CME butter price zooms above $2

Ray Mueller
Now Media Group


Other than having the spot market price for AA butter shoot above $2 per pound this week for the first time since early March on the Chicago Mercantile Exchange (CME), there aren't any encouraging signs for prices in the dairy sector.

On Tuesday of this week, the sale of five carloads of AA butter and an unfilled bid for one carload combined to boost the price by 4.25 cents per pound to put the day's closing price at $2.0025. That performance was easily topped on Wednesday with the sale of an additional 21 carloads, an unfilled bid to buy one carload, and an uncovered offer to sell one carload as the day's closing price shot up by 7.75 cents to $2.08 per pound.

Cheddar cheese dips

Cheddar cheese prices on the CME continue to slide toward the low $1.40s per pound. With no activity on Wednesday, Cheddar barrels stood at $1.4425 per pound. Three carloads were sold earlier in the week.

As the result of an uncovered offer to sell one carload, the Cheddar cheese block price shed another 1.75 cents on Wednesday to close at $1.4325 per pound. One carload was sold on Monday of this week.

The grade A non-fat dry milk price on the CME dipped another 2.75 cents per pound on Wednesday as nine carloads were sold and a bid for an additional five carloads was not filled. This left the price at 69 cents per pound — down by 2.5 cents from a week earlier.

Milk Class prices

The federal milk marketing order prices for March,which were announced within the past week put the national Class III milk base price at $13.74 per hundred. This is down by 6 cents from February and is the lowest March Class III price since the $12.78 per hundred in 2010.

Much higher monthly drops were calculated for Classes II and IV for March. Compared to February, the Class II price (soft dairy products) fell by 73 cents to $13.57 per hundred while the Class IV price (butter and milk powders) lost 75 cents to fall to $12.74 per hundred.

Futures prices

In tune with the current cash market for dairy commodities, the dairy sector's futures prices continue at six-year lows. Prices for all remaining months of 2016 were in red ink territory in early afternoon trading in Wednesday. In the Class III milk futures, there is no per hundred price above $16 for the next two years.

Class III futures remain in the $13.70s for April through June of this year. They then gradually rise into the $14s per hundred for July 2016 through May of 2017 and then into the $15s for all subsequent months through March of 2018.

Futures prices for dry whey are in an even narrower range for the upcoming two years. The lowest prices are in the 24s in cents per pound for April through July of this year and then settle at very close to 28 cents per pound for all months from April of 2017 to April of 2018.

Every 1 cent of the dry whey price converts to about 6 cents per hundred in the Class III milk price.