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Class III benchmark milk price down $1.81 from June
By Lee Mielke
Finances are getting tighter on the farm. The USDA announced the July Federal order Class III benchmark milk price at $22.52 per hundredweight, down $1.81 from June but $6.03 above July 2021. It’s the lowest Class III since March. The seven-month average stands at $22.89, up from $16.90 at this time a year ago, $17.30 in 2020, and $15.58 in 2019.
Late Friday morning Class III futures portended an August price at $19.94; September, $19.40; October, $20.05; November, $20.40; and December at $20.20. That would result in a $21.68 average for the year, $1.12 shy of the USDA’s latest projection of $22.80.
The Class IV price is $25.79, down 4 cents from the record high June price, but is $9.79 above a year ago and the highest July Class IV price ever. Its seven-month average is at $24.83, up from $15.01 a year ago, $13.78 in 2020, and $16.11 in 2019. USDA predicts a $24.70 Class IV average for 2022.
You’ll recall preliminary USDA data showed June milk production was up 0.2 percent from June 2021. StoneX adds that fat and protein in the milk was up as well, giving us about 1.3 percent more milk solids to make dairy products with. The June Dairy Products report shows where that milk went or didn’t.
June cheese production totaled 1.157 billion pounds, down 2.3 percent from the May total which was revised 4 million pounds lower, but is 2.7 percent above June 2021, 20th consecutive month output topped that of a year ago. Cheese output year to date (YTD) stands at 7.0 billion pounds, up 2.5 percent from a year ago.
Italian cheese totaled 484.6 million pounds, down 0.4 percent from May but 4.2 percent above a year ago. American type cheese, at 462 million pounds, was down 4.0 percent from May but up 1.0 percent from a year ago. Mozzarella totaled 385.2 million pounds, up 5.7 percent from a year ago.
Cheddar output, the cheese traded at the CME, slipped to 333.5 million pounds, down 1.1 million pounds or 0.3 percent from May, but was up 3.7 million pounds or 1.1 percent from June 2021, ending three consecutive months it was below a year ago. YTD Cheddar is at 1.96 billion pounds, down 2.5 percent from a year ago.
June butter totaled 160.5 million pounds, down 19.6 million pounds or 10.9 percent from May, but 3.5 million or 2.3 percent above a year ago. YTD butter output is at 1.1 billion pounds, down 2. percent from a year ago.
Yogurt output totaled 391.4 million pounds, up 0.5 percent from a year ago.
Dry whey production slipped to 82 million pounds, down 2.2 million pounds or 2.6 percent from May, but 5.6 million or 7.4 percent above a year ago. YTD, whey is at 482.8 million pounds, up 3.0 percent. Stocks totaled 69 million pounds, down 3.2 million pounds or 4.4 percent from May but 7.4 million pounds or 12.0 percent above a year ago.
Nonfat dry milk dropped to 169.7 million pounds, down 23.3 million pounds or 12.1 percent from May and 15.9 million or 8.6 percent below a year ago. YTD powder was at 1.1 billion pounds, down 7.2 percent. Stocks crept to 317.4 million pounds, up 900,000 pounds or 0.3 percent from May, but down 31.8 million or 9.1 percent below a year ago.
Skim milk powder output climbed to 45.2 million pounds, up 6.5 million pounds or 16.8 percent from May, but down 9 million or 16.6 percent from a year ago. YTD SMP was at 225.4 million pounds, down 25.7 percent from 2021.
Don’t look to the Global Dairy Trade for any rally just yet. The Aug. 2 weighted average did a repeat of the previous event, dropping 5.0 percent, making it the fourth decline in a row.
Declines occurred in every product offered, led this time by buttermilk powder, down 9.2 percent. Whole milk powder was down 6.1 percent, after dropping 5.1 percent on July 19, and skim milk powder was down 5.3 percent, after leading the declines last time with an 8.6 percent drop. Butter was down 6.1 percent, after slipping 2.1 percent, and anhydrous milkfat was off 1.4 percent, following a 2.1 percent slip. GDT Cheddar saw the smallest decline, down 0.7 percent, after dropping 2.0 percent on July 19.
StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.2987 per pound U.S., down 14.8 cents, and compares to CME butter which closed Friday at $3.01. GDT Cheddar, at $2.1763, was down 1.2 cents, and compares to CME block Cheddar Friday at $1.7850. GDT skim milk powder averaged $1.5983 per pound, down 8.4 cents. Whole milk powder averaged $1.6077 per pound, down a dime. CME Grade A nonfat dry milk closed Friday at $1.5025.
North Asia market share remained weaker than last year, according to StoneX, falling below 40 percent in this event, but “SE Asia, Middle East, and Europe picked up purchases bringing their market share levels higher than year-ago levels.”
Aug. 9 will be the first “GDT Pulse,” an effort with Fonterra to “enhance liquidity in GDT,” according to its website. It will run on the opposite weeks of the normal event for six to 12 months and only offers Fonterra whole milk powder.
On a brighter note, June U.S. dairy exports remained impressive, despite all of the shipping challenges. Speaking in the Aug. 8 Dairy Radio Now broadcast, HighGround Dairy’s Lucas Fuess said cheese exports were 96.8 million pounds. That surpassed the record set in March, he said, and were up 30.8 percent from a year ago. The top 10 buyers saw increases, with Mexico remaining the biggest.
Butter totaled 12.9 million pounds, also impressive, he said, up 63.1 percent from a year ago, after a slight dip in April and May. Canada was the top destination.
Unfortunately, nonfat dry milk exports were down from a year ago for the seventh consecutive, falling to four-month lows, at 152.6 million pounds, down 14 percent, which explains the weakness at the CME, Fuess said.
Cooperatives Working Together member cooperatives accepted three offers of export assistance this week to help capture sales of 952,000 pounds of American-type cheese. The product is going to customers in Asia and Middle East-North Africa, and will be delivered through January 2023.
Lack luster demand with ample supplies sums things up at the CME. Cheese was down for the fifth week in a row. Block Cheddar fell to $1.7650 per pound Thursday, lowest since Jan. 27, but regained 2 cents Friday to close at $1.7850, down 9.50 cents on the week, 61.25 cents below its April 18 peak, but 15 cents above a year ago.
The barrels fell to $1.7475 Thursday, lowest since Jan. 11, but regained 4.50 cents Friday to finish at $1.7925, also 9.50 cents lower on the week but 48.25 cents above a year ago. CME sales totaled 6 cars of block and 16 of barrel.
Midwest cheesemakers say milk is available despite summer heat drawdowns. Spot prices ranged $3 to $1 under Class III at midweek. Cheese demand received a shot in the arm in recent weeks, says Dairy Market News, as customers are more willing to pay sub-$2 per pound prices.