Search Site   
Current News Stories
Solar eclipse, new moon coming April 8
Mystery illness affecting dairy cattle in Texas Panhandle
Teach others to live sustainably
Gun safety begins early
Hard-cooked eggs recipes great for Easter, anytime
Michigan carrot producers to vote on program continuation
Suggestions to celebrate 50th wedding anniversary
USDA finalizes new ‘Product of the USA’ labeling rule 
U.S. weather outlooks currently favoring early planting season
Weaver Popcorn Hybrids expanding and moving to new facility
Role of women in agriculture changing Hoosier dairy farmer says
   
News Articles
Search News  
   

Dairy product prices have plunged from record highs

 

By LEE MIELKE
Mielke Market Report 

Eyes were on the cash dairy markets last week to see if the previous week’s price declines would continue. They did. The exception was block Cheddar cheese, which reversed two weeks of decline and closed Friday, Oct. 10, at $2.1975 per pound, up 4.75 cents on the week, 39.75 cents above a year ago, and a higher-than-normal 9.75 cents above the barrels. The Cheddar barrels saw a third week of decline, closing at $2.10 per pound, down 7 cents on the week, but 33.5 cents above a year ago. One car of block traded hands on the week and five of barrel.

The blocks are down 25.25 cents from their recent record high of $2.45 set on Sept. 19. The barrels are down 35 cents since setting their new record high $2.49 on Sept. 22. The NDPSR-surveyed U.S. average block price hit $2.3838, up 0.9 cent, while the barrels averaged $2.4764, up 4.9 cents.

Protein and butterfat levels are increasing in milk received by some cheese manufacturers, which is improving cheese yields by one additional barrel per vat, reports Dairy Market News (DMN). Some manufacturers are buying nonfat dry milk and condensed skim to fortify their vats. There is a growing interest among manufacturers in rebuilding inventory levels. Evidence of continuing cheese inventory tightness for some buyers remains.

Spot cheese sales were made early last week to buyers who were willing to pay based on the previous week’s averages, rather than wait a few days to obtain cheese at last week’s averages. Cheese supplies in the Midwest remain tighter than might have been the case in recent years because of current factors making it more expensive to supplement Midwest inventories with cheese manufactured in the West. The result has diminished the pattern in recent years of shipping cheese manufactured in the West into the Midwest to supplement production.

Buyers have surprised some manufacturers by already seeking commitments to supply 2015 cheese orders. Quoted premium increases by manufacturers do not seem to be a significant deterrent to contracting, according to DMN.

Western sources report that cheese export opportunities are fading with U.S. prices being so far above world levels. In fact, DMN reported that some cheese previously exported was returned to the U.S., after original buyers subsequently obtained lower-priced cheese from other countries, then shipped the originally exported cheese back to the U.S.

Butter battered

The bleeding in the butter continued for the third week in a row, melting down another 9 cents last week, to $2.8050 per pound, still $1.2625 per pound above a year ago but down 25.5 cents from its record high $3.06 hit on Sept. 19. Only one car was sold last week in the cash market. NDPSR butter averaged $3.0130, up 4.4 cents.

Some butter manufacturers are using additional internal cream and bulk supplies, while limiting spot ingredient purchases in light of weaker butter prices, reports DMN. Butterfat imports and declining orders from ice cream makers have suppressed cream demand, leaving supplies readily available. Butter production rates vary, although they are mostly steady as milk supplies are ample. Some retail buyers are delaying large holiday orders given the softening market. Purchasers are buying more on a load-to-load basis. Export orders are light. Supplies are tight with a few manufacturers putting additional butter into storage.

Western cream supplies are readily available to butter manufacturers, who continue to work on holiday orders. Bulk butter interest is growing as prices decline, but buyers continue to get only modestly ahead of needs until pricing seems firmer. There is some increase in inventories. Export interest is very low.

Cash Grade A nonfat dry milk closed Friday, Oct. 10, at $1.38 per pound, down 1.5 cents on the week. One car traded hands. NDPSR powder averaged $1.4925, up a nickel, and dry whey averaged 66.49 cents per pound, down 0.4 cent.

What to expect

Matt Gould, of the Dairy and Food Market Analyst, said Friday, Oct. 10, that the cash dairy market will appear stabilized for a few days at a time because "Inventories ran real low, so people are more comfortable at these price levels. The pipeline is filling, and once that gets filled, we’re going to move lower still, but it will take time."

Dairy product prices have plunged from record highs a couple weeks ago and, when asked if those high prices hurt commercial disappearance, Gould answered, "Yes, and we’re seeing it in the data." He explained that, like Jerry Dryer, he prefers to analyze data over three months rather than a single month.

He reported that American cheese disappearance, in the three months ending Aug. 31, was down 1.2 percent, noting that this is the first trip below year-earlier levels in more than 12 months. Contrast that to the three months ending in July, where American cheese disappearance was up 3.9 percent, he said.

Other cheese was up 2.7 percent at the end of August, following a 4.2 percent increase in the previous three months. Total cheese disappearance was up 1.7 percent at the end of August after being up 3 percent or more all year long.

Cheese exports in the months ending in August were up a respectable 11 percent from a year ago, Gould said, but that "pales in comparison to earlier levels, which were up 18 percent in July and over 30 percent January through June."

He pointed to the Russian import ban in early August for the downfall in exports.

Butter commercial disappearance was down 6.1 percent in the three months ending in August, he said, after being down just a half-percent in July and up 14.8 percent in June. Butter exports were down a whopping 60 percent at the end of August, he said.

Nonfat dry milk, skim milk powder disappearance was off 2.2 percent after having been up 7 percent in the three months ending in July. Powder exports were down 10 percent from a year ago, according to Gould.

10/15/2014