The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Milk volumes being utilized by many Midwest cheese plants have reached all-time high levels for this year, even up from recent weeks, which have had high volumes, reports Dairy Market News. In the Central region and Wisconsin in particular, the volume of milk reaching cheese plants has resulted some running seven days a week every other week to keep up. Cheese sales are good all over the region and that applies to the range of varieties offered.
No indication was heard of plants facing difficulties in finding buyers for the volumes of cheese being manufactured. Memorial Day often marks the approximate point where increasing milk production slows, before beginning to decline. Last week, there was no sign that the tide had turned yet. Surplus milk was being shopped around at prices reaching $4 below class midweek and $50 below class over the holiday weekend. Surplus milk is already being shopped for delivery in June, also $5 under class for multiple loads.
Some of the surplus milk is resulting not only from the flush, but from the ending of school year fluid milk contracts, which leaves processors with milk to find other customers for. This phenomenon may counterbalance the impact on cheese plant milk availability of any decline in milk production in coming weeks, if the flush begins to recede. In part of the region, surplus milk is reportedly being dumped because no buyers can be found, according to DMN.
Global Dairy Prices Decline
Last Tuesday's Global Dairy Trade auction saw the weighted average for all products offered drop 2.2 percent, following a 3.5 percent decline in the May 5 event. This is the fifth consecutive session of loss.
Only two products offered saw gains; buttermilk powder was up 3.2 percent, following a 14 percent plunge in the May 5 event, and lactose inched .9 percent higher, which was not offered in the last event.
Leading the declines was Cheddar cheese, down 7.1 percent, following a 9.1 percent increase last time. Anhydrous milkfat was next, down 4.8 percent, following a 6.3 percent loss last time. Skim milk powder was down 3.6 percent, following a 7.5 percent dip last time, and butter was down 3.2 percent, following a .8 percent loss last time. Whole milk powder was off .5 percent, down 1.8 percent in the last event, and rennet casein was down .4 percent, following an 11 percent plunge last time.
FC Stone reports the average GDT butter price equated to about $1.3205 per pound U.S., down from $1.3629 in the May 5 event. Contrast that to CME butter which closed last Friday morning at $1.89 per pound. The GDT Cheddar cheese average was $1.2451 per pound U.S., down from $1.3663. The U.S. block Cheddar CME price closed last Friday at $1.65 per pound. GDT skim milk powder, at .9036 cents per pound U.S., is down from .9288 cents, and the whole milk powder average at $1.0841 per pound U.S., compares to $1.0822 in the last event. The CME Grade A nonfat dry milk price closed the week at 90 cents per pound.
The Agriculture Department announced the June Federal Order Class I base milk price last Wednesday at $16.14 per hundredweight, up 31 cents from May but $6.72 below June 2014, and equates to about $1.39 per gallon. The six-month average stands at $16.31, down from $23.02 in 2014 and compares to $18.22 in 2013.
The NDPSR-surveyed butter price average used to calculate the Class I value was $1.8462 per pound, up 10.8 cents from May. Nonfat dry milk averaged 94.89 cents per pound, down 2.2 cents. The cheese price average was $1.6520, up 3.8 cents, and dry whey averaged 44.43 cents per pound, down 1.6 cents.
Cheese Prices Rebound
Cash dairy prices at the Chicago Mercantile Exchange entered the Memorial Day weekend relatively strong as product, particularly cheese, made its way to Chicago. Block Cheddar cheese closed last Friday at $1.65 per pound, up 3 cents on the week, the highest level since Dec. 4, 2014 but 37 cents below a year ago. The Cheddar barrels rolled out the week at $1.62, down a quarter-cent and 40 cents below a year ago. Thirteen cars of block traded hands on the week and 19 of barrel. The NDPR-surveyed U.S. average block price hit $1.6271, up 1.4 cents, and the barrels averaged $1.6669, up .1 cent.
Cash butter looked like it was going to continue the previous week's meltdown, dipping to $1.9050 per pound last Tuesday, but gears reversed last Wednesday, regaining 2½ cents, but fell 4 cents last Friday to close at $1.89 per pound, down 8¼ cents on the week, 17 cents below its May 13 peak of $2.06 and 29 cents below a year ago. Thirteen cars traded hands on the week at the CME. NDPSR butter averaged $1.8767, up 5.9 cents.
Cash Grade A nonfat dry milk closed last Friday at 90 cents per pound, up a quarter cent on the week but 89¼ cents below a year ago. Five carloads found new homes on the week. NDPSR powder averaged 95.57 cents per pound, up 1.4 cents, and dry whey averaged 45.42 cents per pound, up 1.8 cents.