Market News

Milk futures, cash dairy mixed

In Class III trade at the Chicago Mercantile Exchange, milk futures were mixed, mostly weak, assessing the USDA supply and demand numbers. Over in the spot market, cash cheese blocks were steady at $1.63. Barrels were up a quarter cent at $1.7225. There were two trades reported, one at the closing price and one at $1.72. Butter was down $.025 at $2.25 with one trade reported. The last bid unfilled was on one load at $2.24. Nonfat dry milk was unchanged at $.8975 with a total of four trades. The last bid unfilled was on one load at $.8925 and the last offer uncovered was for one load at $.8975.

The USDA has lowered its 2016 milk production outlook, citing a slower pace of herd expansion. Production is now expected to be 212.4 billion pounds, down 600 million from June, and the average 2016 price for all milk is now seen at $15.55 to $15.85 per hundredweight, compared to $14.95 to $15.35 last month. Commercial marketings for both the fat and skim basis were each lowered to 100 million pounds 211.5 billion pounds. Commercial fat basis exports were down a little at 8.4 billion pounds and commercial exports on the skim basis were up slightly at 36.4 billion.

For 2017, production is now estimated at 215.6 billion pounds, up 300 million on the month, with higher price projections and expected lower feed costs leading to an expansion in the milk cow herd. The average price for next year is seen at $15.70 to $16.70 per hundredweight, compared to $15.25 to $16.25 in June. Commercial fat and skim basis marketings for next year are pegged at 214.6 billion pounds, 300 million more than a month ago. Commercial exports on the fat basis were left at 8.7 billion pounds, while the estimate for the skim basis was increased a bit to 37.3 billion pounds. The USDA also increased the expected 2016 and 2017 prices for cheese, butter, nonfat dry milk, and dry whey. The USDA’s next set of milk production numbers is out July 21st and updated supply and demand figures are out August 12th.