The August Federal order Class III milk price was announced at $20.66 per hundredweight, up 87 cents from July, $3.47 above Aug. 2023, and the highest since Nov. 2022.
Lee Mielke
It put the eight-month average at $17.75, up from $16.98 a year ago, but compares to $22.54 in 2022.
Monday’s Class III futures settlements portend a September price at $22.97; October, $23.54; November, $22.95; and December at $22.01.
The Class IV price is $21.58, up 27 cents from July, $2.67 above a year ago, and the highest since December 2022. Its average stands at $20.49, up from $18.59 a year ago, and compares to $24.83 in 2022.
Dairy exports strong
U.S. dairy exports remained strong in July, up 7.8%, according to HighGround Dairy’s Alyssa Badger in the Sept. 9 “Dairy Radio Now” broadcast. She pointed out that, while exports to Mexico in June were down, month-to-month and year-to-year, they turned around in July and were up 21% from July 2023.
Exports to China were also higher, she said, as well as to Southeast Asia, up 24%.
Cheese exports totaled 88.7 million pounds, up 9.6%, though Cheddar was down 28.9%. Badger noted that, when these purchases were booked, U.S. prices, although competitive, were not at a steep discount to the global market as they were earlier in the year, so “this is really good news.”
Cheese moving across the southern border to Mexico leapt to its second-highest level ever.
Nonfat/skim milk powder exports hit 159.4 million pounds, up 10.8% from July 2023, and surely helped put CME prices where they are. HighGround Dairy says shipments increased to Southeast Asia and Mexico. Demand from China remained lackluster.
Whey exports totaled 29.6 million pounds, up 15%, though YTD are down 2%. China was the top destination.
Butter exports amounted to 6 million pounds, increasing for the second month in a row, up 16.3% from a year ago, but down 8.6% YTD. Badger said U.S. prices are not at a huge premium to Oceania, and European prices are higher than ours, so that has helped exports. But we were a net butter importer.
Cheese soaring
After jumping 17.25 cents the previous week, cash block Cheddar closed the holiday-shortened Labor Day Week at $2.27 per pound, up 6 cents on the week, highest since June 9, 2022, and 34.50 cents above a year ago, as traders awaited Friday afternoon’s July Dairy Products report.
The barrels finished at $2.2750, 1.50 cents higher, 44.75 cents above a year ago, and just a half-cent above the blocks. There were 7 sales of block on the week and 5 of barrel.
The blocks were unchanged Monday but jumped 3.50 cents Tuesday on a trade, to $2.3050, the highest CME price since May 24, 2022.
The barrels were up a penny Monday on an unfilled bid, bid up another 5.50 cents Tuesday to $2.34, highest since May 23, 2022, and 3.50 cents above the blocks.
Cheese contacts tell Dairy Market News that demand is steady to strong, depending on variety. Some processors shifted back to barrels due to the bullish trend. Plant downtime, unrelated to the holiday weekend, continued to be reported by some Midwest contacts, but has not necessarily prompted an influx of milk.
Cheesemakers continue to suggest that price upticks have yet to deter customer interest and some say it has actually spurred buyers to make deals to assure coverage.
Class III milk demand is generally strong from cheesemakers in the West. However, with most school institutions back in session by midweek last week, milk supplies were not abundant, says DMN, and butter price strength was giving incentive to allocate milk fats in that direction.
Manufacturers are running steady production and block capacity is increasing as new facilities come online.
Butter fell to $3.1475 per pound last Wednesday but closed Friday at $3.1750, a half-cent higher on the week and 49.50 cents above a year ago, with 22 sales for the week.
Monday’s butter was bid up 1.50 cents to $3.19, but gave it back Tuesday, returning to $3.1750.
Churning shifted into high gear last week in the Central region, particularly the Midwest, says DMN. Plants in the south have generally had more spot cream available throughout the summer than their Upper Midwest counterparts, so the uptick in churning has been less dynamic there. Butter demand is gathering its seasonal strength from both retail and food service customers.
Western manufacturers indicate retail churning is strong to steady, while bulk lines are at a much lighter pace. Inventories are “comfortable” for anticipated fourth-quarter demand, according to DMN.
Grade A nonfat dry milk closed Friday at $1.3650 per pound, up 3.50 cents on the week, and 26.50 cents above a year ago; 19 loads found new homes on the week.
Traders took the powder up 1.50 cents Monday on 4 trades, and added 1.50 cents Tuesday on a trade, hitting $1.3950, highest since Nov. 23, 2022.
The whey closed Friday at 58.75 cents per pound, 2.75 cents higher on the week and 28.50 cents above a year ago, with 5 sales put on the board.
The whey inched a quarter-cent higher Monday and stayed put Tuesday at 59 cents per pound, highest in five weeks.
More cheese, more butter
You’ll recall July milk production was down 0.4% from a year ago, though after adjusting for components and milk going into the bottle, the amount of solids available in July was estimated to be up 1.1% from last year, according to StoneX.
Looking at the latest Dairy Products report data, total cheese production crept up to 1.191 billion pounds, up 2.7% from June and up 1.9% from July 2023. Cheese output for the seven month period amounted to 7.1 billion pounds, up just 0.2% from 2023.
Wisconsin produced 297.8 million pounds, up 1.1% from June, and 2.4% above a year ago.
California’s output totaled 204.3 million pounds, down 0.4% from June, but 1.3% above a year ago.
Idaho contributed 88.7 million pounds, off 0.1% from June but 1.1% above a year ago.
New Mexico, with 76.2 million pounds, was up 11.0% from June, but down 3.3% from a year ago.
Italian cheese production totaled 495.2 million pounds, up 2.0% from June and 2.4% above a year ago. American output slipped to 474.2 million pounds, up 3.9% from June but 1.6% below a year ago.
Mozzarella, at 398 million pounds, was up 3.6% from 2023.
Cheddar output climbed to 314.3 million pounds, up 4.1 million pounds or 1.3% from June output which was revised 1.8 million pounds lower, but was down 19.4 million pounds or 5.8%, from a year ago. YTD Cheddar was at 2.3 billion pounds, down 7.7% from a year ago.
Butter production fell to 161.7 million pounds, down 6.3 million pounds or 3.8% from June output, which was revised 1.3 million pounds lower, and was down 19.4 million pounds or 5.8% from a year ago. YTD butter was at 1.4 billion pounds, up 4.1%.
Yogurt production totaled 400.4 million pounds, up 4.0% from a year ago.
Dry whey output fell to 67.7 million pounds, down 5.3 million pounds or 7.2% from June, and down 21.6 million or 24.2% from a year ago. YTD whey was at 528.3 million pounds, down 5.6%. Stocks fell to 63.8 million pounds, down 4.2 million or 6.1% from June, and down 23.3 million pounds or 26.7% below those a year ago.
Nonfat dry milk output slipped to 121.9 million pounds, down 5.6 million or 4.4% from June, and down 11.5 million pounds or 8.6% from a year ago. YTD NFDM was at 1.1 billion pounds, down 16.0%. Stocks fell to 269.7 million pounds, down 3.6 million, or 1.3% from June, but were up 900,000 pounds or 0.4% from 2023.
Skim milk powder production climbed to 62.4 million pounds, up 1.9 million pounds or 3.2% from June, but was down 10 million or 13.8% from a year ago. YTD SMP was at 322 million pounds, down 12.2% from 2023.
Mixed Pulse
Tuesday’s Global Dairy Trade Pulse was Number 60 and saw 4.9 million pounds of product sold, up from 4.3 million in the last Pulse. The price of skim milk powder was up, while whole milk powder was down from the Aug. 27 Pulse.
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