Dairy market review: Dairy prices trend higher

(Agri-View) – Dairy Market News indicates cheese production in the Midwest is strong with plants running near capacity. This is a bit of a surprise due to greater fluid milk pulls for the South take place at this time of year. Demand is increasing with buyers able to obtain supply easily. Strength in cheese prices for the week has been a bit of a surprise, which has brought more buyers off the sideline.

Buyers started bidding more aggressively for cheese as orders increased. Increasing prices brought in more buyers as purchases needed to be made before prices move too much higher. This buying interest propelled prices higher as traders began trying to outbid each other. For the week ending August 30, Cheddar blocks finished at $1.7825, up 11.25 cents. Barrels closed at $1.77, up 12.75 cents. Butterreasonable prices to fill empty stall that were the result of culling last winter and spring.

Milk production report to expand

The National Agricultural Statistics Service will reinstate reporting of cow numbers and milk production per cow beginning in October on the monthly Milk Production report; however, this more complete reporting will be quarterly and not monthly as it had been prior to April when it was suspended to meet budget reductions required by sequestration. Initially, monthly milk production reports were to be discontinued altogether, but fortunately common sense prevailed giving us the information of pounds of milk produced. This was at least better than nothing. On October 21, the industry will again see cow numbers and production per cow, but only on a quarterly basis.

Fonterra product safe

Fonterra confirmed that the contamination of some batches of whey protein discovered early this month did not contain botulism-causing bacteria. It actually was a form of bacteria that is non-toxic and causes spoilage. The company is being praised by some for their quick reaction to pull product from the food chain, but it also is being condemned for faulty testing resulting in a scare affecting many countries of the world.

Exports strong

U.S. dairy exports topped $5 billion for the first time in 2012. Exports have reached a record high of $3.17 billion for the first six months of this year, a 15.5 percent increase during the record pace set last year for the same time. During the same six months imports of dairy products declined 0.67 percent from a year earlier. For the first time, the value of exports was more than double the value of imports. Not surprisingly, the leading category was nonfat dry milk with the value of export increasing by $196.4 million, up 26.9 percent to a total of $927.1 million. The leading category on a percentage basis was fluid whey at $6.9 million, up 604.8 percent.

AMS prices

For the week ending August 24, Agricultural Marketing Service (AMS) prices were mostly higher. Prices for 40-pound cheddar blocks increased 1.4 cents to $1.78. The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $1.80, down 0.7 cents. USDA grade AA butter averaged $1.36 for the week, down 7.9 cents. Nonfat dry milk averaged $1.77, up 0.3 cents. Dry whey averaged 58.3 cents, up 0.3 cents.

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