Mielke's Weekly Summary
Mielke’s weekly summary
The cash cheese market showed no reaction to yesterday’s August Milk Production report, according to DairyBusiness Update associate Editor Lee Mielke. Most analysts believe the report fed the bears.
Prices were unchanged this morning, with no activity whatsoever, and not one pound was sold all week in the spot market. Mid-September cheese prices reversed three weeks of gains, and the block price closed this morning at $1.7950/lb., down 4.5¢ on the week and 20.5¢ below a year ago. Barrels closed at $1.7675/lb., also down 4.5¢ on the week and 19.25¢ below a year ago.
Butter stole the show today in Chicago, where 36 carloads were sold, with prices ranging from $1.5550/lb. to $1.60/lb. at the close when the dust had settled. That’s up 7¢ on the day and the week but still 29¢ below a year ago. 1 bid at $1.60 and 1 offer at $1.6050/lb. were left on the board. A whopping 67 cars were sold on the week, up from 47 last week, as interest grows for the upcoming holidays. FC Stone brokers tell me the highest single week sales of butter totaled 147 loads the week of Nov. 21, 2003, when butter was only trading three time a week.
Cash powder came to life this morning when four sales of Grade A occurred at $1.83/lb. One bid at $1.8450/lb. tried to pry more lose, but no seller stepped to the plate. Extra Grade remained at $1.78/lb. where it’s been since Aug. 22, but 1 bid today at $1.78/lb. got no response either.
Today’s market closing prices:
Butter: up 7¢, to $1.60/lb.
Cheddar blocks: unchanged, at $1.7950/lb.
Cheddar barrels: unchanged, at $1.7675/lb.
Grade A nonfat dry milk: up 1.5¢, to $1.8450/lb.
Extra Grade nonfat dry milk: unchanged, at $1.78/lb.
Class III milk: -12¢ to +9¢ through March 2015. Based on current CME closing prices, the September-December 2013 average is $17.75/cwt.; with an overall 2013 average of $17.73/cwt.; and a 2014 average of $16.78/cwt.
A couple of interesting perspectives on what most everyone agrees was a bearish Milk Production report comes from High Ground Dairy’s Eric Meyer. Meyer points out in his daily update this morning that the 0.2% growth in milk production between July and August is “surprising” “and a little suspicious, because it has never happened in the past. We scoured the historical milk production data and could not find a year when U.S. milk production grew in August over July.”
And, FC Stone risk management consultant Ron O’Brien pointed out in this morning’s eDairy Insider Opening Bell that "Milk is currently tight on both the East and West Coasts, so even though milk production was up substantially in August compared with the previous year, demand is also likely stronger than a year ago." Next week will be very telling.