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Mielke’s Market Daily: Cheese falls

Mielke’s Market Daily: Cheese falls
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
That loud crash you heard this morning in Chicago was a carload of barrel cheese plunging 7.25¢ on a single offer, to $1.7975/lb. The blocks held at $1.9025/lb. on 2 trades at that price, but a 10.5¢ spread is going to mean downward pressure.
FC Stone dairy broker Mary Ecklund said they’re not hearing of tightness in cheese anywhere and “the market just overshot itself.” She looks for some slippage in the blocks tomorrow.
Butter was steady following 3 consecutive sessions of gain, and remained at $1.56/lb. One offer at $1.57 brought no response.
Grade A nonfat dry milk inched up 0.5¢ on 2 unfilled bids and hit $1.9150/lb. Extra Grade remained at $1.86/lb, after gaining 1¢ yesterday on a bid.
Today’s market closing prices:
Butter: unchanged, at $1.56/lb.
Cheddar blocks: unchanged, at $1.9025/lb.
Cheddar barrels: down 7.25¢, to $1.7975/lb.
Grade A nonfat dry milk: up 0.5¢, to $1.9150/lb.
Extra Grade nonfat dry milk: unchanged, at $1.86/lb.
Class III milk: -3¢ to -27¢ through April 2014. Based on current CME closing prices, the Q4 2013 average is $18.25/cwt.; with an overall 2013 average of $17.89/cwt.; and a 2014 average of $16.99/cwt.
The monthly World Agricultural Supply and Demand Estimates is issued Friday afternoon, which will include the Department’s latest projections on U.S. milk production and milk prices. California’s December Class I milk prices are also scheduled to be announced on Friday.
Yesterday’s GlobalDairyTrade (GDT) price index fell 1.8% from Oct. 15, due to drops in butter and whole milk powder. Most other product prices were up. The butter price, converted to 80% butterfat, averaged $1.60/lb., down 7%. Cheddar cheese averaged $1.99/lb., up 1.2%.
High Ground Dairy’s Eric Meyer notes that “Increased milk supplies in New Zealand coming to the auction by way of whole milk powder provided additional resistance to overall dairy commodity prices,” down for the second straight auction. Meyer views the event as slightly bearish for whole milk powder and U.S. skim milk powder, bearish for butter, but bullish for anhydrous milkfat and New Zealand skim milk powder.
The California Department of Food and Agriculture shows the price on powder for the week ending Oct. 25 at $1.8219/lb., on sales of 8.1 million lbs. The week ending Nov. 1 had the price at $1.8390/lb., on sales of 7.5 million lbs.
Looking back to recent USDA reports, FC Stone dairy broker Dave Kurzawski said Friday’s Milk Production report and Monday’s Dairy Products  showed production lighter than expected, “but the market had already climbed in the past month and a half.”
High Ground Dairy’s Eric Meyer says the September Milk Production report “delivered a rather bullish surprise. The country’s milking herd has not yet turned sharply to the upside and challenges to profitability in certain regions of the country were still present as monthly cow numbers shrank throughout the third quarter.”
Meyer says the outlook for dairy farmers is very positive for Q4 into 2014 but the report was “bullish versus expectations and may continue to provide support to dairy commodity prices during the seasonal holiday rally.” He warned that “We still had 1% growth in September and expect production to continue accelerating for the coming months and as such, we anticipate lower dairy commodity prices once holiday demand subsides towards the end of November into early December.”