Cheese Sales Hitting the Mark
Published: Friday, February 7, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Dairy prices looked for direction the last week of January, as the market anticipated the Feb. 4 Global Dairy Trade auction. The Cheddar blocks closed Jan. 31 at $1.92 per pound, down 7.5 cents on the week, 42 cents above a year ago but 1.75 cents below their Jan. 2 perch.
The barrels finished the week and the month at $1.50, down 11 cents, 20 cents above a year ago, 14.25 cents below their Jan. 2 closing, and a near record high 42 cents below the blocks.
There were no sales of block cheese on the week at the CME and 43 in the month of January, down from 37 in December. Only three cars of barrel changed hands and 94 for the month, down from 103 in December.
Midwestern cheesemakers report that 2020 sales are meeting or beating expectations. Markets remain "in flux" because of the large block-barrel price spread, but regional demand for both "is anything but unstable," said Dairy Market News. Milk prices are holding just under class for the most part, on slow trading, and stocks are generally balanced regionally and "mostly positive."
Ample milk is keeping Western vats busy. Demand is "moderate" and cheese is moving well through current contracts, but "there is a capacity to sell more cheese." Retail and food service shipments for "the national cheese day, also known as the Super Bowl, have been made." Contacts are hoping for strong reorders to carry the cheese market into spring and the distant grilling season," says DMN. "While the December cold storage report suggested that total cheese inventories were pulled down a bit nationwide, Western inventories did not follow that pattern." American cheese stocks grew in the West and other natural cheese inventories were fairly stable.
Spot butter fell to $1.7750 per pound on Jan. 28, lowest since Oct. 21, 2016 and 66 cents below its July 16, 2019 high of $2.4350. It rallied to close last Friday at $1.90, up 4 cents on the week but 39 cents below a year ago. Fifty-three cars sold on the week, 28 on Friday, and 82 on the month, up from 29 in December.
"To churn or not to churn," is the question facing Central butter plant managers, says DMN. Cream availability is abundant, widely available from the Western region, the Mountain states and locally. "As some butter producers continue to run full bore, locking away stores for the spring, others are checking production activity owing to both scant seasonal demand and current market bearishness."
The Western butter market is experiencing some pressures, partly caused by abundant stocks and not so much demand. Orders from retailers are stable, but international sales seem almost idle. Lower prices have impelled some to buy more butter for short-term coverages while other end users and buyers are taking a step back as they believe that butter will be available for some time and prices could potentially decline. Cream supplies are widely accessible to butter makers at affordable prices so the churns are running, says DMN.
Grade A nonfat dry milk saw a Friday close at $1.24 per pound, down 4.75 cents on the week and the lowest since Jan. 6, but 23.75 cents above a year ago. Twenty-five cars traded hands on the week, 92 for the month, up from 27 in December.
CME dry whey climbed to 38.50 cents per pound last Wednesday, highest price since Sept. 20, 2019, but closed last Friday at 36.50 cents, unchanged on the week and 25 cents above a year ago. Six cars exchanged hands on the week, 153 for the month, up from 88 in December.
Milk production nationwide is steady to increasing, according to the USDA's weekly update. "Relatively tame winter weather is keeping cows comfortable across much of the country, but below normal temperatures have kept milk output in check in Florida. Milk flows are above projections in the Pacific Northwest and Mountain states and increasing throughout the West and Midwest. Heavy milk and cream volumes are keeping processors busy. Class I sales are steady to higher as educational institutions settle into regular routines and the remaining colleges return from winter break. Cream supplies are readily available," reports DMN.
Looking down under, the Jan. 23 Daily Dairy Report says December milk production in New Zealand totaled 2.7 million metric tons, down .5 percent from the previous year. "The data suggests that the world milk supply has been slow to respond to higher prices at the end of the year. Given challenging weather conditions in Oceania and anemic growth in the Northern Hemisphere, it seems that higher dairy product prices could persist to encourage additional supply."
One other newsworthy note, as of Jan. 31, the UK is no longer a part of the EU. The ramifications of that remain to be seen.
We also continue to wait on the Food and Drug Administration to rule on planted-based manufacture's usage of terms like "milk" and "butter."
Last of all, Bob Gray reports in his Northeast Dairy Farmers Cooperative's newsletter that the Dietary Advisory Committee is "stretching out its time in coming up with dietary guidelines for the school lunch and other federal nutrition programs."
"They just held their fourth and final hearing," writes Gray. "Everyone in the dairy industry is keeping their fingers crossed in the belief that the Committee will restore 2% and whole milk as part of its recommendations for federal nutrition programs under the 'My Plate' guidelines." "I am not holding my breath on this given past recommendations by previous panels," Gray concluded. "Milk has been given short shrift."
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