Cheddar blocks and barrels, as well as butter, all fell below the $1.50/lb mark Wednesday (Feb. 1) on the Chicago Mercantile Exchange (CME). Wednesday’s block cheddar price, at $1.4925/lb, is the lowest in 12 months. Barrels were pegged at $1.49/lb.
After falling virtually every day for the past two weeks, Wednesday’s butter price, at $1.4950/lb, is now the lowest in 22 months.
The CME daily dairy report by Alan Levitt notes that these CME cheddar and butter prices translate into a Class III price of about $16.00.
On Wednesday, the Class III future contract prices on the CME also moved closer to that $16 mark. March and April contracts dropped the most (31.5 cents) to $16.18 and $16.25, respectively, after having already fallen on Tuesday.
Class III contracts from spring through the end of 2012 ranged $16.43 to $17.15 on Wednesday’s close.
Fonterra’s global auction lower
Nonfat dry milk (NFDM) on the CME fell again this week. An offer to sell Extra Grade at $1.36 brought that price down 12 cents on Tuesday (Jan. 31)
Then, on Wednesday (Feb. 1), NFDM lost another penny per pound, with Grade A pegged at $1.37/lb and Extra Grade at $1.35/lb.
Meanwhile, modest price declines were charted on the twice-per-month Global Dairy Trade auction by Fonterra on Tuesday, Jan. 31, where prices for milk powders (skim and whole, not NFDM) fell by less than 1% compared with the auction of two weeks ago.
Tuesday’s Global Dairy Trade auction traded skim milk powder (SMP) at a weighted average price of $1.50/lb across the three forward contract delivery options.
Whole milk powder (WMP) had a weighted average price of $1.60/lb.
The weighted average price for anhydrous milkfat (AMF) was calculated at $1.79/lb., down 3.5% from two weeks ago.
Industrial cheddar cheese sold at a weighted average of $1.65/lb on the Global Dairy Trade auction Tuesday. This is 1% below the price achieved two weeks ago, but still 16-cents per pound higher than the U.S. block and barrel price of $1.49/lb on the CME Wednesday.
While the Global Dairy Trade auction prices average lower than year ago across the categories, the fluctuations have been narrow as products traded in a narrow range since August.
Butter stocks prompt export help
USDA NASS reports that butter production for last year (2011) was 16% higher than 2010, leaving butter inventories at the end of the year at levels 29% above stocks on hand the prior year (2010).
Dairy Market News reports active churning activity across the country and surplus cream supplies clearing to inventory.
The Cooperatives Working Together (CWT) program brought back assistance on butter export sales for the first time since October 2010.
CWT this week accepted bids to provide export assistance on sales of 11 million pounds of butter for delivery through June 2010, as well as 2.8 million pounds. of cheese.
Farm profits hit 8-month low
January’s income-over-feed-cost as calculated by the all-milk price compared with the USDA-reported corn, soybean, and alfalfa hay prices, fell below the 10-year-average for the second consecutive month.
The USDA-calculated dairy farm profitability indicator reached an eight-month low last month.
January’s all-milk price was estimated by USDA at $19.20/cwt, down 60 cents from December’s all-milk price.
Meanwhile, feed costs were a tad lower, according to the USDA NASS Agricultural Prices report, released Tuesday, Jan. 31.
The January corn price was pegged four cents higher at $5.90/bu.; and soybeans advanced 20 cents per bushel to $11.70.
Hay prices, on the other hand, were reported $7/ton lower at $192.00.
These January feed prices translated to a $10.85 cost to feed for 100 pounds of milk production.
Subtracted from the January all-milk price, this reportedly left an income-over-feed-cost (IOFC) for the month of January at $8.35/cwt.
Total cattle inventory bullish
USDA released its twice a year “All Cattle and Calf” inventory last Friday, Jan. 27. The January 2012 report showed a larger than expected drop in the number of all cattle and calves (beef and dairy).
In the dairy sector, the biannual inventory report tallied fewer replacement heifers in the pipeline. On Jan. 1, USDA estimated there were 4.53 million dairy replacements on farms, down from 4.57 million heifers a year ago.
Milk-up your memory
Milk supports brain power... That’s the finding of a new study published in the January edition of the International Dairy Journal.
Researchers at the University of Maine found that adults who regularly consumed more dairy products scored significantly higher on memory and other “brain power” tests than those adults who seldom -- if ever -- drank milk.
Specifically, the study discovered that the adults who regularly drank at least one glass of milk a day were five times less likely to fail the test compared to non milk drinkers.
The researchers put more than 900 men and women ages 23 to 98 through a series of brain and cognitive challenges that tested their visual-spatial, verbal and working memory skills.
Those having the highest scores on all eight tests also consumed the most milk and dairy products like yogurt, cheese and even ice cream. The researchers even adjusted the results to account for cardiovascular risk, lifestyle and other dietary factors to determine the impact of drinking milk!
This is good news for the dairy industry and for older folks concerned about declining brain power.
Consumption of fluid milk has fallen steadily since the mid-1990s. Today, consumers drink four less gallons (per capita) per year than in 1994.
Maybe this study will help people remember to drink their milk!
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