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  Title	Class III milk price highest in more than 2 years
  ID	3176912
  External ID	7205967372
  Author	Lee Mielke
  Published Date	Oct. 11, 2024, 11:19 p.m.
  Summary	The “Mielke” Market Weekly Posted Saturday, October 12, 2024 12:00 am The U.S. Department of Agriculture announced the nation’s September benchmark Class III milk price at $23.34 per hundredweight,
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  URL	https://dairystar.com/stories/class-iii-milk-price-highest-in-more-than-2-years,25733
  Sentiment	Negative: 0.96843    Neutral: 0.01736    Positive: 0.01421
  Relevance	0.01220

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  Content ID	1593206
  Key	6db67453-868b-4a03-9b65-ed3454379bb1
  Content	The “Mielke” Market Weekly Posted Saturday, October 12, 2024 12:00 am The U.S. Department of Agriculture announced the nation’s September benchmark Class III milk price at $23.34 per hundredweight, up $2.68 from August, $4.95 above September 2023, and the highest Class III price since June 2022. That put the 2024 average at $18.37, up from $17.13 at this time a year ago and compares to $22.24 in 2022. Late Friday morning Class III futures portended an October price at $22.63; November, $21.22; December, $20.72; and January 2025 at $20.21 per cwt. The September Class IV price is $22.29, up 71 cents from September, $3.16 above a year ago, and the highest Class IV since November 2022. Its average stands at $20.69, up from $18.65 a year ago and compares to $24.81 in 2022. Lots of eyes were on the International Longshoremen Association dockworkers strike at 36 United States Maritime Alliance terminals along the East and Gulf Coast this week. A new six-year labor contract was given a thumbs down. The National Milk Producers Federation and the U.S. Dairy Export Council called on the Biden administration to immediately intervene, warning “This disruption could have a devastating impact on American dairy farmers and exporters who rely on the smooth functioning of these ports to get products to international markets.” Dockworkers agreed to return to work Thursday after port operators enhanced their offer, extending the existing contract through Jan. 15, 2025. Other issues will have to be negotiated in the meantime, including automation in the ports. Meanwhile, Chicago Mercantile Exchange cheese prices continued their descent ahead of Friday afternoon’s August dairy products report and in spite of news that bird flu has spread in California, now confirmed in 53 dairies as of Oct. 2. The Cheddar blocks closed Friday at $1.9475 per pound, down 16.25 cents on the week, lowest since Aug.8, down 26.75 cents from their Sept. 3 print, but still 24.50 cents above a year ago. The barrels fell to $2.1450 per pound Tuesday, regained 0.75 cents Wednesday, but closed Friday at $1.9550, lowest CME price since Aug.7, down 34.25 cents on the week, down 30.50 cents on the month, but 37.75 cents above a year ago and 0.75 cents above the blocks. Sales totaled 12 loads of block on the week and 34 for the month of September, down from 61 in August. There were four trades on barrel for the week and 21 for the month, down from 23 in August. Dairy Market News reports that contacts say cheese demand has stalled somewhat. Others are preparing for a busy holiday retail demand season, including work on gift baskets and other special orders. Barrel processors say they have had a slight growth in availability for spot market offers, but extra loads are moving briskly. Spot milk prices mid-week were above-Class levels, primarily due to some plants coming back online after recent downtime, says DMN. Class III milk demand from cheese makers is steady in the West. Bottling demand continues to tug on milk supplies and some processors indicate that milk is tighter than a year ago, however, it can be obtained. Cheese output is steady along with contractual demand. Seasonally tighter milk volumes and a strong mozzarella market have contributed to tighter barrel stocks, according to DMN. Demand is steady from domestic and international buyers. Butter started the week jumping 7.25 cents, with 16 loads traded, but it headed lower from there, closing Friday at $2.6875 per pound, down 4.50 cents on the week, 46.50 cents lower on the month, and 81.50 cents below a year ago. There were 59 sales on the week and 102 for the month, down from 223 in August. Churning in the Central region is