Strong cheese and dry whey prices in April will result in a new record high Class III price of about $24.25/cwt. for the month, the third straight month of record Class III prices. The Class III price for the first four months of the year will average about $23.12/cwt. or $5.65 higher than a year ago.
Cheese prices have had some rather dramatic price swings during the month. Chicago Mercantile Exchange (CME) cheddar barrels started the month at $2.25/lb.; was a low as $2.075/lb. on April 9; bounced back to $2.28/lb. on April 17; and declined to $2.25/lb. on April 21. Cheddar blocks started the month at $2.385/lb.; was as high as $2.4225/lb. on April 3; reached a low of $2.165/lb. on April 10; increased to $2.28/lb. on April 14; and declined to $2.25/lb. on April 21.
These strong cheese prices are the result of good domestic sales, strong exports and lower American cheese production – all of which reduced stocks. Cheese exports for the first two months of the year were 44% higher than a year ago. American cheese production for the period was 0.2% lower than a year ago. Feb. 28 American cheese stocks declined from January and were 5.0% lower than a year ago; total cheese stocks were also lower than January and 5.5% lower than a year ago.
The dry whey price has increased from 60¢-61¢/lb. to 65¢/lb. Feb. 28 dry whey stocks were 13% lower than a year ago, the result of 19% lower production for the first two months of the year, and 7% more exports.
Little lower butter and nonfat dry milk prices will result in a little lower Class IV price for April. The March Class IV price was $23.66/cwt., and the April price will be near $23.20/cwt. For the first four months of the year the Class IV price will average about $23.15/cwt., or $5.35 higher than a year ago.
On the CME, butter started the month at $2.01/lb. and has declined to $1.89/lb. Nonfat dry milk was above $2.00/lb. all of March, but has been in the high $1.90s since then.
Butter production for the first two months of the year was 3.8% lower than a year ago, and exports of butter and milkfat were 113% higher. Butter sales have softened from Easter/Passover sales. While Feb. 28 butter stocks were 20% higher than January, stocks were still 31% lower than a year ago.
Nonfat dry milk production for the first two months of the year was just 0.3% lower than a year ago, while skim milk powder production for export was up 2.7%. Feb. 28 nonfat dry milk stocks were 19% lower than a year ago.
April prices no doubt will be the peak for the year. Record high milk prices and lower feed costs have provided dairy producers with margins conducive to producing more milk. So, milk production compared to a year ago will likely increase as we move through the rest of the year. USDA is forecasting total milk production for the year to be 2.4% higher than last year, the result of more milk cows and feeding for higher production per cow.