August milk price highest in 20 months
Heavy trading volume for cheddar barrels
The Class III milk national base price of $16.91 per hundred for August was the highest since the $17.82 in December of 2014. It was an increase of $1.67 per hundred from the July price and of 64 cents from the August 2015 Class III base price for milk with 3.5 percent butterfat.
For the milk they shipped in July, dairy farmers in Wisconsin received a weighted all-milk average price of $16.60 per hundred, which was an increase of $1.80 from June. The national average for July was $16.10 per hundred.
In other top milk production states, the July all-milk average prices included $16.90 per hundred in Pennsylvania, $16.80 in Minnesota and New York, $16.70 in Texas, $16.20 in Idaho, $14.94 in California, and $14.80 in Michigan. Those prices are influenced somewhat by the average butterfat content in milk – 3.65 percent in Wisconsin for July, 3.72 in Idaho, 3.77 in Minnesota, and 3.78 in Texas.
Busy spot markets
Although the trading volumes slowed on Wednesday, the spot markets at the CME Group (formerly Chicago Mercantile Exchange) were busy in previous trading sessions. This included the spot market sale of 15 carloads of Cheddar cheese barrels on Friday, Sept. 2 to boost the week's total to 32 carloads. AA butter and Grade A non-fat dry milk both had 12 carload sales last week.
The pace continued on Tuesday of this week, following the Labor Day market holiday. Ten carloads of Cheddar barrels and 6 of Grade A non-fat dry milk were in the spot market on Tuesday.
One similarity in the spot market on Wednesday of this week was that Cheddar cheese blocks and barrels, AA butter, and Grade A non-fat all had an uncovered offer to sell one carload during the morning session.
Three carloads of Cheddar blocks were sold as the price enjoyed an uptick of 2 cents per pound to close at $1.72. Cheddar barrels tacked on .75 cent to close at $1.66 per pound as one carload was sold.
Continuing a one week trend, the AA butter slipped by .25 cent to close at $2.0125 per pound as one carload was sold. Grade A non-fat dry milk retreated by 1.25 cents from a recent price high to close at 89.75 cents per pound as two carloads were sold.
Futures Markets Review
Despite the small gains in the Cheddar cheese spot market prices, the Class III milk futures prices for the upcoming six months were all in negative territory in trading early on Wednesday afternoon.
This put the prices at $16.81 per hundred for September, $17.24 for October, and $17.03 for November. All other Class III milk monthly prices through August of 2018 remained in the $16s per hundred.
With very little market activity, dry whey futures prices were at low of 30.9 cents per pound for September, at very close to 39 cents for most months in 2017, and at a high of 40 cents in the first quarter of 2018.
Beverage milk sales sink
A report by the U.S. Department of Agriculture indicated that the sale of 49.924 billion pounds of beverage or fluid milk in 2015 was the lowest annual total since 1963. The 2015 volume was down by 1.4 percent or 734 million pounds from 2014.
The record high of fluid milk sales was set in 2000 with 55.427 billion pounds. Within categories for 2015, the sale of 14.584 billion pounds of whole milk was an increase of 4.3 percent or 600 million pounds from 2014.
Monthly reports for 2016 have shown that this uptick in whole milk sales is continuing. Consumers are reducing their purchases of 2 percent butterfat milk and skim (fat-free) milk.
Dairy export report
On Tuesday of this week, Cooperatives Working Together announced the receipt of bids from Tillamook County Creamery of Oregon and the Northwest Dairy Association (Darigold) of Washington for financial assistance on nine contracts to export dairy products.
Those products are 1.296 million pounds of Cheddar and Monterey Jack cheese and 330,693 pounds of butter. They are going to buyers in Asia, the Middle East, and Oceania on deliveries scheduled until February of 2017.