Cold storage report termed bearish for butter, neutral for cheese
May butter stocks totaled 192.5 million lbs., up 11% from April 30, but 40% less than May 2013, according to USDA’s Cold Storage report, released June 23.
Total natural cheese stocks, at 1.07 billion lbs., were up 3% from April, but down 7% from May 2013. American cheese, at 656.8 million lbs., was up 1% from April, but 8% less than a year earlier.
Dave Kurzawski, FCStone, characterized the report as bearish for butter prices, and neutral on cheese.
USDA’s estimated butter stocks were well above FCStone’s expectation for 177.5 million lbs. “While the growth in stocks is mostly in line with the historical increase from April into May, it far exceeded expectations,” he said. “Given that prices have been extremely strong of late, we have to call this a bearish surprise. We do have our doubts, however, as to how much this will play out in the futures market, given the strength of the bull.”
Cheese stocks at the end of May were mostly in line with expectations, Kurzawski added. Total cheese and American cheese stocks came in slightly expectations of 1.056 billion lbs. and 655.5 million lbs., respectively. “We see little takeaway for the marketplace based upon the UDSA’s estimates today. We’ve seen very little movement on the Class III futures market since the report was released.”
Dairy replacement sales (783 head) results from Turlock, Calif., on June 20:
#1 Holstein springers: 1900-2400
#2 Holstein springers: 1400-1875
#1 Jersey springers: 1800-2225
#1 Jersey-X springers: 1800-2200
Compared to the previous week, large square bale prices were down 3%. Large round bale prices were up 4%. Sales activity was very light to light.
For Nebraska, hay prices were steady on limited alfalfa hay sales. Movement was light in most areas. Rain was reported in most areas of the state and some areas of North Eastern Nebraska were pounded by tornados and hail. Quite a lot of first cutting is still down and getting rained on; some fields are left to cut. Other producers are thinking about second cutting.
For Iowa, hay prices were steady on very limited alfalfa hay sales. There was very limited hay movement this week. A little old crop hay still getting sold to dairies. Some first cutting has been baled, some has been rained on and some just getting cut.
In South Dakota, hay prices were $33.25 lower on very light sales due to heavy rains. Demand was only moderate this week. There were very large rains across the trade area, with 6 to 12 inches for the week in many areas. Many hay growers had made their first cutting last weekend only to have it rained on very heavily, while others waited and are looking to make their first cutting this weekend. Flash flooding in southeast South Dakota, northwest Iowa, and southwest Minnesota closed many roads making it very difficult to transport hay. There was very little trade activity because of the stormy, rain, poor hay making weather.