High volumes, volatility prevail in dairy markets

Ray Mueller

CHICAGO, IL. – High numbers in both trading volumes and price volatility prevailed for dairy commodities in the spot market at the CME Group through Wednesday of this week.

AA butter drew the most attention in the price movement, jumping from a per pound spot market price of $2.1050 on Tuesday, May 9 to a high of $2.43 on Tuesday, May 16 before dropping by 8.5 cents to close at $2.3450 on Wednesday of this week.

High numbers in both trading volumes and price volatility prevailed for dairy commodities in the spot market at the CME Group through May 17.

Three carloads of AA butter were sold in the spot market on Wednesday to boost the total to 18 sales for the first three days of this week. A bid to buy three carloads was not filled and an offer to sell four carloads was not covered.

Grade A non-fat dry milk was even more active this week, adding 17 carload sales to put the week's total at 30 sales. The price gained 1.5 cent on Wednesday to close at 89.75 cents per pound. The market day included an unfilled bid to buy three carloads and an uncovered offer to sell six carloads.

Cheese price gap

Cheddar cheese barrels joined in the active sales pattern with three carloads on Wednesday to raise the week's total to 22 carload sales. An offer to sell one carload was not covered.

The Cheddar barrel price lost 4 cents on Wednesday to close at $1.50 per pound, setting up an unusually large price gap with the $1.67 per pound for Cheddar cheese blocks. The price for blocks was steady on Wednesday as one carload was sold an offer to sell one carload was not covered. Four carloads were sold earlier in the week.

Futures prices drop

After staging gains on recent trading days, Class III milk futures fell for all remaining months of 2017 in early afternoon trading on Wednesday. The May price of $15.72 per hundred was the lowest on the trading board.

Following losses of 18 to 31 cents for the day, the highest prices were $17.16 to $17.20 per hundred for August through October of this year. All other Class III milk futures were in the $16s per hundred, standing in the upper half of the $16s for every month from June 2018 through April of 2019.

Dry whey futures prices were also in red ink territory for nearby months in the early afternoon on Wednesday as trades were posted for only seven months in the two-year period. Prices ranged from the high of 50.5 cents per pound for May to lows of 36.025 cents for the summer months of 2018.

April PPD at 15 Cents

The producer price differential (PPD) for April on milk pooled in the Chicago base zone for Federal Milk Marketing Order 30 is 15 cents per hundred – down by 9 cents from March and a negative 5 cents at the most distant milk receiving plants.

Despite the relatively low PPD, more than 3.08 billion pounds of milk were pooled in Order 30 for April. Usage of that milk was 8.4 percent in Class I (fluid milk bottling), 6 percent in Class II (soft dairy products), 80.4 percent in Class III (cheese production), and 5.2 percent in Class IV (butter and milk powders). The pooled milk had averages of 3.84 percent butterfat, 3.1 percent protein, and 5.76 percent other solids.

The national milk production statistics for April are being released on Friday afternoon (May 19).

Cooperatives Working Together has announced the receipt of a total of eight bids from Dairy Farmers of America, Foremost Farms USA, Tillamook Creamery of Oregon, and the Northwest Dairy Association (Darigold) of Washington for financial assistance to export 930,531 pounds of Cheddar and Gouda cheese and 220,462 pounds of butter to buyers in Asia, the Middle East, and North Africa for deliveries scheduled until August.