After a near free-fall during the previous week, spot market prices for Cheddar cheese recovered this week in trading on the Chicago Mercantile Exchange.
With daily gains of 1.5 cents per pound on Monday, 1.25 cents on Tuesday, and 2.5 cents on Wednesday of this week, Cheddar block cheese prices stood at $2.2225 per pound at mid-week. Boosted by an 8.75-cent per pound gain on Monday and another 2 cents on Wednesday, the Cheddar barrel price was up to $2.1875. The gains on Wednesday were due to unfilled bids to buy one carload each of blocks and barrels.
As prices continued to fall, the most active spot markets during the first part of this week were with AA butter and Grade A non-fat dry milk. With respective price declines of 1 and 2 cents per pound on Wednesday, both commodities were at $1.89 at the close of the day's market.
Including two carload sales of AA butter on Wednesday, the week's total was seven carloads. One carload sale of non-fat dry milk on Wednesday put the week's total at 12. Three more carloads of non-fat dry milk were offered for sale on Wednesday, as was one carload of AA butter.
Class III milk futures prices were mixed on Wednesday — up for the second quarter of 2014, down slightly for the remainder of the year, and up a few cents per hundred for the spring months of 2015.
Near the end of the market session on Wednesday, the Class III futures price for April was $24.12 per hundred, which strongly suggests a third consecutive month of a record high Class III milk cash price. Price gains on Wednesday put the May futures at $22.02 per hundred and June at $20.38.
For the remainder of 2014, the Class III futures were in the $19s per hundred for the third quarter and in the $18s for the final quarter of the year. They then fall to the low $18s and upper half of the $17s for the first half of 2015.
Dry whey futures prices were at a record high of 68.15 cents per pound for April on Wednesday, in the 60s for the second quarter of the year, and above 50 cents per pound for all other months through July of 2015.
The producer price differential (PPD) in Federal Milk Marketing Order 30 for March is 19 cents per hundred in the Chicago base zone and minus 1 cent for the most distant milk receiving plants in central Wisconsin.
In adjacent federal orders, the Central (based in Missouri) had a March PPD of 35 cents per hundred while the Mideast order (based in Ohio) was at 62 cents. Those were major turnarounds from a negative 14 cents per hundred in the Central and 2 cents in the Mideast for February, which was a rare month in which the Order 30 PPD (7 cents) was higher than in the two adjoining marketing orders.
The PPD price for March in Order 30 applies to the more than 2.812 billion pounds of milk that were pooled during the month. Of the pooled milk, 10.8 percent was used in Class I (fluid milk bottling), 85.7 percent in Class III (cheese production), and a total of 3.5 percent in Classes II and IV (soft dairy products, butter, and milk powder). The pooled milk had averages of 3.86 percent butterfat, 3.15 percent protein, and 5.7 percent other solids.
On Tuesday of this week, Cooperatives Working Together (CWT) announced the receipt of a batch of 28 bids for financial assistance on the export of 5.34 million pounds of Cheddar, Gouda, and Monterey Jack cheese, 2.26 million pounds of 82 percent butter, and 837,757 pounds of whole milk powder to countries in Asia, Central America, the South Pacific, the Middle East, Africa, and Europe on deliveries scheduled from April to August.
The bids to CWT were submitted by Foremost Farms USA, Dairy Farmers of America, Tillamook Creamery, the Northwest Dairy Association (Darigold), the Michigan Milk Producers Association, and the Maryland and Virginia Milk Producers.
Exports of dairy products through CWT and other commercial venues continued to increase significantly during the first two months of 2014. The total value of $1.169 billion during those two months was an increase of 36 percent from 2013. Volume increases in the exports for February compared to 2013 included 44 percent for cheese and 71 percent for butter.