busy as current and mid-term cream availability is at unprecedented levels. Multiples below 1.20 were reported this week, and butter makers say they are getting offers from the West and, atypically, even East region sources. Hurricane Helene’s effects were backing up cream moving to normal destinations in the East. Butter demand is steady to quiet, said DMN. Wester butter manufacturers note retail production is strong or steady and bulk production is strong to lighter. Stocks are being built to cover upcoming churn maintenance as well as anticipated fourth-quarter demand. Cream is widely available in most of the region but demand from butter makers is mixed. Domestic butter demand is steady to lighter, however, 2025 booking is picking up. Export demand is stronger as U.S. prices become more competitive, said DMN. Grade A nonfat dry milk finished Friday at $1.3525 per pound, down a half-cent but 17.25 cents above a year ago. Sales totaled 18 for the week and 118 for the month, up from 113 in August. Dry whey saw its Friday close at 60.50 cents per pound, 0.75 cents higher and 30.75 cents above a year ago. There were 12 sales on the week and 38 for the month, up from 26 in August. The dairy industry has long used USDA’s monthly milk production data for tracking milk supplies and projecting dairy product output. Falling milk production typically signaled a decline in supplies of fluid milk and components. But a report this week from CoBank entitled “Why Milk Components Matter More Than Milk Production” challenges the norm. The report said, “Decoupling fluid milk production and milk component production represents an important paradigm shift for the industry given growing consumer demand for manufactured dairy products.” Speaking in the Oct. 7 “Dairy Radio Now” broadcast, Corey Geiger, dairy economist for CoBank, said milk components have grown much. And, while milk output has been down for 14 consecutive months, components, such as butterfat and protein, have been up in 12 of those 14 months. Geiger said 80% or more of U.S. milk goes into manufactured products like cheese and butter and 90% of dairy farmers are paid on multiple component pricing so, “It’s the components that matter, and components matter to processors, so this is a win-win situation.” The report suggests the dairy industry would benefit from a more comprehensive monthly report from USDA that includes milk, protein and butterfat production levels. Geiger said it will take some work to make this change happen but, “The industry needs to talk about how we get there.” Falling corn, soybean, and hay prices and a rising milk price moved the August milk feed price ratio higher again, up for the sixth time in the past seven months. The latest ag prices report shows the August ratio at 2.79, up from 2.50 in July, and compares to 1.66 in August 2023. The all-milk price averaged $23.60 per cwt., with a 4.09% butterfat test, up 80 cents from July, which had a 4.07 test, highest price since December 2022, and $4 above August 2023, which had a 4.00% test. The national corn price averaged $3.84 per bushel, down 39 cents from July and $1.89 below a year ago. Soybeans averaged $10.30 per bushel, down $1.00 from July and $3.80 per bushel below a year ago. Alfalfa hay averaged $175 per ton, down $8 from July, and $55 per ton below a year ago. Looking at the cow side of the ledger, the August average cull price for beef and dairy combined was unchanged at $142 per cwt., $27 above August 2023, and $70.40 above the 2011 base average. Quarterly milk cow replacements averaged $2,360 per head in July, up $240 from April, and $600 above July 2023. Cows averaged $2,100 per head in California, up $200 from April, and $435 above a year ago. Wisconsin’s average, at $2,650 per head, was up $270 from April, and $740 per head above July 2023. Milk production margins moved to the highest level since October 2014, at $15.14 per cwt., and were $1.45 per cwt. above July, according to dairy economist Bill Brooks of Stoneheart Consulting in Dearborn, Missouri. “Income over feed costs in August were above the $8 per cwt. level needed for steady to higher milk production for the 10th month in a row,” Brooks said. “Input prices were lower in August with all three input commodities remaining in the top 11 for August all-time. Feed costs were the ninth highest ever for the month of August and the lowest since the $8.43 recorded in December 2020.” “Dairy producer profitability for 2023 