LINKEDINCOMMENTMORE

The Agriculture Department announced the April Federal order Class III benchmark milk price Wednesday at $15.81 per hundredweight (cwt.), up 25 cents from March, $8.50 below April 2014, but $1.59 above California's comparable 4b milk price, and equates to about $1.36 per gallon, up from $1.34 last month and compares to $2.09 a year ago.

Class III futures portend a larger jump next month, the May contract settled Thursday at $16.22 per cwt. June settled at $16.34, with the peak at $17.26 in November, $7.34 below the 2014 peak and record high $24.60 in September. The four month Class III average now stands at $15.75, down from $23.04 at this time a year ago and compares to $17.48 in 2013.

The April Class IV price is $13.51, down 29 cents from March and an eye catching $9.83 below a year ago. The four month Class IV average is at $13.59, down from $23.19 a year ago and compares to $17.81 in 2013.

The four-week NPSR-surveyed cheese price used to calculate the April price averaged $1.6122 per pound, up 3.7 cents from March. Butter averaged $1.7355, up 4.1 cents. Nonfat dry milk averaged 96.84 cents per pound, down 5.3 cents, and dry whey averaged 46.1 cents per pound, down 2.1 cents.

California's April Class 4b cheese milk is $14.22 per cwt., up 25 cents from March but $7.51 below April 2014 and $1.59 shy of the comparable Federal order Class III price. The gap is the same as last month's and compares to $2.58 a year ago and 67 cents in April 2013. The four-month 4b average stands at $13.93, down from $21.34 a year ago and compares to $15.80 in 2013.

The Class 4a butter-powder milk price is $13.36, down 6 cents from March and $9.95 below a year ago. The 4b average now stands at $13.33, down from $22.97 a year ago and compares to $17.75 in 2013.

Cash cheese ends April and begins May in a stronger than expected position. The Cheddar blocks closed Friday, May 1, at $1.61 per pound, unchanged on the week but 46 cents below a year ago when they tumbled 14 cents, to $2.07 per pound. The Cheddar barrels finished at $1.6175, down a quarter-cent on the week and 43 3/4-cents below a year ago when they rolled 16 1/2-cents lower, to $2.0550. Four cars of block traded hands this week and none of barrel. The NDPSR-surveyed U.S. average block price hit $1.5925, up 1.4 cents. The barrels averaged $1.6575, up 1.8 cents.

Has cheese put in a floor? Some believe that's true, according to the April 24 Dairy and Food Market Analyst. "Given the conversations we had at the Wisconsin Cheese Makers meeting this week, it feels like market sentiment is changing," Editor Jerry Dryer wrote. "After being very bearish for some time, cheesemakers and others gathered here in Madison, WI, were less bearish. In fact, some were even bullish. While we don't completely agree, several people told us the cheese market has put in a floor for the year" and it will only move higher from here."?

Dryer adds that "We're hearing two different stories from cheesemakers: Some cheesemakers tell us they can't make enough cheese. Their plants are at full capacity with orders booked well into the future. This matches with what we're hearing from traders; the cheese market is tight and some say it has tightened over the past couple of weeks. However; one major cheese manufacturer is arguing that prices should be significantly lower. He pointed at growing inventories, weak exports and increasing imports." To read more, write Matt Gould at:MGould@DairyMarketAnalyst.com.

Most Midwest cheese plants remain busy, pushed along by the higher volumes of milk being produced, reports Dairy Market News (DMN). The volume of plant production for several weeks is taking a personnel toll, leaving some cheese facility staff feeling "exhausted". Some extra barrel production is occurring, but less so than last week. Interest in Cheddar remains strong, but Italian varieties, while still receiving good demand, are closer to a desired balance. Most cheese manufacturers are satisfied with customer demand accommodating higher available seasonal milk supplies going into cheese.

Most cheese plants in the West have active schedules and there is good demand for the output. Customers are still buying good volumes of cheese. The question is increasingly asked, is current demand active or holding inventories of cheese for consumption later in the year? Whatever the answer, sales are strong and that is enough to keep production schedules active. Recent demand spikes for barrels were taken as typical by some manufacturers who cite building inventories for the grilling season as a factor in higher seasonal demand for process cheese, made primarily from barrel cheese.

Cash butter saw a fourth consecutive week of gain, closing Friday at $1.85 per pound, up 2 cents, but 22 1/2-cents below a year ago when the spot blasted 16 1/2-cents higher, to $2.0750 per pound. Only three cars traded hands this week at the CME. NDPSR butter averaged $1.7577 per pound, up 2.3 cents.

