Dockworkers Return to Work, Easing Fears of Export Slowdown
Published: Friday, October 11, 2024
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department announced the nation's September benchmark Class III milk price at $23.34 per hundredweight, up $2.68 from August, $4.95 above September 2023, and the highest Class III price since June 2022. That put the 2024 average at $18.37, up from $17.13 at this time a year ago and compares to $22.24 in 2022.
Last Friday morning, Class III futures portended an October price at $22.63; November, $21.22; December, $20.72, and January 2025 at $20.21 per hundredweight.
The September Class IV price is $22.29, up 71 cents from September, $3.16 above a year ago, and the highest Class IV since November 2022. Its average stands at $20.69, up from $18.65 a year ago and compares to $24.81 in 2022.
Lots of eyes were on the International Longshoremen Assn. dockworkers strike at 36 U.S. Maritime Alliance terminals along the East and Gulf Coast last week. A new six-year labor contract was given a thumbs down.
The National Milk Producers Federation and the Dairy Export Council called on the Biden administration to immediately intervene, warning, "This disruption could have a devastating impact on American dairy farmers and exporters who rely on the smooth functioning of these ports to get products to international markets."
Dockworkers agreed to return to work last Thursday after port operators enhanced their offer, extending the existing contract through Jan. 15. Other issues will have to be negotiated in the meantime, including automation in the ports.
Meanwhile, CME cheese prices continued their descent ahead of last Friday afternoon's August Dairy Products report and in spite of news that bird flu has spread in California, now confirmed in 53 dairies as of Oct. 2.
The Cheddar blocks closed last Friday at $1.9475 per pound, down 16.25 cents on the week, lowest since Aug. 8, down 26.75 cents from their Sept. 3 print, but still 24.50 cents above a year ago.
The barrels fell to $2.1450 per pound last Tuesday, regained 75 cents last Wednesday, but closed last Friday at $1.9550, lowest CME price since Aug. 7, down 34.25 cents on the week, down 30.50 cents on the month, but 37.75 cents above a year ago and 75 cents above the blocks.
Sales totaled 12 loads of block on the week and 34 for the month of September, down from 61 in August. There were four trades on barrel for the week and 21 for the month, down from 23 in August.
Dairy Market News reports that contacts say cheese demand has stalled somewhat. Others are preparing for a busy holiday retail demand season, including work on gift baskets and other special orders. Barrel processors say they have had a slight growth in availability for spot market offers, but extra loads are moving briskly. Spot milk prices mid-week were above-class levels, primarily due to some plants coming back online after recent downtime, says DMN.
Class III milk demand from cheesemakers is steady in the West. Bottling demand continues to tug on milk supplies and some processors indicate that milk is tighter than a year ago however it can be obtained. Cheese output is steady along with contractual demand. Seasonally tighter milk volumes and a strong Mozzarella market have contributed to tighter barrel stocks, according to DMN. Demand is steady from domestic and international buyers.
Butter started the week jumping 7.25 cents, with 16 loads traded, but it headed lower from there, closing last Friday at $2.6875 per pound, down 4.50 cents on the week, 46.50 cents lower on the month, and 81.50 cents below a year ago. There were 59 sales on the week and 102 for the month, down from 223 in August.
Churning in the Central region is busy as current and mid-term cream availability is at unprecedented levels. Multiples below 1.20 were reported last week, and butter makers say they are getting offers from the West and, atypically, even East region sources. Hurricane Helene's effects were backing up cream moving to normal destinations in the East. Butter demand is steady to quiet, says DMN.
Western butter manufacturers note retail production is strong or steady and bulk production is strong to lighter. Stocks are being built to cover upcoming churn maintenance as well as anticipated fourth quarter demand. Cream is widely available in most of the region, but demand from butter makers is mixed. Domestic butter demand is steady to lighter however 2025 booking is picking up. Export demand is stronger as U.S. prices become more competitive, says DMN.
Grade A nonfat dry milk finished last Friday at $1.3525 per pound, down a half-cent but 17.25 cents above a year ago. Sales totaled 18 for the week and 118 for the month, up from 113 in August.
Dry whey saw its Friday close at 60.50 cents per pound, 75 cents higher and 30.75 cents above a year ago. There were 12 sales on the week and 38 for the month, up from 26 in August.
Falling corn, soybean and hay prices and a rising milk price moved the August milk feed price ratio higher again, up for the sixth time in the past seven months. The latest Ag Prices report shows the August ratio at 2.79, up from 2.50 in July, and compares to 1.66 in August 2023.
The All-Milk Price averaged $23.60 per hundredweight, with a 4.09% butterfat test, up 80 cents from July, which had a 4.07 test, highest price since December 2022, and $4 above August 2023, which had a 4% test.
The national corn price averaged $3.84 per bushel, down 39 cents from July and $1.89 below a year ago. Soybeans averaged $10.30 per bushel, down $1 from July and $3.80 per bushel below a year ago. Alfalfa hay averaged $175 per ton, down $8 from July, and $55 per ton below a year ago.
Looking at the cow side of the ledger, the August average cull price for beef and dairy combined was unchanged at $142 per hundredweight, $27 above August 2023, and $70.40 above the 2011 base average.
Quarterly milk cow replacements averaged $2,360 per head in July, up $240 from April, and $600 above July 2023. Cows averaged $2,100 per head in California, up $200 from April, and $435 above a year ago. Wisconsin's average, at $2,650 per head, was up $270 from April, and $740 per head above July 2023.
Milk production margins moved to the highest level since October 2014, at $15.14 per hundredweight, and were $1.45 per hundredweight above July, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.
"Income over feed costs in August were above the $8 per hundredweight level needed for steady to higher milk production for the 10th month in a row," said Brooks. "Input prices were lower in August with all three input commodities remaining in the top 11 for August all-time. Feed costs were the ninth highest ever for the month of August and the lowest since the $8.43 recorded in December 2020."
"Dairy producer profitability for 2023 in the form of milk income over feed costs, was $8 per hundredweight," according to Brooks. "Profitability was $3.91 below 2022 and $1.72 lower than the 2018-22 average. In 2023, the decrease in milk income over feed costs was a result of the milk price decreasing more than feed prices dropped. Income over feed in 2023 was around the level needed to maintain or grow milk production."
Return to Top of Page