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  June 18, 2010

The July Class I "mover" climbed another 38 cents to $15.66, driven by butter and powder prices pushing Class IV over Class III as "the higher of" base for Class I. This is the highest Class I mover since January of 2009. The July mover was announced by USDA today (June 18).

Meanwhile the number of block and barrel cheese loads traded today (June 18) on the Chicago Mercantile Exchange (CME) was the highest single day total -- ever. Bids on Cheddar blocks began the brief trading session higher at $1.41/lb, but as sellers continued to offer, the price slipped to $1.040/lb. Barrels sold $1.3850/lb. A total of 35 loads of barrels actually traded and 14 loads of blocks. The new "cheese futures and options" trading begins Monday, June 21.

Butter prices continued the daily upturn through the week to finish at $1.6350/lb Friday. Nonfat dry milk remains at $1.25/lb where it has been for a couple weeks.

USDA's World Agriculture Supply and Demand Estimates were released today (June 18), projecting a little higher all-milk price for 2010 and 2011 than earlier forecasts, even though production is also projected to be higher than earlier estimates.

The higher projected all-milk price is based on forecasts that butter and powder (Class IV) will continue to drive the pricing in the dairy complex, as the WASDE forecasts for Class III were reduced slightly for 2010 due to weak prices expected for cheese and whey for the remainder of the year. Cheese stocks remain high and international whey prices are weaker. The  The all milk price for 2010 is forecast to average $15.75 to $16.15 per cwt.

For 2011: The WASDE foresees domestic and export demand supporting increased powder prices, and the cheese price forecast next year is also raised as the higher butter/powder values are expected to divert milk from cheese production. Tighter supplies of milk are also expected, along with reduced imports in 2011, which leads the forecasters to peg the 2011 all-milk price average at $15.80 to $16.80/cwt.


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