The USDA announced the November Federal order Class III benchmark milk price at $21.01 per hundredweight (cwt.), down 80 cents from October but $2.98 above November 2021. That put the 11-month average at $22.09, up from $16.96 at this time a year ago and $18.39 in 2020.

Late Friday morning, Class III futures had December at $20.20, which would result in a 2022 average of $21.93, up from $17.08 in 2021 and $18.16 in 2020.

Looking ahead, the January contract was at $19.91; February, $19.86; and March was at $20.00, with a peak at $20.42 in September.

The November Class IV price is $23.30 per cwt., down $1.66 from October, $4.51 above a year ago, and the lowest Class IV since January. Its average now stands at $24.68, up from $15.74 a year ago and $13.50 in 2020.

The CME Cheddar blocks fell to $2.0650 per pound Wednesday but closed the first Friday in December at $2.10, down a nickel on the week but still 24.25 cents above a year ago. They also ended November 10.50 cents higher than where they started the month at.

After dropping 24.50 cents the previous two weeks, the barrels slipped to $1.80 per pound Tuesday, lowest since Aug. 8, but rallied to finished Friday at $1.8975, up 8 cents on the week, 29.50 cents above a year ago, and 20.25 cents below the blocks. They ended November 14.25 cents lower than their Nov. 1 perch.

Sales totaled seven cars of block for the week and eight for the month of November, down from 18 in October. Barrel sales totaled nine for the week and 28 for the month, down from 43 in October.

StoneX Nov. 30 Early Morning Update stated that cheese demand is “Quiet right now. Buyers seem to, by and large, have what they need. On the flip side, we don’t get the sense that sellers are panicked either.”

Cheesemakers tell Dairy Market News that milk was still plentiful after the Thanksgiving holiday. This week’s reported spot milk discounts were not as substantial mid-week as the previous week, but most were below Class. Some cheesemakers say current demand slowdowns have kept them from seeking extra milk. Some say it’s the seasonal slowdown, as retailers have filled their holiday pipelines while others suggest market price declines are keeping customers on the sidelines. Cheese production is somewhat steady.

Cheese demand is steady in western retail markets while food service demand is slightly higher following Thanksgiving. Export demand is strong, though lower prices in other countries may soften this demand in the coming weeks, warns DMN. Asian purchasers continue to buy loads for second quarter 2023 and are reportedly paying a healthy premium to secure them. Barrel inventories are more ample than blocks currently. Cheese makers say milk is available in the region, allowing them to run busy schedules but they are still hindered by labor shortages and delayed deliveries of production supplies.

CME butter fell to $2.88 per pound Thursday but closed Friday at $2.90, down 4.75 cents on the week but 89.75 cents above a year ago. There were 6 sales on the week and 63 for November, up from 58 in October.

Holiday related cream access continues to keep Midwest butter churning active, says DMN, and plants were turning away cream offers because they were at capacity. Demand remains despite prices over $2.90 per pound and the late timeframe in regard to the holiday season. Market tones continue to maintain support and contacts view the markets as stable, if not slightly bullish, says DMN.

Western cream is becoming more available as milk production is improving in the region. Cream availability is outpacing strong demand and contributing to lower cream multiples. Some processors say tanker and labor shortages are making it difficult to obtain and process increased volumes of cream. Butter makers say they are actively churning but labor shortages are preventing some from operating full schedules. Butter demand is strong in the West from both food service and retail. Inventories are available but some tightness persists.

Grade A nonfat dry milk fell to $1.3475 per pound Thursday, lowest since Sept. 16, 2021, but finished Friday at $1.36, 3.75 cents lower on the week and 20.25 cents below a year ago. Sales totaled 10 for the week and 41 for the month, up from 29 in October.

The October Dairy Products report was issued Friday afternoon after the markets finished trading for the week. StoneX reminded us that a lot of milkfat went “missing” in August and September and, while it was produced at the farm level, it didn’t show up in the major dairy products.

“We are assuming some of that fat found its way back into the major dairy products in October,” says StoneX, “but may have continued to move directly into retail and foodservice.” I’ll have details from the Dairy Products report next week.

The Global Dairy Trade’s Pulse auction on Tuesday saw 2.2 million pounds of Fonterra whole milk powder sold, up from 2.1 million in the Nov. 22 Pulse, and at $3,280 per metric ton, down $25 or 0.8 percent from the previous Pulse.

HighGround Dairy (HGD) stated: “After whole milk powder found support at the most recent main GDT auction two weeks ago on Nov. 15, the two subsequent Pulse events have indicated slight price weakness. However, the two recent Pulse auction settlements remain higher versus the $3,250 per metric ton WMP value at the first November auction.”

Speaking in the Dec. 5 Dairy Radio Now broadcast, HGD’s Lucas Fuess said demand is pretty weak around the world regarding products from New Zealand despite continuous news that milk output there is weaker this season.

Don’t look for China to come to the rescue any time soon. China’s global dairy purchases will likely remain limited for the foreseeable future as protests mounted across the country due to frustration over the government’s continuing zero-COVID policy of massive lockdowns and quarantine centers.

Dairy margins weakened over the second half of November as milk prices slumped while feed costs were steady to higher since the middle of the month according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

“U.S. milk production grew again in October, marking the fourth consecutive month that milk production increased from the prior year,” the MW reported. “USDA reported October Milk Production at 18.85 billion pounds, up 1.2 percent from last year with a larger dairy herd and higher yields driving the increase. USDA revised the September dairy herd up by 6,000 head, from the initial assessment of a 2,000 head decline to a 4,000 head increase. October’s dairy herd also increased 1,000 head from September to 9.418 million head. This would be 31,000 head higher than last October when producers were aggressively culling cows with margins under pressure. Yields increased in the Midwest last month due to mild weather while they contracted along the West Coast due to unseasonably hot weather and soaring input costs. Milk production in Texas increased 7 percent in October due to both a larger dairy herd and increased milk yield, eclipsing Idaho to become the third largest milk producing state in the U.S.”