Milk Powder Pulls Market Prices Lower in Global Dairy Auction
Published: Friday, December 27, 2019
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The last Global Dairy Trade (GDT) auction of 2019 ended with a loud thud last Tuesday, as the weighted average of products offered plummeted 5.1 percent, following the .5 percent loss on Dec. 3, ending five consecutive sessions of gain.
Powder pulled the market lower, led by whole milk powder, down 6.7 percent, following a .1 percent uptick on Dec. 3. Skim milk powder was down 6.3 percent, following a 1.9 percent gain last time. Butter contributed as well, down 2.4 percent, after losing 4.9 percent, and anhydrous milkfat was off .3 percent, following a 5.1 percent drop.
Rennet casein led the gains, up 2.6 percent. GDT Cheddar was up 1.7 percent, after jumping 2.7 percent last time, and lactose was up .6 percent.
FC Stone equated the GDT 80 percent butterfat butter price to $1.7199 per pound U.S., down 4.3 cents from the last event. CME butter closed last Friday at $2.0050. GDT Cheddar cheese equated to $1.7550 per pound, up 3.3 cents, and compares to last Friday's CME block Cheddar at $1.86. GDT skim milk powder averaged $1.3004 per pound and compares to $1.3918 last time. Whole milk powder averaged $1.4059, down from $1.5108. CME Grade A nonfat dry milk closed last Friday at $1.25 per pound.
In other trade news, the House passed the USMCA agreement 385 to 41 last week and now awaits Senate action next year. The U.S. and China will reportedly sign their Phase One trade pack in January.
The USDA's Dairy World Markets and Trade report issued Dec. 17 says, "Prospects for U.S. dairy exporters have improved markedly as 2020 exports of skimmed milk powder (SMP) are expected to grow by 5 percent to reach 718,000 tons."
The fiscal year trade forecast was raised by $300 million to $5.8 billion, largely as a result of higher export volumes and prices for skimmed milk products such as SMP and whey. The report states that, while the volume shipped has lagged last year's pace, the value of U.S. exports of SMP are up 12 percent year-over-year (YOY) through September 2019, and accounted for about 25 percent of the total value of U.S. dairy exports. "A key factor for higher values has been the persistent rise in the price of SMP in the U.S. and international markets since early 2018," said USDA.
CME cheese price declines reversed the week before Christmas, with the blocks closing the week at $1.86 per pound, up 6.25 cents and 47 cents above a year ago. The barrels, after diving 53.25 cents the previous week, fell to $1.57 last Tuesday, lowest since June 12, but finished last Friday at $1.6650, 3 cents below the previous Friday, 37 cents above a year ago, but 19.5 cents below the blocks. Twelve cars of block traded hands on the week at the CME and 35 of barrel, highest barrel count since the week of Aug. 26.
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