The first week of the year in the dairy markets saw the barrel-to-block ratio not only narrow but invert. At the close on Friday, barrels closed at $1.4325 while blocks ended at $1.41. Class III futures for the first half of 2010 saw some nice gains for the day while the July through December contracts ranged from 2 cents higher to 2 cents lower.
The average weekly block price on the CME in 2009 was $1.2993 compared to $1.85 in 2008. Average barrel price in 2009 was $1.2549 compared to $1.8305 in 2008 and $1.74 in 2007.
USDA Ag Market News says milk production is building in California, Arizona, New Mexico, Utah and Idaho. The improvement in the milk-to-feed ratio each of the last six months has slowed the cull rate and increased the feeding out west.
After posting some pretty good gains over the past few months, it seems the powder markets have leveled-off a bit. Drying plants ran heavy over the holidays to take advantage of the extra milk that was available but demand seems to have slowed on the domestic side. The export market remains strong.
European milk production remains at seasonally low levels although indications are it is starting to recover. Meanwhile production in Oceania is still trending lower than expected. For the first four months of their production year, New Zealand is running 1.5 percent above year-ago levels but that is less of an increase than had been expected. Australian production is even more disappointing running 5 percent below year-ago levels and no sign of improvement. At the monthly global trading auction on last Tuesday, the average whole milk powder price declined 7 percent, the first decline since July. The average anhydrous milk fat price was 4.37 percent higher.
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