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Trading volume builds in dairy spot market

Ray Mueller
AA butter makes big gains.

CHICAGO, IL. – Trading volumes for AA butter and Cheddar cheese barrels picked up during the first three trading sessions this week at the CME Group.

AA butter set the pace, adding seven carload sales on Wednesday to boost the week's total to 15 sales in the spot market. With the day's session also including an uncovered offer to sell one carload and an unfilled bid for one carload, the price gained .75 cent to close at $2.07 per pound.

Grade A non-fat dry milk lost .25 cent on Wednesday to close at 84.75 cents per pound as one carload was sold to put the week's total at two sales.

Barrels and blocks

As their price fell by another 2 cents on Wednesday to close at $1.40 per pound, Cheddar barrels had 10 carload sales for the week, including one on Wednesday. An offer to sell one carload was not covered.

Cheddar block cheese, meanwhile, had no activity during the first three days of this week. That left the price standing at $1.4750 per pound.

Futures markets differ

In early afternoon trading on Wednesday, the Class III milk futures posted single digit per hundred losses per hundred while, based on contracted prices for every remaining month in 2017, the dry whey futures enjoyed gains.

With a trading price of $15.84 per hundred, the July 2017 Class III milk futures joined the group of months in the $15s per hundred. Those are the nearby months – April at $15.25 per hundred, May at $15.20, and June at $15.36. All other months through March of 2019 are in the $16s per hundred.

The highest dry whey futures price on the trading board was 54.275 cents per pound for April 2017. Prices then slide to 37 and 38 cents for the final five months of 2017 and to 35 cents per pound for months in the spring quarter of 2018.

March PPD at 24 cents

The producer price differential (PPD) in Midwest Milk Marketing Order 30 for March in the Chicago base zone is 24 cents per hundred. It falls to 4 cents at the most distant milk receiving plants in Order 30.

With the positive value for the PPD, the volume of milk pooled in Order 30 for the month increased to more than 2.936 billion pounds. Of the pooled milk, 9.9 percent was used in Class I (fluid milk bottling), 2.4 percent in Class II (soft dairy products), 82.9 percent in Class III (cheese production), and 4.8 percent in Class IV (butter and milk powders). The pooled milk had averages of 3.88 percent butterfat, 3.14 percent protein, and 5.75 percent other solids.

On Tuesday of this week, Cooperatives Working Together announced a request from member cooperatives (not identified) for financial assistance on a total of 15 contracts to export 2.335 million pounds of Cheddar and Monterey Jack cheese to buyers in Asia, the Middle East, and Oceania. Deliveries are scheduled until July.

The national milk production report for March was scheduled for release on Thursday afternoon (April 20).