in the form of milk income over feed costs, was $8.00 per cwt.,” Brooks said. “Profitability was $3.91 below 2022 and $1.72 lower than the 2018-22 average. In 2023, the decrease in milk income over feed costs was a result of the milk price decreasing more than feed prices dropped. Income over feed in 2023 was around the level needed to maintain or grow milk production.” “Milk income over feed costs for 2024 (using Sept. 27 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $13.94 per cwt., a loss of 14 cents per cwt. versus last month’s estimate. Income over feed in 2024 would be above the level needed to maintain or grow milk production, and up $5.94 per cwt. from 2023,” Brooks said. “Milk income over feed costs for 2025 is expected to be $14.27 per cwt., a gain of 33 cents per cwt. versus 2024. Income over feed in 2025 would be above the level needed to maintain or grow milk production, and down 16 cents from last month’s estimate,” Brooks said. Meanwhile, dairy margins were steady over the second half of September with rising milk prices and increasing feed costs roughly offsetting one another, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. “USDA’s monthly milk production report continued to highlight declining year-over-year output, with 18.8 billion pounds produced in August down 0.1% from last year and the f14th consecutive month of lower year-ago comparisons,” MW said. “The milking cow inventory held steady from July to August at 9.325 million head, down 40,000 from August 2023. While the average national milk yield bested last year’s low bar, productivity has slowed as the milking herd ages with heifer replacements increasingly expensive and harder to come by.” “USDA’s Cold Storage report showed total cheese stocks at the end of August were 1.4 billion pounds, down 0.2% from July and 6.4% lower than last year. Cheese stocks have contracted for six consecutive months even as cheese production during that period has expanded which is a testament to strong exports and domestic demand,” according to the MW. “Cheddar block and barrel prices collapsed in the second half of the month following barrel prices soaring to new all-time highs above $2.60 per pound.” “A preference to produce Italian-variety cheeses at the expense of American helped support the Cheddar market at the CME all summer,” the MW concluded. The U.S. corn harvest was at 21%, as of the week ending Sept. 29, even with a year ago but 3% ahead of the five-year average. The week’s crop progress report also showed 75% was rated mature, up from 61% the previous week, 4% behind a year ago, but 5% ahead of the five-year average. Sixty-four percent was rated good to excellent, down 1% from the previous week, but compares to 53% a year ago. Checking the beans, 81% were dropping leaves, 1% behind a year ago, but 8% ahead of the five-year average. Sixty-four percent were rated good to excellent, unchanged from the previous week, but compares to 52% a year ago. Twenty-six percent have been harvested, 6% ahead of a year ago, and 8% ahead of the average. Dairy cow slaughter for the week ending Sept. 21 totaled 51,600 head, up 300 from the previous week, but 7,200 or 12.2% below a year ago. Year to date, 1,997,000 dairy cows had been culled, down 324,500 head or 14.0% from 2023. Tuesday’s Global Dairy Trade weighted average was up 1.2%, following a 0.8% advance on Sept. 17. Volume, at 85.6 million pounds, mirrored that on Sept. 17, and the average metric ton price slipped to $3,851 U.S., down from $3,883. The gains were led by lactose, up 6.7%, which followed a 3.5% rise on Sept. 17. Buttermilk powder was up 5.0% and whole milk powder was up 3.0%, after a 1.5% gain. Skim milk powder was off 0.6%, following a 2.2% rise. Cheddar was up 3.8%, after a 2.9% gain, but Mozzarella was down 7.7%, after jumping 4.5%. GDT butter was down 1.4%, following a 1.7% drop, and anhydrous milkfat was off 0.1%, after slipping 1.2% Sept. 17. StoneX says the GDT 80% butterfat butter price equates to $2.8353 per pound U.S., down 6.2 cents from Sept. 17, and compares to CME butter which closed Friday at a bargain $2.6875. GDT Cheddar, at $2.0895, was up 7.5 cents, and compares to Friday’s CME block Cheddar at $1.9475. GDT skim milk powder averaged $1.2676 per pound, down from $1.2740 and whole milk powder averaged $1.6144 per pound, up from $1.5640. CME Grade A nonfat dry milk closed Friday at $1.3525 per pound.
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