., up 3 cents from January but an eye-popping $7.36 below February 2014. The small rebound reverses four weeks of decline but is $8.61 below the record high $22.39 in September 2014.

The ongoing gap among last week’s announced benchmark milk prices narrowed some. The Federal order Class III price, at $$15.46 per cwt., compared to California’s Class 4b cheese milk price of $13.78.

The gap in 2014 ranged from a low of 84 cents in January, to a high of $3.24 in November. The range in 2013 was from 67 cents in April to $2.30 in January.

The Milk Producers Council’s Rob VandenHeuvel has often written about the gap and the millions of dollars it has cost California dairy producers in his weekly newsletter. It is also the impetus behind the recent effort to form a Federal order in the nation’s number 1 milk producer.

California’s February 4a butter-powder milk price is $13.46, up 37 cents from January but $9.62 below a year ago.

Meanwhile, Cheddar block cheese closed the first Friday of March at $1.56 per pound, up 1.5 cents on the week but 73.25 cents below a year ago. The Cheddar barrels closed at $1.4950, up a quarter-cent on the week and 75.5 cents below a year ago and a larger than normal 6.5 cents below the blocks. Four cars of block traded hands on the week and none of barrel. The NDPSR-surveyed U.S. average block price climbed to $1.5529 per pound, up 2.1 cents, while the barrels rolled 0.3 cents lower, to $1.5257.

The cheese market continues to be a very stable situation, according to Dairy Market News. Midwest manufacturers view this period as one where business as usual is being done. Heavy milk supplies continue to move to Midwest cheese vats as a preference to other dairy products. Buyers continue buying cheese, although at a slower pace in some plants than others, as inventories begin to fill.

Fresh cheddar is fairly easy to locate and purchase. Many cheese sellers do not anticipate any imminent factor that would significantly move markets off the current resting point, although there remains a "calm before the possible storm" apprehension with other manufacturers, who dread the unknown and are nervous about the market’s lack of any clear direction. There is an awareness of the potential for what some manufacturers believe could be minor softening in domestic cheese prices, as the spring flushes in the U.S. and EU progress.

Cash butter jumped 8.5 cents Monday (March 2), then lost 3 cents Tuesday and closed Friday, March 6, at $1.75, up 5.5 cents on the week but 13 cents below a year ago. Thirty two cars sold on the week. NDPSR butter averaged $1.7068, down a half-cent.

Retail butter sales are increasing as the spring holidays near, reports USDA’s Dairy Market News. Print butter inventory levels are average to increasing, and available cream is moving to churns. Cream levels are mixed as some reports indicate a tight market, while others are showing surplus.

Cash Grade A nonfat dry milk finished last week at $1.0250, down 13 cents, with 31 cars finding new homes. NDPSR powder averaged $1.0580 per pound, up 3.9 cents, and dry whey keeps sliding, down 2.4 cents, to 48.79 cents per pound.

Nonfat dry milk markets are unsettled as buyers and sellers attempt to gauge near-term price trends in light of recent price swings. Production is steady to higher. The dock slowdown at Western ports has continued to impact exports.

Speaking of exports, Cooperatives Working Together (CWT) accepted 11 requests for export assistance last week from Dairy Farmers of America, Northwest Dairy Association (Darigold), Tillamook County Creamery Assoc. and United Dairymen of Arizona who have contracts to sell 2.477 million pounds of Cheddar, Gouda and Monterey Jack cheese and 385,809 pounds of butter to customers in Asia, the Middle East and the South Pacific.

The product has been contracted for delivery March through August 2015 and raises CWT’s 2015 cheese exports to 9.709 million pounds plus 18.839 million pounds of butter to 18 countries on five continents. The amounts of cheese and butter in these sales contracts represent the equivalent of 513.481 million pounds of milk on a milkfat basis, according to CWT.

The Global Dairy Trade (GDT) auction Tuesday, March 3, saw the weighted average for all products jump 1.1 percent, following a 10.1 percent jump on Feb. 17. It is the sixth consecutive event of gain though the smallest since the Jan. 20 event.

The gains were again led by Cheddar cheese, up 10.8 percent, following a 16.8 percent increase in the Feb. 17 event. Butter milk powder was next, up 6.8 percent, following a 1.9 percent increase last time. Next was skim milk powder, up 5.9 percent, which follows a 5.7 percent jump last time. Butter was up 2.5 percent, following a 1.1 percent increase last time.

Declines were led by anhydrous milkfat, down 2.2 percent. It was up 6.4 percent last time. Whole milk powder followed, down 1.0 percent, after a 13.7 percent jump in the last event, and rennet casein rounded out the losses, down 0.7 percent, following a 1.2 percent increase last time.

FC Stone reports the average GDT butter price March 6 equated to about $1.7744 per pound U.S., up from $1.7340 in the Feb. 17 event. Contrast that to CME butter, which closed March 6 at $1.75 per pound. The GDT Cheddar cheese average was $1.5318 per pound U.S., up from $1.3854. The U.S. block Cheddar CME price closed Friday, March 6, at $1.56. GDT skim milk powder, at $1.3314 per pound U.S., is up from $1.2445, and the whole milk powder average at $1.4702 per pound U.S., is down from $1.4844 in the last event. The CME Grade A nonfat dry milk price closed Friday morning at $1.0250 per pound.