Prices strengthen, stabilize in Cheddar cheese spot market

As a result of bids during the past week to buy Cheddar cheese in the spot market on the Chicago Mercantle Exchange, prices rose to their highest level since the third week of August.

At the close of the trading session on Wednesday of this week, Cheddar barrels stood at $1.93 per pound while Cheddar blocks trailed at $1.8975. The latest price increases included totals of 10 cents per pound for barrels and 8.75 cents for blocks on Thursday and Friday of last week (Nov. 3 and 4).

On Wednesday of this week, the spot market saw the sale of 2 carloads of Cheddar blocks and an unfilled bid to buy 1 carload as the price slipped by .25-cent per pound. The barrel spot market price held as an offer to sell 1 carload was not covered.

There was a much busier day on Wednesday in the AA butter spot market with the sale of 7 carloads and an uncovered offer to sell 1 carload as the price slipped by another 1.75 cents to $1.79 per pound at the day's close. That is a price decline of 8.75 cents per pound from a week earlier.

In the non-fat dry milk spot market, an unfilled bid to buy 1 carload of Grade A raised the price by .25-cent to $1.4325. The Grade Extra price remained at $1.58.

Class III milk futures prices did not advance in tune with the spot market cash prices for cheese in the past week, but nearby months posted modest gains during the period before slipping a bit on Wednesday of this week. The day's closing prices included $18.85 per hundred for November, $18.26 for December, and $17.28 for January, before falling into the $16s per hundred for most months from February 2012 through November 2013.       

National Class prices for milk shipped in October were announced last week Friday. They included $18.03 per hundred for Class III, $19.41 for Class II, $18.41 for Class IV, and the previously announced $19.56 per hundred base price for Class I fluid milk before federal milk marketing order differentials are added.

Despite those prices, the milk to feed price ratio continued to deteriorate for October. It fell to 1.79 for October from the 1.84 for September and the 2.4 for October 2010, compared to the 3.0 that is generally regarded as the point at which profits can be earned from milk production.

The October ratio is based on the national average gross all-milk price of $19.90 per hundred, a shelled corn price of $5.92 per bushel, soybeans at $11.90 per bushel, and baled alfalfa hay at $203 per ton (up by $85 from October 2010). The weighted percentages assigned to the feedstuffs in the formula were 51 for corn, 41 for alfalfa hay, and 8 for soybeans.