Lee Mielke: Disappointing butter drawdown | Dairy

The barrels climbed to $1.8675 Thursday, the highest since Dec. 12, but finished the week, the month, and the year at $1.8575, 6.25 cents higher on the week, 4 cents below their Dec. 1 standing, and 14.75 cents above a year ago.

There were 9 sales of block in the short week and 24 for December, up from 8 in November. Barrel sales totaled 8 for the week and 57 for the month, up from 28 in November.

The markets were closed Monday for the New Year holiday but one sale Tuesday pulled the blocks 13.75 cents lower, to $1.9975, lowest since Dec.16. The barrels were down 11.25 cents on 2 sales Tuesday, falling to $1.7450, lowest since Dec. 21, and 25.25 cents below the blocks.

Milk is widely available for Midwest cheesemakers, according to Dairy Market News. Plants were taking loads at discounts as low as $10 under class for the second week in a row and those in areas affected by winter storms were slowly getting things back in order, as in some cases, employees were unable to get to the plant or it was shut down as a precaution.

Western cheese demand was steady to softer in retail and food service. Export demand was unchanged, with continued sales to international buyers seeking delivery in the second quarter. Milk was also being sold below class prices.

Butter, which plunged 46 cents the previous week, lost 1.50 cents last Tuesday and that’s where it closed the week and the year, $2.38 per pound, lowest CME price since Dec. 27, 2021, 50 cents lower than its Dec. 1 perch, and 7.25 cents below a year ago.

There were only 5 sales reported last week and 57 for December, down from 63 in November.

Tuesday’s butter held at $2.38, with no activity.

DMN says Midwest butter producers were met with trying conditions last week, from extreme winter weather to holiday cream availability. Managers said the weather “put operations in flux,” and they were still working through a number of problems from employee shorthandedness to hauling snags.

Cream availability continues to outpace demand in the West. Butter producers are using available cream as opposed to selling it at current prices.

Grade A nonfat dry milk closed Friday at $1.3350 per pound, up a half-cent on the week, 1.25 cents below its Dec. 1 price, and 32 cents below a year ago. There were 13 sales reported last week and 40 for the month, down from 41 in November.

The powder was down 1.25 cents Tuesday, slipping to $1.3235, lowest since Aug. 31, 2021.

CME dry whey finished the week and the year at 41.50 cents per pound, 3 cents higher on the week, but 3.50 cents below where it was on Dec. 1, and 33.50 cents below a year ago. There were no sales last week and 31 for the month, up from 16 in November.

Traders left the whey unchanged Tuesday, at 41.50 cents per pound.

Dairy farmers saw another slight improvement in one of the measures of their bottom line. The November milk feed price ratio is higher for the third month in a row, according to the latest Ag Prices report. The November ratio came in at 1.93, up from 1.92 in October, and compares to 1.92 in November 2021.

The All Milk Price average slipped to $25.60 per hundredweight, down 30 cents from October, but $4.90 above November 2021.

The November national corn price averaged $6.49 per bushel, down a penny from October, after falling 59 cents the previous month, but is still $1.23 per bushel above November 2021.

Soybeans crept up $14 per bushel, up 50 cents from October, after dropping 60 cents a month ago, and were $1.90 per bushel above November 2021.

Alfalfa hay dropped $14 per ton from October, after jumping $4 a month ago. The November average fell to $267.00 per ton, still $54 per ton above a year ago.

The November cull price for beef and dairy combined averaged $78.40 per cwt., down another $5.70 from October, after dropping $7.10 the previous month, but is $9.20 above November 2021, and $6.80 above the 2011 base average.

Dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo., says, “Income over feed costs in November were above the $8 per cwt. level needed for steady to increase milk production for the 14th month running.

“For 2022, milk income over feed costs (using Dec. 30 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $12.17 per cwt., a gain of 48 cents per cwt. versus the previous month’s estimate. 2022 income over feed would be above the level needed to maintain or grow milk production and $4.38 per cwt above the 2021 level,” writes Brooks.

“Looking at 2023, milk income over feed costs are expected to be $8.18 per cwt., a loss of 59 cents per cwt. versus last month’s estimate. 2023 income over feed would be above the level needed to maintain or grow milk production,” Brooks warned, “but down $3.99 per cwt. from 2022’s estimate.”

The first Global Dairy Trade event of 2023 saw its weighted average drop 2.8%, following the 3.8% plunge on Dec. 20, and 0.6% gain on Dec. 6. Traders brought 73.8 million pounds of product to the market, up from 63.4 million on Dec. 20, and the most since Nov. 3, 2020.

Buttermilk powder provided the biggest pull on the weighted average, down 12.9%, after not trading on Dec. 20. Anhydrous milk fat was next, down 5.1%, after falling 2.2% last time, and butter was down 2.8%, following a 2.6% decline. Skim milk powder was down 4.3%, following a 4.8% plunge, and whole milk powder was off 1.4%, after dropping 4.0%. Lactose was down 3.6%, after not trading last time, and Cheddar was down 2.7%, after slipping 0.7% last time.

StoneX Dairy Group says the GDT 80% butterfat butter price equates to $1.9822 per pound US, down 5.5 cents, after losing 5.4 cents last time, and compares it to CME butter which closed Tuesday at $2.38. GDT Cheddar, at $2.1274, was down 5.0 cents, and compares to Tuesday’s CME block Cheddar at $1.9975. GDT skim milk powder averaged $1.2874 per pound, down from $1.3447 (5.7 cents), and whole milk powder averaged $1.4552 per pound, down from $1.4723 (1.7 cents). CME Grade A nonfat dry milk closed Tuesday at $1.3225 per pound.