Butter and cheese stocks slipped in August. The latest Cold Storage report showed Aug. 31 butter holdings at 323.3 million pounds, down 29.5 million pounds or 8.4% from the July count.

July was revised down 1 million pounds, but was up 31.5 million pounds or 10.8% from August 2023.

American type cheese stocks grew to 799.9 million pounds, up 8.5 million or 1.1% from the July level, which was revised 2.6 million pounds lower, but was down 53 million pounds or 6.2% from a year ago.

The “other” cheese category, at 577.9 million pounds, was down 11.7 million pounds or 2.0% from July’s count, which was revised 900,000 pounds lower and was down 42.0 million pounds or 6.8% from a year ago.

The total Aug. 31 cheese inventory slipped to 1.4 billion pounds, down 3.1 million pounds or 0.2% from July and 95.1 million pounds or 6.4% below a year ago.

Cheese & butter fall

CME dairy prices were mostly lower the final full week of September. The Cheddar blocks fell to a Friday finish at $2.11 per pound, down 12.75 cents on the week, yet still 39 cents above a year ago.

The barrels started falling last Tuesday on uncovered offers, plunging 11.75 cents on Wednesday and 10.25 cents Friday and closed at $2.2975 per pound, down 29.25 cents on the week, but still 81.75 cents above a year ago and 18.75 cents above the blocks. There were 8 sales of block on the week and none of barrel.

Monday’s trading took the blocks up a penny to $2.12, with 3 loads exchanging hands, but they dropped 4 cents Tuesday on 3 more trades, slipping to $2.08, lowest since Aug. 29.

The barrels plunged 15 cents Monday on 2 trades and inched a quarter-cent lower Tuesday on 2 trades, dipping to $2.1459, lowest since Aug. 28, but 6.5 cents atop the blocks.

Cheese plant downtime the past few weeks continued to factor into Central cheese markets last week, according to Dairy Market News. Mid-week milk prices were as low as $1.50-under Class, though some remained at the higher end of recent ranges.

Contacts east/northeast of the region continue to say milk is tight. Cheese processors said the bullish markets had customers buying on a hand-to-mouth basis.

Class III milk demand from cheese manufacturers is steady to strong in the West.

Bottling demands continued to pull on milk but loads were generally available.

Cheese production is steady to strong. Domestic demand is steady. Export demand is stronger, according to DMN.

Cash butter, after dropping 20.25 cents the previous two weeks, saw its Friday close at $2.7325 per pound, down another 24 cents, lowest since Feb 15, and 56.75 cents below a year ago when it was on its way to an October 6 record high $3.5025 per pound. There were 38 sales last week.

The butter jumped 7.25 cents Monday, with 16 loads finding new homes, but was offered 5.50 cents lower Tuesday, dipping to $2.75.

Butter output is mixed, says DMN. Plant downtime in the Midwest is a factor in pushing more cream into other regional plants but some are turning it away as they are at capacity.

Butter manufacturers note steady or strong production in the West. Stocks continue build ahead of upcoming maintenance projects and holiday demand. Cream is widely available and demand from butter manufacturers is steady.

Grade A nonfat dry milk closed Friday at $1.3575 per pound, 2.25 cents lower on the week but still 17.25 cents above a year ago, with 35 loads finding new homes on the week.

Monday’s powder inched a quarter-cent higher on a trade, but offers Tuesday took it back to Friday’s close.

Dry whey closed the week at 59.75 cents per pound, up a penny and 30.75 cents above a year ago, with 7 sales put on the board.

The whey was unchanged Monday but inched a half-cent higher Tuesday, to 60.25 cents per pound.

Prices still good

“Milk production is still underwhelming,” said StoneX broker, Dave Kurzawski in the Sept. 30 “Dairy Radio Now” broadcast. Milk is getting tighter in California as bird flu spreads, now with 40 cases confirmed. That’s where 18% of U.S. milk is produced, he said, and 50% of 2023 nonfat dry milk was manufactured there “so it’s a big issue.”

CME butter and cheese prices climbed but have since reversed direction. Buyers kept purchasing at the elevated prices, Kurzawski said, but they now have what they need.

Butter at $2.50 a pound is still a great price, he said, even though it’s down significantly from 2024 highs. Barrel cheese hit a record high but “that initial pinch is behind us.”

He believes cheese is still tight, as year to date output is about 8% less than a year ago.

Buyers step away from high prices and an extra load may feel like 20, he said. “They have to bring the price down. We’re in the midst of trying to figure out where that bid comes in,” and while he predicts cheese will be north of $2 through the end of the year, “we may have some big downward corrections.”

Feed ratio heads higher

Falling corn, soybean, and hay prices and a rising milk price moved the August milk feed price ratio higher, up for the sixth time in the past seven months. The latest Ag Prices report shows the ratio at 2.79, up from 2.50 in July, and compares to 1.66 in August 2023.

The All Milk Price averaged $23.60 per hundredweight (cwt.), with a 4.09% butterfat test, up 80 cents from July, which had a 4.07 test, highest price since December 2022, and $4 above August 2023, which had a 4.00% test.

The national corn price averaged $3.84 per bushel, down 39 cents from July and $1.89 below a year ago.

Soybeans averaged $10.30 per bushel, down a dollar from July and $3.80 per bushel below a year ago.

Alfalfa hay averaged $175 per ton, down $8 from July and $55 per ton below a year ago.

The August average cull price for beef and dairy combined was unchanged at $142 per cwt., $27 above August 2023, and $70.40 above the 2011 base average.

Quarterly milk cow replacements averaged $2,360 per head in July, up $240 from April, and $600 above July 2023.

Cows averaged $2,100 per head in California, up $200 from April, and $435 above a year ago. Wisconsin’s average, at $2,650 per head, was up $270 from April and $740 per head above July 2023.

Milk production margins moved to the highest level since October 2014 at $15.14 per cwt. and were $1.45 per cwt. above July, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.

“Income over feed costs in August were above the $8 per cwt. level needed for steady to higher milk production for the 10th month in a row,” says Brooks. “Input prices were lower in August with all three input commodities remaining in the top 11 for August all-time. Feed costs were the ninth highest ever for the month of August and the lowest since the $8.43 recorded in December 2020.”

Milk income over feed costs for 2024 (using Sept. 27 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $13.94 per cwt., a loss of 14 cents per cwt. versus last month’s estimate.

Income over feed would be above the level needed to maintain or grow milk production, and up $5.94 per cwt. from 2023.

GDT up 1.2%

Tuesday’s Global Dairy Trade weighted average was up 1.2%, following a 0.8% advance on Sept. 17. Volume, at 85.6 million pounds, mirrored that on Sept. 17, and the average metric ton price slipped to $3,851 U.S., down from $3,883.

The gains were led by lactose, up 6.7%, which followed a 3.5% rise on Sept. 17.

Buttermilk powder was up 5.0% and whole milk powder was up 3.0%, after a 1.5% gain.

Skim milk powder was off 0.6%, following a 2.2% rise. Cheddar was up 3.8%, after a 2.9% gain, but Mozzarella was down 7.7%, after jumping 4.5%. GDT butter was down 1.4%, following a 1.7% drop, and anhydrous milkfat was off 0.1%, after slipping 1.2% on Sept. 17.

HighGround Dairy says the GDT butter price equates to $2.91 per pound U.S. and compares to Tuesday’s CME close at $2.75. GDT Cheddar equates to $2.09 per pound U.S., and compares to Tuesday’s CME block Cheddar at $2.08. GDT whole milk powder equates to $1.61 per pound and skim milk powder at $1.27 U.S. CME Grade A powder closed Tuesday at $1.3575.