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Overall, a nice week for dairy markets

For the week, cash cheese barrels are unchanged, blocks are 3 cents higher, butter is 2.5 cents higher and the October, November, December average Class III price increased 29 cents.

Cheese stocks declined a bit in September. The monthly Cold Storage Report from USDA puts total cheese in storage at 1.04 billion pounds, down 2 percent from August and 2 percent lower than a year ago. American cheese stocks totaled 632.6 million pounds down 2 percent from August and 1 percent lower than a year ago.

Butter stocks dropped 9 percent from August to end September at 117.9 million pounds. That is 16 percent more than at the end of September in 2010 reflecting near-record butter production in September.

A few more dairy cows went to slaughter in September, USDA reports 247,000 head were slaughtered under federal inspection for the month, 2,000 more than in August and 4,000 more than September of last year. Year-to-date, 2.156 million dairy cows have been shipped, 86,000 more than January through September of 2010.

Dairy markets also encouraged by news Mexico is going to drop its tariffs on U.S. cheese. The tariffs were put on a number of U.S. products in retaliation for the U.S. not allowing Mexican trucks to operate north of the border. The WTO ruled that was a violation of the North American Free Trade Agreement. The two sides worked out a resolution with Mexico promising to drop the tariffs once a Mexican firm was granted a Federal Motor Carrier Safety Administration permit. A Monterrey-based company got one last week and the Mexican government responded as promised. The U.S. Dairy Export Council president Tom Suber said the resolution is a huge relief for cheese processors, “These actions mean dairy products on Mexico’s retaliation list will now be free of the 20 to 25 percent tariffs that were restricting access to our best foreign market.”

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