Some Central butter manufacturers are trying to increase inventory but cannot with current demand, according to DMN. The increase in pricing at the CME has some producers in flux. Butter production remains steady with some increased competition for cream from ice cream manufacturers.

Butter manufacturing is a mixed picture in the West. Some plants are only manufacturing prints for orders in hand and selling extra cream. Other plants are moving cream from other states to support butter production levels. In plants churning print and bulk butter, there is a shift toward a higher percentage of production being bulk. Bulk butter from the West is moving into the Central Region. Some concerns are voiced about meeting print demand during quarter 4.

Speaking of fat; consumers are returning to the flavor of fat. It started with the premium, high-fat ice creams, then butter, and now fluid milk. The April 24 Dairy and Food Market Analyst, which reports that "Consumers are drinking higher fat milk. Whole, regular fat milk sales were up 3.7% versus reduced fat two-percent milk sales, down 6.9 percent during the four weeks ending March 22, based on Information Resources Incorporated data. Low fat (half-percent milk to one-percent milk) sales increased 4.5 percent while fat free milk sales declined 12.7 percent. In total, conventional milk sales were down 3.0 percent YoY; total organic sales were up 0.4 percent."

Cash Grade A nonfat dry milk finished the week at 93 3/4-cents per pound, up three quarter-cents on the week but 85 cents below a year ago when it was trading at, better sit down for this, $1.7875 per pound. No powder was traded this week at the CME and the NDPSR-surveyed powder price hit 95.27 cents per pound, down 1.4 cents. Dry whey averaged 45.74 cents per pound, up 0.2 cent.

The dairy farmer-funded Cooperatives Working Together (CWT) accepted eight requests for export assistance this week from Dairy Farmers of America, Northwest Dairy Association (Darigold), and Tillamook County Creamery Association who have contracts to sell 1.122 million pounds of Cheddar, Gouda, and Monterey Jack cheese and 85,980 pounds of whole milk powder to customers in Asia, the Middle East, and Central and South America.

The product has been contracted for delivery through October and raised 2015 exports to 28.878 million pounds of cheese, 24.388 million pounds of butter, and 8.739 million pounds of whole milk powder to twenty eight countries.

The March 2015 milk feed price ratio slipped to 2.00, down from February's 2.02 and compares to 2.54 in March 2014 and 1.48 in March 2013, according to the Agriculture Department's latest Ag Prices report issued Thursday.

The index is based on the current milk price in relationship to feed prices for a ration of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay, in other words, 1pound of milk today can purchase 2 pounds of dairy feed containing that blend.

The March U.S. average all-milk price dropped to $16.60 per cwt., down 20 cents from February and a whopping $8.50 below March 2014.

March corn, at $3.81 per bushel, was up 2 cents from February but 71 cents below March 2014. Soybeans averaged $9.84 per bushel, down 8 cents from February, and $3.86 per bushel below March 2014. Alfalfa hay averaged $172 per ton, unchanged from February, but $21 per ton below March 2014.

Looking at the cow side of the ledger; the March cull price for beef and dairy combined averaged $114.00 per cwt., up $4 per cwt. from February and $12 above March 2014, and compares to the 2011 base average of $71.60 per cwt. Prices received for milk cows was $1970.00 per head, down $20 from February 2015 but $160 above March 2014, and $550 above the 2011 base.

USDA reported that 2014 milk production totaled 206.0 billion pounds, up from 201.2 billion in 2013. USDA's 2014 Dairy Products Summary issued Wednesday shows where the milk went. It shows total cheese production, excluding cottage cheeses, was 11.5 billion pounds, 3.1 percent above 2013 production. Wisconsin was the leading State with 25.4 percent of the production.

Italian varieties, with 4.95 billion pounds, were 4.5 percent above 2013 production and accounted for 43.2 percent of total cheese in 2014. Mozzarella accounted for 79.3 percent of the Italian production followed by Provolone with 7.3 percent and Parmesean with 6.1 percent. California was the leading State in Italian cheese production with 31.6 percent of the production.

American type cheese totaled 4.53 billion pounds, 2.6 percent above 2013 and accounted for 39.6 percent of total cheese in 2014. Wisconsin was the leading State in American type cheese production with 18.7 percent of the production.

Butter production totaled 1.86 billion pounds, 0.3 percent below 2013. California accounted for 33.0 percent of the production.

Lee Mielke is a graduate of Brown Institute in Minneapolis, MN. He's formerly the voice of the radio show "DairyLine," and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.

LINKEDINCOMMENTMORE
Read or Share this story: http://www.farmersadvance.com/story/money/2015/05/13/class-iii-benchmark-milk-up/27179313/