Wild price swings strike spot market

Ray Mueller

Chicago, Ill.. - Spot market prices for Cheddar cheese continued to slip through Wednesday of this week in the spot market at the CME Group in the wake of major price moves last week.

Spot market prices for Cheddar cheese continued to slip through Wednesday of this week in the spot market at the CME Group in the wake of major price moves last week.

As they closed at $1.62 per pound on Wednesday following a 1 cent loss for the day, Cheddar blocks had lost a total of 23 cents per pound from a price spike on Thursday of last week. Wednesday's session included an uncovered offer to sell one carload and the sale of three carloads, bringing the week's total to 13 sales.

Cheddar barrels slipped by 1.5 cent on Wednesday to close at $1.6850 per pound. An uncovered offer to sell two carloads constituted the day's market activity. A total of 14 carloads were sold on Monday and Tuesday of this week.

Wild price swings for Cheddar cheese dominated in the spot market late last week. On Thursday, Feb. 3, barrels gained 12 cents per pound while blocks added 10 cents. On the next day, blocks gave back 11 cents while barrels tacked on 1 cent.

Record cheese year

Twenty five consecutive years of record high cheese production volumes in the United States were completed in 2016 with the year's total hitting 12.074 billion pounds. This is a virtually a doubling of production since 1990, when the volume first topped 6 billion pounds.

The 2016 record was solidified in December, when the 1.05 billion pounds of production set a record high for any month ever in the country. The December volume topped the production in October of 2016 by 12 million pounds.

Wisconsin's cheese production in December was 271.3 million pounds. State totals for 2016 have not yet been reported but, as indicated by the December numbers, Wisconsin accounts for about 27 percent of the nation's production.

Butter, NFDM spot markets

Both AA butter and Grade A non-fat dry milk posted price gains in the spot market on Wednesday of this week.

During a market day of four carload sales and an uncovered offer to sell four carloads, AA butter added 1.75 cents to close at $2.1775 per pound. One carload was sold earlier in the week.

Non-fat dry milk picked up 1 cent for a closing price of 96 cents per pound on Wednesday. Three carloads were sold, a bid to buy one carload was not filled, and an offer to sell one carload was not covered. Three carloads were also sold earlier in the week.

Futures markets

Going contrary to the spot market cash prices, the dairy futures markets posted gains for all months in 2017 in trading through early afternoon on Wednesday. For Class III milk, the largest gain was 13 cents per hundred for March.

The day's market activity put prices at $16.88 per hundred for February, $16.94 for March, and in the $17s per hundred for all remaining months of 2017. The prices stood in the $16s per hundred for all months in 2018.

Dry whey futures were also in green ink territory for most months in 2017 as trading activity was concentrated in the upcoming three months. Prices were in an extremely tight range of 47.275 cents per pound for February to a high of 49.25 cents the latter months in 2018.

All-milk prices

As reported in late January, the all-milk prices for December in Wisconsin and Minnesota posted the highest average among the nation's nine top milk production states. Boosted by average butterfat percentages of 3.93 and 4.01 respectively, the two states had all-milk prices of $19.70 per hundred for the month.

In Wisconsin, those prices were $1 above November of 2016 and $2.40 per hundred above the December 2015 price. The national all-milk average price for December was $18.80 per hundred.

Although it was an improvement of $1.80 from November, Michigan's December all-milk price still lagged at $17.80 per hundred. Prices in other states for December were $16.10 per hundred in New Mexico, $17.54 in California, $18.70 in Texas, $18.60 in Idaho, $19.30 in New York, and $19.40 in Pennsylvania.

Dairy export report

In recent releases, Cooperatives Working Together reported the receipt of 17 bids from Dairy Farmers of America, the Maryland and Virginia Milk Producers Cooperative, the Michigan Milk Producers Association, and the Northwest Dairy Association (Darigold) for financial assistance on the export of dairy commodities.

Those products are 1,547,637 pounds of Cheddar and Monterey Jack cheese and 1.102 million pounds of butter going to buyers in Asia, the Middle East, and North Africa. Deliveries are to be completed by April of this year.