Class 3 Milk Price Should Peak in October; GDT Prices Slip
Published: Friday, March 13, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department announced the February Federal order Class 3 benchmark milk price at $17 per hundredweight, down 5 cents from January, $3.11 above February 2019, and the highest February Class 3 since 2014.
Last Friday morning, Class 3 futures portended a March price at $16.36; April, $16.02; May, $16.29; and June at $16.51; with a peak at $17.13 in October.
The February Class 4 price is $16.20, down 45 cents from January, 34 cents above a year ago, and the highest February Class 4 price since 2014.
You'll recall that January U.S. milk output hit 18.8 billion pounds, up .9 percent from January 2019.
The latest Dairy Products report shows where the milk went.
Cheese output totaled 1.103 billion pounds, down 2.3 percent from December but .4 percent above January 2019. That's a record high for January, according to the Daily Dairy Report.
Wisconsin produced just under 274 million pounds of the total, down 1.6 percent from December and .9 percent below a year ago. California output fell to 212 million pounds, down 2.4 percent from December and .9 percent below a year ago. Idaho cheese came in at 85.2 million pounds, down 4.1 percent from December and 1.7 percent below a year ago. Minnesota output totaled 61.9 million pounds, down 2.3 percent from December and 5.2 percent below a year ago, while New Mexico output climbed to 83.9 million pounds, up 1.6 percent from December and 4.65 above a year ago.
Italian-type cheese totaled 482.2 million pounds, down .2 percent from December but .4 percent above a year ago.
American cheese totaled 436.3 million pounds, down 4.9 percent from December and .7 percent below a year ago. Mozzarella, at 380.2 million pounds, was up .1 percent.
Cheddar output, the cheese traded at the CME, fell to 317.4 million pounds, down 15.9 million pounds, or 4.8 percent, from December and was 5.8 million, or 1.8 percent, below January 2019, and helps explain the strong prices.
Butter production climbed hit 190.7 million pounds, up 13.9 million pounds, or 7.9 percent, from December and 1.1 million pounds, or .6 percent, above a year ago, the eighth consecutive month butter output topped that of a year ago and was also a record high for the month of January.
Dry whey totaled 84.8 million pounds, up 6.3 percent from December and 4.4 percent above a year ago. Stocks fell to 66.7 million pounds, down 7.7 percent from December and 16 percent below a year ago.
Nonfat dry milk production hit 173.2 million pounds, up 8.5 million pounds, or 5.2 percent, from December and 500,000 pounds, or .3 percent, above a year ago. Stocks climbed to 279.2 million pounds, up 31.7 million, or 12.8 percent, from December but were 7.2 million pounds, or 2.5 percent, below the 2019 level.
Skim milk powder output slipped to 51.5 million pounds, down 2 million pounds, or 3.7 percent, from December but was 11.7 million pounds, or 29.4 percent, above a year ago.
Last Tuesday's Global Dairy Trade (GDT) auction saw its weighted average of products offered slip 1.2 percent, following the 2.9 percent drop on Feb. 18 and 4.7 percent plunge on Feb. 4. A year ago, the first GDT's weighted average for March was up 3.3 percent and was the seventh consecutive month of gain.
Buttermilk powder led the declines last Tuesday, down 4.8 percent, followed by GDT Cheddar, down 4.7 percent, after gaining 5.3 percent in the last event. Skim milk powder was down 3.2 percent, after a 2.6 percent drop, and anhydrous milkfat was down 1.7 percent, following a 5.5 percent dive. Whole milk powder was off .5 percent, after a 2.6 percent drop last time.
Lactose was up 5.7 percent. Butter was up 1 percent, after a 3.9 percent decline, and rennet casein inched .5 percent higher.
FC Stone equated the GDT 80 percent butterfat butter price to $1.8282 per pound U.S., up 1.8 cents from the last event. CME butter closed last Friday at $1.8550. GDT Cheddar cheese equated to $1.9437 per pound, down 10.9 cents, and compares to last Friday's CME block Cheddar at a bargain $1.75. GDT skim milk powder averaged $1.2460 per pound
and compares to $1.2882 last time. Whole milk powder averaged $1.3389, down from $1.3455. CME Grade A nonfat dry milk closed last Friday at $1.1150 per pound.
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