During the five-day market period ending on Wednesday of this week, prices for dairy commodities fell in the spot market on the Chicago Mercantile Exchange. Class III milk futures for nearby months followed suit in the early trading on Wednesday but then rebounded late in the session.
With most of the price setbacks occurring on Thursday and Friday of last week, the net declines for the week ending on Wednesday were 8.5 cents per pound for Cheddar barrel cheese, 6.5 cents for Cheddar blocks, and 15 cents per pound for AA butter.
Per pound losing prices on Wednesday were $1.9750 for Cheddar blocks, $1.9475 for Cheddar barrels, $2.47 for AA butter, and $1.6750 for Grade A non-fat dry milk. Market activity for the day included the sale of three carloads of blocks, an unfilled bid to buy one carload of barrels, and the sale of two carloads of butter, bringing the week's total to 19 carload sales.
The dairy sector futures markets for nearby months headed in opposite directions in trading on Wednesday. Class III milk prices were once down by 21 cents per hundred for August and 17 cents for September but a price strength late in the day pulled the August price back up to $21.45 per hundred and September to $21.32.
Declines of a few cents per hundred were on the trading board for the latter months of 2014 and most months in 2015. Prices stood in the very low $18s per hundred for a majority of the months in 2015.
In the dry whey futures market, prices were higher for nearby months, including the new high of 67.775 cents per pound for August. Other prices were 58.775 cents for November contracts and above 51 cents per pound for all subsequent months through September of 2015.
Thanks to the approximately 6 cents per hundred that every 1 cent of the dry whey price is worth in the Class III cash milk price, it's probable that the price for July will set a seventh consecutive monthly high. The existing record of $21.39 per hundred for a July cash price is likely to be broken by about 15 cents per hundred.
With the steady run of record high milk prices so far for all months in 2014, the culling of dairy cows fell to its lowest monthly total in 6 years during June. The total of 199,500 head culled was down by 9,800 from May of this year and by 20,800 from June of 2013. For the first 6 months of 2014, the cull total of 1.391 million head was 175,600 less than for the first half of 2013.
The August national base price for Class I fluid milk is $23.87 is hundred. This is an increase of 85 cents from the July price and is $4.99 per hundred above the August 2013 price. For the first eight months of 2014, the Class I base price has averaged $23.13 per hundred — up by $4.74 from 2013.
On the down side, retail sales of fluid milk continue to drop significantly. A recently issued report indicated that the April sale of 4.15 billion pounds was 4.5 percent less than in April of 2013. For the first four months of 2014, the fluid milk sale total of 17.04 billion pounds was down by 2.2 percent compared to a year earlier.
Organic milk sales, which are accounting for 4.9 percent of the fluid milk sales volume, are an exception to the downward trend, however. They were up by 7.6 percent for April and by 13.5 percent for the first four months of 2014 compared to 2013.
A report on Tuesday of this week indicated that Cooperatives Working Together had received a total of eight bids from Dairy Farmers of America and the Tillamook Creamery of Oregon for financial assistance on the export of 1.645 million pounds of Cheddar cheese and 2.222 million pounds of whole milk powder to countries in North Africa, Central America, and South America in deliveries scheduled from July to January of 2015.