Upticks in both trading volume and dairy commodity prices highlighted the activity on the spot market at the Chicago Mercantile Exchange (CME) during the first half of this week.
AA butter stepped back into the spotlight on Wednesday with a price jump of 6.5 cents for a closing price of $2.10 per pound as nine carloads were sold during the day's trading session and a bid for four more carloads was not filled.
Grade A non-fat dry milk also posted a price gain of .75 cent to close at 74.25 cents per pound on Wednesday. Three carloads were sold, a bid for two carloads was not filled, and an offer to sell one carload was not covered.
Cheese prices narrow
After having broken out to a per pound price spread of 8 cents on Friday, Jan. 8, the Cheddar cheese prices narrowed on the CME this week. That trend continued on Wednesday with Cheddar blocks gaining .50 cent to close at $1.4950 per pound as two carloads were sold and an offer to sell one carload was not covered.
Meanwhile, Cheddar barrels lost .25 cent to close at $1.52 per pound on Wednesday as the result of an offer to sell one carload that was not covered. Eight carloads of barrels were sold on the CME on Monday of this week.
Single digit increases per hundred for nearby months were on the trading board for Class III milk futures late Wednesday morning. This put prices in the upper half of the $13s per hundred for the first quarter of 2016 and in the $14s for the second quarter.
The Class III prices then rise to the high $15s per hundred for the final months of 2016 and into early 2017. For the second half of 2017, they were in the low $16s per hundred.
Dry whey futures prices exhibit the same pattern. They start with a low of 22.75 cents per pound for February and don't top 30 cents until February of 2017 before holding in the very low 30s per pound for the remainder of that year. Each 1 cent in the dry whey price converts to about 6 cents per hundred in the Class III milk price.
The December producer price differential (PPD) for the Chicago base zone in federal milk marketing order 30 is 42 cents per hundred. That relatively high price also attracted a recent high total of 3.079 billion pounds of milk pooled in the order for the month.
Of the pooled milk, 87.9 percent was used in Class III for cheese production, 10 percent in Class I for fluid milk bottling, 1.3 percent in Class II for soft dairy products, and .8 percent in Class IV for butter and milk powders. The pooled milk had averages of 3.9 percent butterfat, 3.17 percent protein, and 5.74 percent other solids in December.
Dairy export report
On Tuesday of this week, Cooperatives Working Together (CWT) announced the receipt of a total of 12 bids from five dairy processor members for financial assistance on contracts to export 2.09 million pounds of Cheddar, Gouda, and Monterey Jack cheese, 1.323 million pounds of butter, and 396,832 pounds of whole milk powder.
Those requests came from Dairy Farmers of America, the Northwest Dairy Association (Darigold), the Michigan Milk Producers, Niagara O-AT-KA of New York, and the Tillamook County Creamery of Oregon. Shipments are scheduled to buyers in Asia, Central America, the Middle East, and Oceania until July of 2016.
For calendar year 2015, CWT's volume on those financially assisted exports was 57.1 million pounds of cheese, 25.8 million pounds of butter, and 49.9 million pounds of whole milk powder — the equivalent of 1.5 billion pounds of milk on a milkfat basis. The deliveries went to buyers in 36 countries on five continents.