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Quiet day in the dairy markets
No activity in the cash cheese markets on the Chicago Mercantile Exchange on Tuesday, nonfat dry milk held steady while butter slipped 1.5 cents on 2 sales. Class III futures were narrowly mixed.
The overall index slipped another 1.3 percent on the Global Dairy Trade auction Tuesday. This is the seventh-consecutive decline in the index which has lost 30 percent of its value since March.
This was the smallest decrease of the last seven and prices were actually higher on four products. Cheddar cheese was up 2.4 percent from the June 2nd sale, butter was 3.3 percent higher, rennet casein increased 4.3 percent and butter milk powder jumped 10 percent. Whole milk powder was down 0.1 percent, skim milk powder was 0.2 percent lower, lactose fell 2.8 percent from the last auction and anhydrous milk fat dropped 8.9 percent. No sweet whey powder was offered.
Volume was 24,047 metric tonnes sold, the smallest amount since the April 1st sale. The decrease was expected as Fonterra had announced it would offer less powder at this sale but return to more-normal levels after this.
Rabobank issued its Quarterly Dairy Report for the second quarter on Tuesday. Global Dairy Strategist Tim Hunt says while prices are well-off what they were at the end of 2014; U.S. producer milk prices are still 15 percent above the Netherlands and 57 percent above New Zealand. Hunt cautions sustaining those differences will be more challenging in the coming months as an oversupplied international market filters back home.
U.S. cheese and butter prices have been the strength thanks to strong consumer demand. Hunt says employment growth, higher wages and lower gas prices have all helped boost U.S. cheese sales by 4.5 percent and butter sales are higher as well. Some of that cheese demand has been buyers restocking, that is likely to taper-off in the coming months. Hunt says they expect butter and cheese prices to come in considerably lower than what the CME suggests in the third and fourth quarters.
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