The farm benchmark milk price took a step backward on a slightly lower cheese price. The July Federal order Class III price is $19.79 per hundredweight, down 8 cents from June, but $6.02 above July 2023.

Monday’s settlements portend an August price at $20.16; September, $19.72; October, $20.26; November, $19.95; and December at $19.27.

The Class IV price is $21.31, up 23 cents from June, $3.05 above a year ago, and the highest since October 2023.

Cheese output slips

You’ll recall June milk production was down 1.0% from a year ago, but milk components were up. The June Dairy Products report shows the results.

Total cheese production dropped to 1.161 billion pounds, down 4.0% from May and down 1.4% from June 2023, first drop since March. First half 2024 cheese output amounted to 7.1 billion pounds, up 0.2% from 2023.

Italian cheese production was down 0.1% from a year ago, American was down 4.9%, while Mozzarella was up 2.0%.

Cheddar production was down 17.2 million pounds or 5.2% from May, and down 31.1 million or 9.1%, from a year ago, which no doubt helped keep June prices strong. YTD Cheddar was down 7.9% from a year ago.

Butter output fell to 169.2 million pounds, down 35.2 million pounds or 17.3% from May, but up 4.7 million pounds or 2.8% from a year ago, as farm butterfat levels are strong.

YTD butter was at 1.2 billion pounds, up 4.5% from 2023.

Dry whey was up 6.4% from May but down 7.5% from a year ago, as reduced cheese production means a smaller whey stream. Stocks were down 17.9% from a year ago.

Nonfat dry milk output dropped 24.4% from May and down 26.1% from a year ago. Stocks were down 6.2%.

Skim milk powder production was up 44.5% from May and 21.6% above a year ago.

China impacts global trade

Frustration remains in the global dairy market over China’s lack of purchases, and a big part of the reason is China’s increased domestic milk production. Rabobank Global Sector Strategist, Mary Ledman, addressed the topic in a recent report “The Dairy Dominoes: How China’s Increased Self Sufficiency is Reshaping Global Trade.”

Speaking in the Aug. 5 “Dairy Radio Now” broadcast, Ledman said it’s been a work in progress since 2018 when China released its five-year agricultural plan. They established a goal of increasing milk output by nearly 11 million metric tons, she said, or about 25 billion pounds — equivalent to Idaho, Washington state, and maybe even Oregon. “And they did it ahead of schedule,” she said.

They added a million head to their herd, high producing dairy cows on farms of 5,000-10,000 cows, comparable to U.S. herds that size. She reported that China imported about 1 million head of replacement heifers from New Zealand and Australia between 2018 and 2023.

“To continue on this path, they need to increase their animal husbandry of replacement heifers, but that’s yet to be determined,”  Ledman said. “There are feed constraints, water constraints and land constraints.”

Can other countries make up for China’s smaller purchases?

Ledman answered, “Yes. We have a growing world population and while China’s absence is large, as they are the world’s largest dairy importer, it has particularly impacted whole and skim milk powder.”

The whey market is still very important to the United States and China has not developed a domestic cheese industry that would produce that whey, she said.

“The powder deficits are being absorbed by Algeria, Southeast Asia, Mexico and others,” she concluded.

Feed ratio climbs

A higher All Milk Price and lower corn, soybean, and hay prices gave another lift to the milk-feed price ratio. The latest Ag Prices report shows the June ratio at 2.36, up from 2.24 in May, and compares to 1.35 in June 2023.

The All Milk Price averaged $22.80 per hundredweight, with a 4.10% butterfat test, up 80 cents from May, and $5 above June 2023, which had a 4.01% test.

The national corn price averaged $4.48 per bushel, down 3 cents from May, after jumping 12 cents the previous month, and was $2.01 below a year ago.

Soybeans averaged $11.80 per bushel, down a dime from May and $2.40 per bushel below a year ago.

