U.S. farm milk prices continue to fall.
The U.S. Department of Agriculture announced the November Federal Order Class III benchmark Dec. 5 at $14.44 per hundredweight, down $1.09 from October and $2.44 below November 2017.
It’s the lowest Class III since July 2018, and the lowest November Class III price since the disastrous year of 2009.
November’s Class III price also equates to $1.24 per gallon, down from $1.34 in October and $1.45 a year ago.
A survey of retail prices conducted by Federal Milk Market administrators found conventional whole milk prices for November averaged $3.27 per gallon. Organic whole milk averaged $4.09 per half-gallon.
When asked about the low prices in the U.S., Jerry Dryer, analyst and editor of the Dairy and Food Market Analyst newsletter, stated on the Dec. 10 Dairy Radio Now broadcast that the U.S. has been playing in a worldwide market the past several years.
Milk output in New Zealand is expected to be up 3-4 percent in the current market year, he said, but it’s expected to be flat or down in Europe and flat or down in the U.S. by some time in the first quarter of 2019.
He admits demand is strong right now in the U.S. because of the holidays, “but not as strong as it could be and production is even stronger.”
The supply of milk will be impacted, according to Dryer, from weather issues in Europe and weather and economic issues in the U.S., so he expects higher milk prices ahead.
“Given some feed quality issues etc., we’re going to see that milk production number get trimmed.”
As to the low Class III futures, he said, “The futures aren’t always a good forecaster of the future.” He believes we will see some $17 milk by the end of next year and, if his hunch on milk supply becomes reality, “we could see $20 milk by the end of next year.”
Cash prices headed lower the first week of December. The cheddar blocks closed at $1.35 per pound, 12.5 cents below a year ago. The barrels finished at $1.2225, down 44.75 cents below a year ago.
Midwest contacts tell Dairy Market News that cheese volumes are “plentiful.” On the other hand, “cheese markets remain stagnant, with many contacts pointing to export declines and cheese inventories as market agitators.”
Western contacts report that, with U.S. cheese prices lower than a few months ago, there has been renewed interest from international buyers, but some foreign prices have declined as well, creating stiff competition in a few markets.
Cash butter closed at $2.2075 per pound, down 3.5 cents on the week and 1.25 cents below a year ago.
Midwest butter producers say the amount of cream offered has escalated and prices were slightly lower than the previous week but “still above their comfort zone.”
Western orders are seasonally higher, but international demand is slow due to low U.S. prices compared to the rest of the world and a high dollar exchange rate.
Spot Grade A nonfat dry milk finished Friday at 88.5 cents per pound, 20.25 cents above a year ago.
The Northwest Dairy Association makes these price projections for the Class III price and Pacific Northwest blend price:
Nov. $14.44 $15.30
Dec. $13.80 $14.80
Jan. $14.00 $14.70
Feb. $14.40 $14.70
March $14.80 $15.00
April $15.20 $15.30
May $15.40 $15.60
June $15.70 $15.80
July $15.90 $16.00
Lee Mielke, of Lynden, is editor of the Mielke Market Weekly. Whatcom County has about 100 dairy farms.