Market News

Milk futures, cash cheese lower

In Class III trade at the Chicago Mercantile Exchange, milk futures were lower as contracts continued to back off of the recent highs. Production is rising along seasonal lines in many areas and the USDA recently raised production estimates for the fourth quarter on this year and 2017. September was $.05 lower at $16.36, October was down $.26 at $16.07, November was $.16 lower at $16.24, and December was down $.12 at $16.00.

In the spot market, cash cheese was lower. Blocks were down $.02 at $1.65. There were a total of four loads sold, three at the closing price. Barrels were $.04 lower at $1.48. The barrel market was active again Friday, with a total of nine loads sold, including three at the closing price and four at $1.49.

Butter was down $.005 at $2.00. There were three trades, one at $2.00. The last unfilled bid was on one load at $1.995. The last uncovered offer was for two loads at $2.00.

Nonfat dry milk was up $.0025 at $.91. There were four loads sold, all at that price. The last unfilled bid was on seven loads, also at $.91. The last uncovered offer was for two loads at $.92.

The USDA reports that for the week ending September 16th, butter churning across the U.S. was mostly steady with an increasing amount of available cream. Some Midwestern operations are still limited by a supply inconsistency. Microfixing is active for current needs and expected strong fourth quarter demand, so bulk butter supplies are down and print butter is up. Retailer and food service demand varies by region.

Cheese makers in the Midwest and Western regions are reportedly looking for additional milk to meet production needs. Extra milk is available in the West, but Midwestern manufacturers are, in the words of the USDA, “having to reach out further to secure extra milk”.

Milk production is seeing a seasonal rebound with improving butterfat and protein levels for some areas. Milk sales into Class III are called active. Cream pricing multiples and basing are fluctuating because as standardization builds supplies. Cream multiples in the Midwest region are 1.18 to 1.28, compared to 1.20 to 1.32 in the East and 1.16 to 1.29 in the West. Class II demand is declining as ice cream and frozen dessert production declines.

The price spread for a half gallon of organic and conventional milk is $1.93. Retail ads for organic and conventional dairy products were mixed on the week.