News

Cheese barrel-to-block spread down to a quarter-cent

Cash cheese continued to nudge higher on the Chicago Mercantile Exchange on Thursday. Barrels increased 1.75 cents to $1.6275 while blocks added a half-cent to $1.625. Butter held steady and Class III futures were mixed.

Milk production is noticeably declining in the Midwest as heat and dry conditions start to take effect. Processors say there is not a shortage of milk but discounted loads have disappeared, in fact they are now seeing premiums of $1.00 to $1.40 on Class III milk.

Rather interesting that a week ago we were worried about the 13.5 spread between barrels and blocks, that is down to a quarter-cent. Some speculation that recent moves in the block price on the CME are partly influenced by international buyers who have an easier time selling non-U.S. cheese in the European Union if U.S. cheese for export is around $1.70.

The U.S. Senate has passed a $500 Billion Farm Bill in a vote of 64 to 35. Sixty votes, minimum, were needed for passage. The bill makes $23 Billion in cuts. The measure eliminates direct payments and expands crop insurance for wider disaster coverage. It cuts about $4-Billion from the food stamp nutrition program.

The Senate passed their version of the Farm Bill on Thursday including the Dairy Security Act. National Milk Producers Federation president and CEO Jerry Kozak says there really were no direct attempts to alter the dairy provisions. Kozak said “the dairy title contains a better safety net for farmers in the form of the Dairy Production Margin Protection Program, which offers them a basic level of coverage against low margins, as well as a supplemental insurance plan offering higher levels of protection jointly funded by the government and participating farmers. Those farmers choosing to enroll in the margin program will also be subject to a Market Stabilization Program that addresses the imbalance between supply and demand when farm-level margins are poor.”