Market News

Milk futures mixed, cash dairy steady to weak

Chicago Mercantile Exchange Class III milk futures Friday were mixed on spread trade and position squaring ahead of the monthly milk production numbers. The trade also continues to monitor negotiations with China, on NAFTA, and for the farm bill. May held at $15.23 per hundredweight and June was down $.11 at $15.66, while July was up $.08 at $16.25 and August was $.07 higher at $16.61.

Cash cheese blocks were unchanged at $1.5825 per pound, with two bids unfilled at that price. Barrels were $.0025 lower at $1.5325, with one uncovered offer at that price. Nonfat dry milk was down $.0025 at $.8525. The USDA reported one unfilled bid at $.85 and the last uncovered offer was for one load at $.8525. Butter was steady at $2.385. Three loads were sold, including two at the closing price. The last unfilled bid was on one load at $2.3775 and the last uncovered offer was for two loads at $2.39. Dry whey was $.0025 higher at $.37, with one load sold at that price. The last unfilled bid was on one load at $.37 and the last uncovered offer was for one load at $.375.

For the week ending May 18th, blocks averaged $1.609, down $.07 on the week, and barrels were pegged at $1.5695, $.075 lower. Nonfat dry milk averaged $0.85, unchanged, and dry whey was reported at $.3475, an increase of $.026. Butter averaged $2.3745, $.045 higher.

The USDA says that butter production was active over the past week, even as butterfat demand increases from other product production sectors. Domestic and export demand for butter are solid, with bulk and print inventories able to meet buyer needs. Cheese demand was reported as good in the Midwest and West, but steady to slower in the East. Production was up in the East and the West, but some Central plants have slowed down for maintenance and/or inventory management. Milk is expected to remain readily available for the next several weeks, with fluid output rising in the Midwest and Northeast. Class I sales are slowing down as schools let out for the summer. Cream demand is firm with higher prices and a seasonal increase in ice cream production.

The USDA’s attaché in Australia projects that nation’s 2018 milk production at 9.5 million tons, up 2.2% from 2017, thanks to better weather in southern portions of the dairy production region. Higher yields are also a factor, canceling out a smaller herd. Cheese production could grow 6% to 350,000 tons because of export demand expectations, up 5.3% to 180,000 tons, but Australia is also a cheese importer, with the value of U.S. cheese sales to Australia jumping 80% from 2016 to 2017. Butter production could rise 1.9% to 105,000 tons, with exports surging 25.0% to 20,000, while skim milk powder is expected to increase 1.8% to 228,000 tons and whole milk powder production could increase as much as 6.7% at 80,000 tons because of higher demand for infant formula.