Dairy margins improved over the last half of April, with a combination of higher milk prices and lower feed costs, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC.
Monday’s big jump in cheddar barrels sparked interest in the spot cheese markets, but the price corrected sharply yesterday, closing down 6.25¢. The volume of eight trades was the largest single-day volume going back to the last week of December 2014.
Global dairy prices slumped to their lowest in nearly six years on Tuesday as milk powder producers struggled to find buyers for their increased production with demand easing in Asia and other emerging regions.
USDA released its monthly Dairy Products report on May 5, summarizing March 2015 and year-to-date (Y-T-D) production estimates (see table). Compared to a year earlier, March total cheese output was up 1.8%, but butter production was down 3.0%.
The beef industry stands alone in 2015 in its continued reduction in supplies available to consumers. The year of 2014 was a special year for the animal production industries with record high farm level prices for cattle, hogs, broilers, turkeys, milk and eggs. For 2015, a surprisingly fast expansion of poultry, pork and milk production will cause lower prices for those commodities. Beef stands alone in the continuation toward lower production, but prices remain uncertain.
In light of current milk supplies (burdensome and could get another growth spurt as the school year ends), cheese export demand (not dead, but very quiet), global cheese prices (lower than U.S.) and cheese imports (down from Q4 but well ahead of Jan./Feb. of 2014), we have to wonder if it will crack the foundation of milk prices during the second half of 2015
California's April Class 4a/4b milk prices followed the same trend as comparable federal order prices, with milk used for cheese and whey (4b) up slightly, while milk for butter/powder (4a) was slightly lower.