CHEESE MARKETS HAVE PLACED A DRAG on farm gate milk prices. CME spot Cheddar blocks started April at $1.80 per pound. By the end of May, those prices dropped to $1.42. This was the first time blocks fell below the $1.50-per-pound mark since June 2021.
AS CHEESE PRICES SLID, June-to-August Class III futures dropped from $18.85 per hundredweight (cwt.) at the close of CME trading on April 3 and settled at $17.75 by May 1. That three-month Class III average closed the month of May at $16.20, a drop of $2.65 per cwt. in 60 days.
MOZZARELLA HAS BEEN A REASON that Cheddar prices have slid. As European Union’s Mozzarella values dropped below U.S. prices, some dairy importers have turned to the EU for second and third-quarter purchases. As that situation developed, some domestic milk previously destined for Mozzarella moved into Cheddar cheese plants.
MANY ECONOMISTS PREDICT THE DIP in Cheddar prices will be a short-term situation and that values could rebound within three months. CME futures mirror that sentiment as September-to-December Class III contracts started May at $19.17 and closed the month at $18.45.
CLASS IV FUTURES CONTRACTS were far more stable during April through May trading on the CME. June-to-August contracts started April at $18.56; opened May at $18.43; and finished the month at $18.25. During that same time window, September-to-December contracts moved only 32 cents and closed May trading at $19.10 per cwt.
ON THE FEED FRONT, CORN AND SOYBEAN MEAL followed milk’s movement as September corn futures started April at $5.29 and closed May at $5.13 per bushel. Meanwhile, soybean meal opened April at $407 per ton and ended May at $367 on the CME market.
HAY HAS BEEN FAR MORE STUBBORN with all types of alfalfa and grass hay selling for $235 per ton, according to USDA. That was up 22% from last year. That movement has been driven by two factors: inventory and drought. Dry hay stocks have shrunk to the lowest levels since 1954. Also, wide swaths of hay land are experiencing drought conditions.
PREMIUM QUALITY ALFALFA continues to fetch a strong premium in California with top-side values at $400 per ton, according to USDA. In Idaho, prices were a much more palatable $250 per ton.
IN NEW ZEALAND, FONTERRA ANNOUNCED an opening price ranging from $7.25 to $8.75 per kilogram of milk solids (kgMS). That would net an $8 midpoint for the upcoming 2023-24 season for the Southern Hemisphere island nation that is the world’s largest dairy exporter.
THAT EQUATES TO A $15.07 CLASS III with a range of $13.66 to $16.48, shared the University of Wisconsin’s Mark Stephenson. The midpoint for average test milk would be $16.75, with a $15.18 to $18.32 range.
ORGANIC DAIRY FARMERS are eligible for USDA assistance via the $104 million Organic Dairy Marketing Assistance Program. Producers must sign up at their local Farm Service Agency prior to July 24.
THE EPA OVERSTEPPED ITS AUTHORITY ruled the U.S. Supreme Court. “This case concerns a nagging question about the outer reaches of the Clean Water Act (CWA), the principle federal law regulating water pollution in the United States,” wrote Justice Samuel Alito.
IN BRINGING GREATER CLARITY, the court declared the EPA only has jurisdiction over wetlands that have continuous surface connection to navigable waters. In making that ruling, the Supreme Court rejected EPA’s far more expansive view on Waters of the United States (WOTUS).
“THE JUSTICES RESPECT PRIVATE PROPERTY RIGHTS. It’s now time for the Biden administration to do the same and rewrite the Waters of the United States rule,” said Farm Bureau’s Zippy Duvall.