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Cheese prices continue to melt

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Columnist Lee Mielke wraps up the week’s dairy industry news.

Cash cheese prices were down, and butter was up in the Martin Luther King Day holiday-shortened week.

Block Cheddar closed Friday, Inauguration Day, at $1.6975 per pound, down 2 3/4-cents on the week but 23 3/4-cents above a year ago.

The barrels finished at $1.5350, down 10 1/2-cents on the week and 10 1/2-cents above a year ago.

The blocks lost 4 3/4-cents Monday, as traders awaited Tuesday afternoon’s December Milk Production and Cold Storage reports. They shed a penny Tuesday morning, slipping to $1.64 per pound, the lowest price since Oct. 25, 2016.

The barrels gave up 3 1/2-cents Monday and 2 cents Tuesday and fell to $1.48, the lowest barrel price since Oct. 14, and still at a huge deficit to the blocks of 16 cents.

Midwestern cheesemakers reported an abundance of milk last week, according to Dairy Market News, and that meant “fully active production.”

Butter closed the week at $2.25 per pound, up 2 1/2-cents, and 8 cents above a year ago.

It dropped 3 1/4-cents Monday on a single trade, to $2.2175, but was unchanged Tuesday, with no activity.

“Cream supplies are ample across the U.S., as Midwestern butter makers are receiving offers from East and West suppliers,” reports DMN.

Spot Grade A nonfat dry milk closed Friday at $1.0050 per pound, down 2 3/4-cents on the week but 26 1/4-cents above a year ago.

The spot powder moved to electronic trading Monday and was down a half-cent. It lost a penny and a half Tuesday, closing at 98 1/2-cents per pound, first time below $1 since Dec. 14, 2016.

Milk production up

U.S. milk production, contrary to what’s happening globally, is running strong, thanks to increasing cow numbers and strong output per cow. Preliminary data pegged December milk in the top 23 producing states at 16.8 billion pounds, up 2.4 percent from December 2015. Revisions added 27 million pounds to the November estimate, now put at 16.1 billion, up 2.8 percent from a year ago.

December cow numbers in the 23 states totaled 8.69 million head, up 10,000 from November and 53,000 more than a year ago. Output per cow averaged 1,931 pounds, up 35 pounds from a year ago.

California topped year ago output for the third consecutive month, up 0.5 percent, despite a drop of 10,000 cows. Output per cow was up 20 pounds. Wisconsin was up 1.7 percent, on a 35-pound gain per cow but cow numbers were down 1,000 head.

States that drew the most attention included Texas, with the biggest gain again, up 11.7 percent from a year ago, thanks to a whopping 29,000 more cows and a 95-pound gain per cow. Impressive increases in cow numbers were seen in Michigan, up 3.9 percent, on 13,000 additional cows and 15 pounds more per cow. Idaho also milked 13,000 more cows, and got 10 pounds more per cow, pushing the state’s output up 2.7 percent. New Mexico topped the charts with a 100-pound gain per cow though that was measured against Winter Storm Goliath’s impact a year ago. Output in the state was up 7.1 percent, with 6,000 more cows milked than a year ago.

New York was up 3.6 percent, on a 70-pound gain per cow, but cow numbers were unchanged. Pennsylvania was up 1.7 percent on a 45-pound gain per cow but cow numbers were down 5,000 head. Minnesota was up 1.1 percent on a 15-pound gain per cow and 1,000 more cows. Washington was one of five states showing a decline, off 0.2 percent, on 2,000 fewer cows, though output per cow was up 10 pounds.

Fewer cows retiring

U.S. dairy cow culling was up from November but down from a year ago, according to USDA’s latest Livestock Slaughter report. An estimated 253,000 head were slaughtered under federal inspection in December, up 9,800 head from November but 2,400 head or 0.9 percent below December 2015.

Culling in the January to December period totaled 2,885,700 head, down 29,300 head from 2015.

The bottom line boils down to this: The level of slaughter is well below the heifer supply, according to FC Stone, “which means the herd should be expanding.”

No product shortages

There is plenty of product on hand. USDA’s latest Cold Storage report showed Dec. 31 butter stocks at 174.9 million pounds, up 13.7 million pounds or 9 percent from November and 19.9 million pounds or 13 percent more than December 2015.

American type cheese, at 728.9 million pounds, was up 15.7 million pounds or 2 percent from November and 27.9 million or 4 percent above a year ago. The total cheese inventory stood at 1.21 billion pounds on Dec. 31, up 24 million pounds or 2 percent from November and 60.5 million pounds or 5 percent from a year ago.

Class I drops

The February federal order Class I base milk price is $16.73 per hundredweight, down 72 cents from January but $3.09 above February 2016. The two-month average is at $17.09, up from $14.84 at this time a year ago and compares to $17.41 in 2015.

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