Market News

Cash cheese slips ahead of the three-day weekend

Cash cheese prices declined on the Chicago Mercantile Exchange on Thursday.  Cheddar barrels were 1.25 cents lower and blocks declined 1.75 cents.  Class III futures slipped as well.  Butter gained a penny and nonfat dry milk held steady.

More reports of skim milk being dumped in the Northeastern United States.  Bloomberg says dairies in the Northeast dumped 31 million pounds of skim milk in the first five months of this year including 7.9 million in May.  The plants are skimming the cream off of the milk then dumping what is left into manure pits as they have no market for it and no capacity to process it further.

 

Cheese production in the United States totaled 989 million pounds in May, up 1.8 percent from May of last year.  Italian cheese production totaled 423 million pounds up 1.9 percent from a year ago while American-type cheese output was 1.6 percent higher at 401 million pounds.

Wisconsin cheese production totaled 251.6 million pounds in May up 4 percent from a year ago.  California cheese production totaled 208.6 million pounds in May, 0.4 percent above May of last year.

Butter production was 169 million pounds in May, 1.9 percent above May of 2014.

Year-to-date, U.S. cheese production is running 2.2 percent above the same period a year ago while butter production is 2 percent lower.

 

The 5.9 percent decline at the Global Dairy Trade auction on Wednesday is putting additional pressure on the New Zealand dollar.  The “Kiwi” slipped to 67-cents against the U.S. dollar on Thursday as the New Zealand dairy industry continues struggle with over production and a limited export market.  The GDT index has lost 58 percent of its value since February and there is no turnaround in sight.

Dairy is a major component of New Zealand’s economy and exports provide the market.  Fonterra cooperative, which handles most of the milk in the country, is the largest dairy exporter in the world.

In an effort to increase exports, the Reserve Bank of New Zealand reduced its cash rate by 25 basis points last month.  The hope is a cheaper Kiwi will give New Zealand dairy products a price advantage on the global market.  Commonwealth Bank analyst Nick Tuffley tells the Sydney Morning News he expects three more cuts of 25 basis points each starting this week.