Trade volumes high in dairy spot market

Ray Mueller

Chicago, Ill, - Trading activity for dairy commodities has been brisk in the recent spot market sessions at the CME Group through Wednesday of this week. As that was happening, Cheddar cheese prices were falling.

In a busy spot market, 20 carloads of Cheddar barrels were sold on Friday, Feb. 24, followed by another 14 sales on Tuesday of this week. In addition, six carloads of AA butter were sold on February 24 and a bid for nine carloads of Grade A non-fat dry milk was not filled.

Wednesday market

Except for AA butter, dairy commodities suffered a price hit on Wednesday of this week with Cheddar barrels losing 6 cents to close at $1.4650 per pound and blocks shedding 5.75 cents to close at $1.49. Those prices are down by 13.5 and 4 cents per pound respectively since the start of trading last week.

Four carloads of blocks and three of barrels were sold in the spot market on Wednesday. A bid for one carload of barrels was not filled.

Grade A non-fat dry milk continued in its price decline with a 3.25 cent loss on Wednesday to close at 79.25 cents per pound, which is its lowest price in 2017. Two carloads were sold on Wednesday, a bid for nine carloads was not filled, and an offer to sell three carloads was not covered.

AA butter defied the price trend with a gain of 5.25 cents on Wednesday to close at $2.2325 per pound. Two carloads were sold, a bid for one carload was not filled, and an offer to sell six carloads was not covered.

Dairy futures markets

In tune with the price setbacks for Cheddar cheese, the Class III milk futures for nearby months suffered losses in trading into early Wednesday afternoon. That left per hundred futures at $16 for March, $15.88 for April, and $15.90 for May.
On their last trading day on Tuesday, the Class III futures for February closed at $16.87 per hundred. For the trading day on Wednesday, prices also stood in the $16s per hundred for all months from June of 2017 through February of 2019.

Dry whey futures prices were in red ink territory for all remaining months of 2017 in trading on Wednesday. In what was their greatest spread in many months, prices ranged from a high of 48.325 cents per pound for March 2017 to lows of 38 cents for September and October of 2017. The highest prices on the trading board were 49.25 cents per pound for months in late 2018 and early 2019 but no contracts were being traded at those prices.

Milk price update

For the milk they shipped in January, dairy farmers in Wisconsin received a weighted average price of $19.30 per hundred with a butterfat average of 3.9 percent. That's down by 40 cents from December 2016 but well above the $16 per hundred for January of 2016.

In other states, the January all-milk prices were $20.20 per hundred in Texas (thanks in part to average butterfat of 4.13 percent), $20 in Pennsylvania, $19.70 in New York, $19.10 in Minnesota, $18.30 in Idaho (butterfat at 4.05 percent), $18.10 in Michigan, $17.90 in New Mexico, and $17.54 in California.

The national average all-milk price for January was $18.90 per hundred. This was up by 10 cents from December and by $2.80 per hundred compared to January of 2016.

For March, the Class I fluid milk national base price is $16.90 per hundred. This is an increase of 17 cents from the February price.

Dairy export report

On Monday of this week, Cooperatives Working Together announced the receipt of a batch of 19 bids from Dairy Farmers of America, the Northwest Dairy Association (Darigold), and the Tillamook County Creamery of Oregon for financial assistance on the export of dairy commodities.

Those commodities are 2.558 million pounds of Cheddar and Monterey Jack cheese and 52,360 pounds of butter. They are contracted to go to buyers in Asia, Central America, the Middle East, and Oceania in deliveries by May of this year.

Trading activity for dairy commodities has been brisk in the recent spot market sessions at the CME Group through Wednesday of this week.