CHICAGO, IL. - After staging impressive gains in busy trading sessions late last week in the spot market at the CME Group, Cheddar cheese prices slipped a bit on Wednesday of this week.
Cheddar blocks had jumped to $1.52 per pound at the end of last week but they lost 2 cents on Wednesday to close at $1.50 Two carloads were sold to put the week's total at five sales and an offer to sell one carload was not covered. A total of 16 carloads of blocks were sold on Thursday and Friday of last week as the price jumped by 7.5 cents.
Heavy Barrel Volumes
Sales of Cheddar cheese barrels have been brisk during the past week, totaling 34 carloads on Thursday and Friday of last week and another 31 carloads during the first three days of this week, including seven on Wednesday morning.
The price gained 10 cents per pound on Thursday and Friday of last week but gave back 2.25 cents on Wednesday morning of this week to close at $1.4575 per pound. An offer to sell two carloads was not covered on Wednesday.
Spot market activity for AA butter has been relatively quiet during the past two weeks. Six carloads were sold on Monday and Tuesday of this week. On Wednesday, the price slipped by .50 per pound to close at $2.1450 as a bid to buy one carload was not filled and an offer to sell one carload was not covered.
Despite a market day with two carload sales, an unfilled bid to buy two carloads, and an uncovered offer to sell five carloads, the Grade A non-fat dry milk price stood at 80 cents per pound.
The price pickups for Cheddar cheese during the past week were not enough to lift the Class III milk futures prices out of the $15s per hundred for the spring quarter of 2017. Early afternoon trading prices on Wednesday were $15.38 per hundred for April, $15.44 for May, and $15.78 for June before rising into the $16s – mostly in the upper half – for all subsequent months through March of 2019.
In the dry whey futures, the highest price on the trading board on Wednesday was 51.4 cents per pound for April. The price then declines gradually to 38 cents by December of 2017.
Prices throughout 2018 stood in the upper half of the 30s in cents per pound before jumping to 49.25 cents for the first quarter of 2019 – months for which no trading is taking place. Each 1 cent change in the dry whey prices converts to about 6 cents per hundred in the Class III milk cash price, for which the March 2017 price was yet to be announced this week.
February Milk Prices
For the milk they shipped in February, dairy farmers in Wisconsin received a weighted average of $19 per hundred. Compared to the month's Class III milk base price of $16.88 per hundred for milk with 3.5 percent butterfat, this represents a $2.12 per hundred basis value for the combined worth of components (butterfat and protein), milk quality, and volume premiums in the state.
The February price was down by 30 cents per hundred from January but was 50 cents above the national weighted average for the month and $2.90 above the February 2016 price. Among the top milk production states, Pennsylvania, which has a state premium of $1.60 per hundred for the share of its milk production used in Class I fluid, had the highest February average of $19.60 per hundred.
Prices in other states were $19.30 per hundred in Texas, $19.10 in New York, $18.70 in Minnesota, $18.40 in Idaho, $17.50 in Michigan, $17.44 in California, and $17.10 in New Mexico. With its significant portion of Jersey cows, Texas again claimed the top butterfat average percentage of 4.03 for the month while Idaho followed at 3.99 and Wisconsin had 3.86 percent.
2016 Mailbox Milk Prices
The USDA's agricultural marketing service has reported the mailbox milk price averages for 2016 in the areas covered by federal milk marketing orders (FMMO). Those averages are the net pay prices received by dairy farmers – the payment for milk minus marketing expenses such as hauling costs and stop fees along with the mandatory 15-cent per hundred promotion checkoff and the voluntary contribution to the Cooperatives Working Together export assistance program.
The average mailbox price for 2016 within the FMMOs was $15.95 per hundred – down by $1.07 from 2015. This was the first year that the price was below $16 since 2009, when it sank to $12.92 per hundred.
Wisconsin's mailbox price average in 2016 was $16.59 per hundred. Minnesota was at $16.45, Illinois at $16.34, and Michigan at $14.31, which was the lowest for any state or marketing area. With their high percentage of Class I fluid milk sales, the New England states had the highest average of $17.27 per hundred for 2016, followed by Florida at $17.23.
California, which is not covered by an FMMO, had a mailbox milk price average of $14.68 for 2016. This was down by 40 cents from 2015 and was the state's lowest since $14.37 in 2010. At the moment, California is in a process which would lead to the creation of an FMMO.
Dairy Farm Counts
Another report by the USDA indicates that there were an average of 41,809 licensed dairy operations in the United States during 2016. With losses of 1,275 dairy herds in 2015 and another 1,725 in 2016, the report noted that the total had fallen to the lowest number since that tabulation began in 1992.
Although its total had dropped to a lower number by late in the year, Wisconsin accounted for 9,520 of the nation's licensed dairy herds during 2016. The loss of 380 herds during 2016 in Wisconsin was the most for any state. The report observed that Wisconsin had 31,286 licensed dairy herds in 1992, meaning that the reduction in the state during the 25-year period has been nearly 70 percent.
In other states, licensed dairy herd numbers included 6,650 in Pennsylvania, 4,650 in New York, 3,350 in Minnesota, 1,810 in Michigan, and 1,420 in California. Fourteen states had less than 100 licensed dairy herds in 2016.
On Monday of this week, Cooperatives Working Together reported the receipt of bids from Dairy Farmers of America, the Northwest Dairy Association (Darigold) of Washington, and the Tillamook County Creamery of Oregon for financial assistance on 12 contracts to export 2.01 million pounds of Cheddar and Monterey Jack cheese to buyers in Asia, Central America, the Middle East, and Oceania. Deliveries are scheduled until June.