Market News

Milk futures lower, cash dairy mostly steady

Class III milk futures at the Chicago Mercantile Exchange were lower, pressured by USDA expectations for higher milk production and lower cheese prices. March was down $.08 at $15.74, April was $.27 lower at $15.61, May was down $.29 at $15.76, and June was $.24 lower at $16.10.

Cash cheese blocks were $.0125 lower at $1.385. There were five loads sold, including one at $1.385 and three at $1.39. Barrels held at $1.40. There were three loads sold, one at $1.40 and two at $1.395. The last uncovered offer was for one load at $1.41.

Butter was unchanged at $2.1625. The last unfilled bid was on one load at $2.1625. The last uncovered offer was for one load at $2.19.

Nonfat dry milk was steady at $.81. There were four loads sold at $.81. The last unfilled bid was on one load at $.8075. The last uncovered offer was for one load at $.83.

The USDA reports fluid milk production was higher over the past week, high enough that parts of the U.S. are unable to use all the milk they have on hand. Midwestern production is expected to continue to rise through the spring. Class I sales in the Midwest are slow and spot Class III loads are mostly $1.50 to $4 under class, with the USDA reporting some offers as much as $6 below class. Cream is abundant and some Midwestern manufacturers are churning extra butter instead of selling at discounts on the spot market.

Butter production is called heavy and bulk butter is building up at a number of U.S. plants. January butter and milk fat exports were 50.0 million pounds, up 3% on the year.

Cheese production is active because of the available milk supplies. Demand is mixed with the Midwest called mostly steady, except for a seasonal decline at some plants. Cheese inventories are long in all regions.

At the retail level, conventional dairy ads were up 4% while organic was unchanged. Conventional butter ads jumped 44% and organic ads were 11% higher. The spread between organic and conventional half gallons of milk is $2.14, in favor of organic. The USDA says conventional milk ads were down 19%, while organic ads were up 27%.