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Chicago, Ill. - Prices for all four dairy commodities continued on a downward trend in the spot market at the CME Group through Wednesday of this week.

The lowest prices since late May of 2016 set in for Cheddar cheese as blocks lost 1 cent per pound and barrels shed 2.5 cents per pound for respective closing prices of $1.36 and $1.375.

Four carloads of blocks were sold on Wednesday to put the week's total at 12 carload sales. Two carloads of barrels were sold during the day's trading session. There were also uncovered offers to sell one carload each of blocks and barrels.

Grade A non-fat dry milk continued to post the most spot market activity. Six carloads were sold, a bid for one carload was not filled, and an offer to sell one carload was not covered as the price slipped by another 1 cent to close at 79.5 cents per pound. This followed a Tuesday spot market session which featured an unfilled bid to buy 11 carloads and an uncovered offer to sell 7 carloads.

AA butter joined in the price setback on Wednesday with a 3 cent loss to close at $2.15 per pound. One carload was sold to put the week's total at three sales.

Class III futures retreat

As a result of the continued weakness in dairy commodity prices, the Class III milk futures suffered losses for all months through July of 2018 in early afternoon trading on Wednesday. The greatest declines ranged from 28 to 39 cents per hundred for April through June of this year.

This dropped the trading board's futures prices to $15.66 per hundred for March, $15.23 for April, $15.36 for May, and $15.84 for June. All other Class III futures through February of 2019, however, were still in the $16s per hundred – most of them in the upper half.

Dry whey futures were in red ink territory for the spring months of 2017 and in green ink territory for the final half of this year. Prices ranged from a high of 50.9 cents per pound for March to lows of 38.5 cents for the months in the final quarter of 2017.

February PPD at 6 cents

The February producer price differential (PPD) for the Chicago base zone in the Upper Midwest federal milk marketing Order 30 is 6 cents per hundred. Because of the transportation allowance, this converts to a minus 14 cents per hundred at the most distant milk receiving plants in Wisconsin.

Because of the low PPD and the short month, only a little over 2.251 billion pounds of milk were pooled in Order 30 during February. The pooled milk had component averages of 3.86 percent butterfat, 3.13 percent protein, and 5.75 percent other solids.

Of the pooled milk, 11.5 percent was used in Class I for fluid bottled milk, 7.7 percent in Class II for soft dairy products, 75.2 percent in Class III for cheese production, and 5.6 percent in Class IV for butter and milk powders.

Positive drug residue report

For the fiscal year which concluded on September 30, 2016, there were 350 tanker loads of milk in the United States which failed a drug residue test. Among the 3.5 million loads which were tested, this was the lowest percentage of violations in 20 years. The percentage of violations in fiscal 2016 was one-eighth of that in 1997.

In addition, dairy producers (milk shippers) voluntarily submitted 407,592 samples for drug residue testing during that fiscal year. Of them, 261 were found to be positive. Of the more than 600 samples in both categories found to be positive for a drug, all but six for a sulfa drug and one for tetracycline were found to have residues from beta lactam drugs.

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