Dairy futures tumble for nearby months

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CHICAGO, IL

Cheddar cheese, butter, and Class III milk futures prices endured multiple downside trading days in the wake of the announcement last week that that the U.S. Department of Agriculture would be purchasing 11 million pounds of Cheddar cheese for distribution to food banks and pantries to address the 30-year high of a 1.276 billion pounds of cheese in inventory at the end of July.

In the spot market on the Chicago Mercantile Exchange last week, Cheddar cheese blocks, barrels, and AA butter suffered setbacks of 12.5, 18.5, and 13.25 cents per pound respectively. Through the first 3 days of this week, Cheddar blocks lost another 6 cents while barrels fell by 5.5 cents per pound.

Wednesday spot market

On Wednesday of this week, Cheddar blocks lost 3 cents as the result of an uncovered offer to sell one carload, putting the day's closing price at $1.68 per pound. Cheddar barrels held at $1.6250 per pound as a bid for two carloads was not filled. Eleven carloads of barrels were sold on Monday and Tuesday of this week.

Although the AA butter spot market price also fell by 3 cents on Wednesday, the day's closing price of $2.08 per pound was an increase of 2.25 cents for the week. Market activity on Wednesday consisted of two carload sales to raise the week's total to 11 sales, an uncovered offer to sell one carload, and an unfilled bid to buy one carload.

Grade A non-fat dry milk continued to show a relatively stable price, holding at 85.50 cents per pound on Wednesday following a market day with an unfilled bid to buy two carloads and an uncovered offer to sell one carload. Nine carloads were sold earlier in the week.

Futures markets slide

Including the loss of 15 cents per hundred on Wednesday, the early afternoon Class III milk futures price of $16.45 for September was a decline of $1.02 per hundred from a week earlier. For the same period, the October futures price was down by 80 cents to $16.48 per hundred.

Futures prices dipped into the high $15s per hundred for the first quarter of 2017 in the afternoon trading on Wednesday. All other months through August of 2018 stood in the $16s per hundred.

Dry whey futures price dropped by more than 2 cents per pound for the final five months of 2017 on the 13 contracts executed on Wednesday for each of those months. Prices ranged from a low of 30 cents per pound for September 2016 to highs of 40 cents for the first quarter of 2018.

Dairy export report

On Monday of this week, Cooperatives Working Together reported the receipt of eight bids from Dairy Farmers of America and the Northwest Dairy Association (Darigold) for financial assistance on the export of 1.83 million pounds of Cheddar, Gouda, and Monterey Jack cheese and 110,231 pounds of butter. Those products are going to buyers in Asia, the Middle East, and Oceania in deliveries to be completed by December.

In its latest prediction, the U.S. Department of Agriculture estimated that dairy exports would increase by $300 million in fiscal 2017 to a total of $4.8 billion while imports would decline by $100 million to $3.3 billion for the upcoming fiscal year.

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