Cheese Booms on the Fourth of July
USDA released its dairy products report for the month of May on this day before Independence Day, and in it some fairly revealing numbers.
American cheese, cheddar specifically, rose 3.8%. In its total production over the month of April, American cheese and total was up 2.1%. However, relative to the year prior May production fell a half of a percent as we add to that the production of other types of cheese. Total cheese production, however, did rise both month over month by 1.5% and year over year by 1.6%.
Even though the spring flush was not as grandiose as it was in 2018, milk still managed to find its way to the VAT. Butter production fell 4.2% over 2018 while only dropping 1% from the month of April in response to the softer demand. Dry whey products fell significantly dropping from 14.2% from April's numbers and down 5.7%. From 2018 levels, whey protein concentrates and whey protein isolates picked up part of that slack. Isolates rising 13.1% from April, concentrates rising 2.2% relative to April's production. However, in both cases, production was down sharply from 2018.
Prior to all of this news, the CME spot trade posted a softer tone for cheese with blocks falling a penny to $1.85 and barrels remaining unchanged at $1.78. Butter rose a half a cent to finish at $2.40 and a half nonfat dry milk dropped a quarter cent to $1.04 and a half and way fell a quarter cent to 32 and three quarter cents, the lowest price posted since late April. Milk markets responded in kind with class three prices dropping six cents on average for the balance of 2019. With that price now standing it's $17.67 for markets saw a equally soft tone dropping 10 cents in the third quarter is average. The fourth quarter however, did not trade so the balance of the year dropped the nickel to an average price of $17.39.
As you go about your Independence Day celebrations we bid you a safe and happy holiday from commodity Risk Management Group. This is Mike north. I know your markets.