Cheese prices took a wild ride following the July Cold Storage report, starting with double-digit increases the following Monday. Then they backtracked, only to rise again.

StoneX says the report was “underpinned by rising global markets, growing worry around U.S. and EU milk supplies and anecdotal comments about bird flu having finally made inroads in California.”

Confirmation was made on three California dairies. Bird flu has hampered milk output in at least 13 other states, with 17 cases reported in the last 30 days.

Meanwhile, the USDA has authorized a field safety trial of a vaccine for dairy cattle.

Broker Dave Kurzawski said in the Labor Day “Dairy Radio Now” broadcast that “the marketis trying to figure out where it should be. Cheese is tight. We’ve been making less Cheddar all year and the milk supply is tight. Cheese prices in May, June and July were pretty much in a 10-cent range around $1.90, but that changed in August and are now over $2 per pound,” he said. “The market is trying to find that comfortable equilibrium price where we can clear product.”

“In the midst of that,” Kurzawski warned, “you can have 10- and 15-cent swings because there isn’t a tremendous overhang of cheese in the market and buyers want to get stuff done but they don’t want to pay up. They can take a couple days off and let the market come down a little bit.

“The big picture is still very bullish on cheese generally speaking,” he said, “although day-to-day trading can get wonky.”

When asked about the inverted spread between block and barrel prices, Kurzawski said, “It’s representative of what’s going on in the country. There’s more block capacity and more blocks available while barrels are tighter.”

That tightness may be a result of fast food, quick service restaurants running specials this summer or any number of other reasons, he said.

“Demand does get a vote,” he concluded. “At some point you would think that demand would curl up and go away but that’s just not the season that we are in right now.” He expects more back-and-forth price movement the next few weeks.

Cheese oscillating

Cash dairy prices ended August mostly higher. The Cheddar blocks closed the Friday before Labor Day at $2.21 per pound, up 17.25 cents on the week, 31.25 cents above where they stood on Aug. 1, and 26 cents above a year ago.

The barrels finished at $2.26, 16 cents higher on the week, 31 cents above their Aug. 1 perch, 39 cents above a year ago, and 5 cents above the blocks.

There were 16 sales of block the last week of August and 61 for the month, up from 58 in July. Barrel sales totaled 5 for the week and 23 for the month, down from 80 in July.

The markets were closed Monday for Labor Day but a sale Tuesday took the blocks up a half-cent, to $2.2150, highest CME price since Nov. 18, 2022. The barrels were unchanged.

Midwest cheesemakers say bullish market prices have yet to hinder customer buying, according to Dairy Market News. Milk availability increased as Labor Day weekend approached. Spot prices mid-week ranged 50 cents to $2.25-over Class III. Inventories are tightening seasonally. Some cheesemakers say they are full and running heavy schedules while milk availability is relatively ample.

Western cheesemakers say demand has shown no marked difference week over week, despite the strength in price, though some say purchasing could slow with prices well above $2.

Milk availability is reportedly steady to growing and increased with the holiday weekend. Most of the region continues to face high temperatures and seasonally depressed milk output, likely hurt even more now that bird flu has arrived in California.

Butter made it to $3.1975 per pound last Tuesday, highest since Oct. 31, 2023, but closed Friday at $3.17, 4 cents higher, 4.25 cents above its Aug. 1 print, and 51 cents above a year ago. Sales totaled 42 for the week and a whopping 223 for August, up from 137 in July.

Tuesday’s butter was down 1.75 cents to $3.1525, with 13 loads finding new homes.

Concerns over Blue Tongue in Europe maybe launching butter prices there, says StoneX, “and likely supportive here.” A viral disease that affects ruminants and is transmitted by biting midges, it attacks the mouth and tongue, thus reducing feed intake and milk output. 

Central butter makers report that demand is steadily ticking higher seasonally. Cream was more available last week and multiples at 1.20 returned ahead of the holiday.

Cream handlers say the next two weeks will likely create a strong opportunity for strengthened churning. Some contacts expect third and fourth quarter prices to level off and find stability at or even below $3 per pound. Others say there is still room for bullish shifts, says DMN.

Western churning is steady as cream availability has increased. Holiday plant downtime pushed more cream into Class IV production, as handlers worked to locate homes for surplus volumes. The upcoming demand push is expected to keep churns busy.

Grade A nonfat dry milk closed Friday at $1.33 per pound, up 4.75 cents on the week, up 9 cents on the month, and 25.50 cents above a year ago. There were 40 loads sold on the week and 113 for the month, up from 76 in July. The tight U.S. milk supply is supplying support on the powder market.

The powder gained 1.25 cents Tuesday, hitting $1.3425, on 6 trades, highest since Dec. 20, 2022.

Dry whey finished the week and the month at 56 cents per pound, down a half-cent on the week, 6.50 cents lower on the month, but 25.50 cents above a year ago. Sales totaled 9 lots for the week and 26 for the month, up from 11 in July.

Whey gained a penny Tuesday on a trade, rising to 57 cents per pound, highest in three weeks.

Feed ratio heading higher

Falling corn, soybean and hay prices nudged the milk feed price ratio a little higher, up for the fifth time in the past six months. The USDA’s latest Ag Prices report has the July ratio at 2.50, up from 2.36 in June, and compares to 1.37 in July 2023.

The All Milk Price averaged $22.80 per hundredweight (cwt.), with a 4.07% butterfat test, unchanged June, which had a 4.10 test, but is $5.50 above July 2023, which had a 3.99% test.

The national corn price averaged $4.24 per bushel, down 24 cents from June and was $1.98 below a year ago.

Soybeans averaged $11.30 per bushel, down 50 cents from June and $3.40 per bushel below a year ago.

Alfalfa hay averaged $183 per ton, down $12 from June and $63 per ton below a year ago.

The July average cull price for beef and dairy combined crept to $142 per cwt., up $4 from June, $31 above July 2023, and $70.40 above the 2011 base average.

Milk production margins moved to the highest level since November 2014 at $13.68 per cwt. and 53 cents per cwt. above June, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo. “Income over feed costs in July were above the $8 per cwt. level needed for steady to higher milk production for the 10th month in a row,” says Brooks.

GDT slips 0.4%

Tuesday’s Global Dairy Trade auction saw its weighted average slip 0.4%, following a 5.5% jump on Aug. 20. Volume jumped to 84.5 million pounds, up from 77 million.

The average metric ton price slipped to $3,833 U.S., down from $3,920.

The declines were led by lactose, down 8.9%, followed by whole milk powder, which was down 2.5%, after gaining 7.2% on Aug. 20. Skim milk powder was up 4.5%, after a 4.0% gain. Butter was off 0.9%, after rising 3.7%, while anhydrous milkfat was up 0.7% after jumping 4.8% last time.

Buttermilk powder was up 8.4% and GDT Cheddar was up 0.9%, after slipping 0.2% on Aug. 20. Mozzarella was up 7.0%.

HighGround Dairy says the GDT butter price equates to $3.03 per pound U.S. and compares to CME butter which closed Tuesday at $3.1525.

GDT Cheddar, at $1.96 U.S., compares to Tuesday’s CME block Cheddar at $2.2150. GDT skim milk powder averaged $1.25 per pound U.S., and whole milk powder averaged $1.54. CME Grade A nonfat dry milk closed Tuesday at $1.3425 per pound.