The U.S. Department of Agriculture on Aug. 2 announced the July benchmark Class III milk price at $17.55 per hundredweight, up $1.28 from June, $3.45 above July 2018 and the highest Class III price since December 2014.
It equates to $1.51 per gallon, up from $1.40 in June and $1.21 a year ago.
Also, the Aug. 2 Class III futures portended a peak of$17.79 in September.
The seven-month Class III average stands at $15.58, up from $14.37 at this time a year ago but below $16.02 in 2017.
The July Class IV price is $16.90, up 7 cents from June, $2.76 above a year ago and the highest Class IV since November 2014.
Rising milk prices are welcome news to the troubled bottom lines of dairy farmers throughout the country. However, rising feed prices and continued clouds on the export horizon will temper some of the increase.
USDA reported another slip in one of the measures of farm profitability. The June milk-feed price ratio was 2.08, down from 2.10 in May, but above 1.98 in June 2018.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. One pound of milk today purchases 2.08 pounds of that ration blend.
The U.S. All-Milk price averaged $18.10 per cwt., up just a dime from May but $1.80 above June 2018.
The national average corn price averaged $3.98 per bushel, up a whopping 35 cents from May and follows an 11-cent jump in May. Corn was up 40 cents per bushel from June 2018. Soybeans averaged $8.31 per bushel, up 29 cents from May, after dropping 26 cents in May, but $1.24 per bushel below a year ago. Alfalfa hay averaged $193 per ton, down $11 from May, but $12 per ton above a year ago.
The June cull price for beef and dairy combined averaged $65.90 per cwt., up 30 cents from May, 40 cents below June 2018 and $5.70 below the 2011 base average of $71.60 per cwt.
Milk cow replacements averaged $1,240 per head for the quarter in July, up $100 per head from April although $80 below July 2018. Prices averaged $1,300 per head in California, up $200 from April and unchanged from a year ago. Wisconsin cows averaged $1,210 per head, up $80 from April but $40 below July 2018.
Cash dairy traders are no doubt concerned over President Trump’s July 31 announcement that the U.S. will impose an additional 10 percent tariff on $300 billion in Chinese imports starting Sept. 1. Exports to that country were already hurting.
The Chicago Mercantile Exchange cheddar blocks closed the first Friday of August at $1.82 per pound, down a half-cent on the week but 23.25 cents above a year ago. The barrels finished at $1.6925, down 2.75 cents, 21.75 cents above a year ago, but an unsustainable 12.75 cents below the blocks.
Dairy Market News says most Midwest cheesemakers report that demand is meeting expectations, but some say the early summer upticks have steadied. Cheese production has slowed, as milk availability is dwindling.
Western cheese production remains active with plenty of milk on hand and plants are running near full capacity. Cheese inventories are generally comfortable as steady end user and consumer demand has been able to offset production.
CME butter, hurt from a higher-than-expected cold storage report, fell to $2.3275 per pound July 30, regained some, then fell again to close the week at $2.32, down a nickel, 11.5 cents below the July 16 high and dead even with a year ago.
Butter sales are slower and more bulk butter has become available in recent weeks. Butter producers suggest buyers are waiting on potential price drops.
The western butter market varies by area. Butter output remains active but decreased somewhat as more cream continues to move to ice cream plants. Butter stocks are plentiful.
Grade A nonfat dry milk closed Aug. 2 at $1.02 per pound, down a penny on the week but 19.25 cents above a year ago.
The Northwest Dairy Association made these price projections in July for the Class III price and Pacific Northwest blend price:
Month Class PNW
July $17.55 $17.45
Aug. $17.35 $17.80
Sept. $17.85 $17.90
Oct. $17.90 $17.70
Nov. $17.70 $17.50
Dec. $17.25 $17.30
Jan. $16.80 $17.00
Feb. $16.70 $16.90
June $16.27 $16.95
Lee Mielke, of Lynden, is editor of the Mielke Market Weekly. Whatcom County has about 85 dairy farms.