Changes are for past three weeks
Commodities used in
*Barrel cheese is not used in
**Dry Whey (average of the
Western ‘mostly’) is used only in the Class 1 formula.
Nonfat Dry Milk: Dropped and hopefully bottomed

NDM prices dropped close to 9 cents in the last three
weeks. The biggest price drop
occurred 6 weeks ago and a comparison of the average price in most recent 6
weeks ($1.051) to the 6 weeks previous to that ($1.285) shows - what we hope is
full extent of the drop – is $.233 per pound or just over $2.00 per cwt on the
4a price. Some observers are openly
speculating that NDM prices could drop all the way to the support price of 80
cents per pound. That would be a
worrisome outcome but it seems unlikely since the globalDairyTrade auction
(which this week included Skim Milk Powder for the first time) set the May 2010
price at $1.28 (US$) did a lot to remove that fear.
Prices were significantly higher in the next two pricing periods (Jun
thru Aug at $1.42; and Sep thru Nov at $1.32) which lend even more comfort.
Today’s prices applied to Class 4a milk formula generate
a price of $12.84 per cwt. While
disappointing it is $1.62 higher than
the 4b price which works out to $11.22 per cwt.
All told this is a quite discouraging price drop.
The past several months have been almost exciting with steadily climbing
prices. However, there is no large
disaster (like a drought) to curtail production in some part of the world which
will drive milk prices to new highs. World
prices will settle at a price level that will attract sufficient supply.
All the literature and studies continue to indicate that the world will
continue to need product from the
Cheese: Prices pressing aggressively lower
Both Block and Barrel cheese prices have crashed right
through the “floor” of $1.40 that seemed to have been established over the
past four months. In fact, both are
now below the $1.30 level. Inventories
of cheese continue to be burdensome and overhang the market.
While overall milk production in the country is down a bit it is not down
in
Whey
Products: Down a bit
Both Dry Whey and WPC are down a bit. Market comment indicates that inventories are not burdensome but that because of increasing cheese production the production of both whey categories is increasing also. With NDM prices dropping like they are and with the whey product volumes increasing, buyers will be sitting on their hands waiting for downward price adjustments or compelling proof that prices will not be dropping.
Butter: There is some good news – Butter prices climbing nicely

This is the third run-up in Butter price since October (see chart). This time it has a nice fairly gentle slope that hopefully indicates the product will be able to hold at higher levels. Easter is still four full weeks away so that alone should result in three weeks of good prices. Inventory numbers are pretty low right now and disappearance should be high because of Easter so there is a chance that prices may stay up.
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Page
4 Weekly Update
The magnitude of the January milk production increase in
Louie
Barcellos died on
Another influential dairy leader of the
putting-pooling-together era has died. I
first met Louie when I took the job as General Manager of the League of
California Milk Producers in 1970. He
was 51 and I was 27. He was the
Manager of Associated Dairymen which was a member of the League.
I had the schooling but he had the knowledge.
More importantly, he was willing to share that knowledge and spent
endless hours sharing it with me. Louie
explained to me how pooling was put together and how it worked but more
importantly he shared why it was put together as it was as well as the intention
of each section.
Louie was one
of the smartest and most persuasive people I have ever worked with. He was also
an amazing teacher and, for me, a wonderful mentor. My wife, Carol, and I shared
many meals with Louie and Pat. Anyone who spent time with them was witness to a
loving couple that was truly committed to each other.
She died several years ago but now they are together again.
Louie has been looking forward to that reunion for every day of those
several years. Goodbye dear friends,
may you rest in peace.
Until next week, Bill Van Dam