Alfalfa hay averaged $195 per ton, down $7 from May and $68 per ton below a year ago.

The June average cull price for beef and dairy combined climbed to $138 per cwt., up $6 from May, $31 above June 2023, and $66.40 above the 2011 base average.

Cheese slips

After gaining 6.50 cents the previous week, Cheddar block cheese climbed to $1.95 per pound last Monday but closed Friday at $1.85, down 8 cents on the week, 5 cents below where it was on July 1, and 11.50 cents below a year ago.

The barrels reached $1.9875 Tuesday, highest since June 17, but closed Friday at $1.93, 4 cents lower on the week, 7.75 cents above their July 1 print, 15.50 cents above a year ago, and 8 cents above the blocks. Four cars of block were sold on the week and 58 for the month of July, down from 71 in June. Barrel sales totaled 4 for the week and 80 for the month, up from 55 in June.

The blocks lost a penny Monday, as new worries over the economy and world unrest mounted. They jumped 6 cents Tuesday on a trade, to $1.90.

The barrels were offered 2 cents lower Monday and stayed put Tuesday, holding at $1.91, with 3 loads exchanging hands.

Central region contacts tell Dairy Market News that retail demand for cheese is steady but food service is soft. Export demand is steady.

Cheesemakers are running active schedules but tightening milk availability is contributing to lighter output.

Cheese production is seasonally weakening in the West. Class III milk demand is strong from cheese manufacturers, but milk availability is tighter. Domestic cheese demand is steady to lighter.

Butter continues to impress, closing Friday at $3.1050 per pound, up 1.50 cents on the week, 3.25 cents below its July 1 post, but 48.50 cents above a year ago. Sales totaled 39 for the week and 137 for the month, up from 44 in June.

Monday’s butter was unchanged with no activity but was offered a quarter-cent lower Tuesday, slipping to $3.1025.

Central region reports are that butter demand from retail purchasers is steady, though food service sales are softening. Cream volumes continue to tighten as milk production is declining.

Butter production is weakening in the West. Some producers continue to build inventory to cover anticipated fourth quarter demand. Cream is tight, demand is mixed.

Grade A nonfat dry milk saw its highest CME price since Feb. 13, 2023, last Thursday, hitting $1.2475 per pound, but closed Friday at $1.24, still 0.75 cents higher on the week, 6 cents above its July 1 perch, and 11.50 cents above a year ago. Sales for the week totaled 25 and 76 for the month, down from 84 in June.

The powder lost 0.75 cents Monday with 2 cars exchanging hands, but was unchanged Tuesday, holding at $1.2325, with 17 loads finding new homes.

Dry whey hit 62.50 cents per pound last Thursday, highest CME price since April 22, 2022, but closed Friday at 61 cents, up 4 cents on the week, 12 cents higher on the month, and 33.75 cents above a year ago. There were 5 sales last week and 11 for the month, down from 13 in June.

HighGround Dairy reports that “a dryer fire in the Upper Midwest has limited supplies of the commodity, and ongoing strong demand for high-protein products has also crimped volumes.”

The whey was unchanged Monday but backtracked 1.25 cents Tuesday, to 59.75 cents per pound, on 4 sales. 

GDT up 0.5%

Tuesday’s Global Dairy Trade weighted average crept up 0.5%, following a 0.4% gain on July 16. Volume jumped to 79.3 million pounds, up from 50.6 million on July 16, and the largest since October 2023. The average metric ton price fell to $3,680 U.S., down from $3,837.

Lactose led the gains, up 16.1%, after slipping 0.6% on July 16. Mozzarella was up 8.4% while Cheddar was up 1.3%, following a 6.2% advance.

Whole milk powder was up 2.4% after dropping 1.6%, while skim milk powder was down 2.7% following a 1.1% slip.

Butter was down 2.4%, after inching 0.8% higher, and anhydrous milkfat was up 1.2%, following a 4.0% jump on July 16.