Base milk prices lower

Dairy producers’ milk checks will be a little smaller this month. The base milk prices for January are mostly lower than they were in December. The Class III base is $14.50 per hundredweight, down 48 cents from December. Class IV is $1.16 lower at $13.85 while Class II is 97-cents higher at $15.22. Component prices for January milk are $1.4405 per pound for butterfat; $2.7916 for protein; $1.0148 for nonfat solids and $0.1946 for other solids.

Right now, it looks like things are going to get worse before they get better; Class III futures continue to slide with February through June all lower than the January price. In fact, March, April and May contracts are $13.55 and lower. If it’s any consolation, a year ago the base for Class II was $10.41, Class III was $10.78 and Class IV was $9.59.

The powder market continues to weaken, Dairy Market News reports drying schedules are heavy and inventories are increasing seasonally. Shipping container availability is a bit of a problem for exporters. Grade A nonfat dry milk on the Chicago Mercantile Exchange cash market Friday slipped 4 cents to $1.15 on one uncovered offer.

In Oceania, New Zealand’s milk production is running about even with year-ago levels while in Australia, November milk production was 6.8 percent below a year ago and preliminary indications show December about 9 percent lower. However, weakening world powder markets do not provide any incentive to increase production. The monthly global dairy sale in New Zealand saw the whole milk powder price down 1.6 percent and anhydrous milk fat down 7.9 percent from the January sale.

European milk production is a little lower than usual for this time of year although there are signs of it picking up. March 1 will be the start of a new dairy intervention year in the E.U. but traders and handlers say prices are around 10 percent higher than intervention levels. There is some concern the Union might release some of the stocks from the current year onto the market.