Milk Prices Soften, Cheddar Price Gap Widens
By Mike North, Commodity Risk Management
Class III milk prices started softer on Thursday and then strengthened after the products traded lower. Strange you say? Indeed. Equally odd, is the ongoing widening of the relationship between block and barrel Cheddar cheese.
In Thursday’s spot session, block cheese rose a half a cent to $1.64 ½ after a single bid moved prices. Barrels sank lower yet once more to $1.44 ¾ down a penny and a quarter after two trades took place. If the market should drop more than a penny of where it is today that will mark the lowest prices seen since June 1, 2016. Regarding the block barrel spread, only five times since the turn of the century has the spread been this wide. It seems something has to give.
The powder market continued its decent after four loads took place and finished down a nickel at 93 ½ cents. Butter was down a penny and a quarter as well, traded one time and finished at $2.18 ½.
Let’s look more closely at the milk markets. Class IV saw steep losses in the second half of the year with August, the biggest loser, down 58 cents. In the Class III markets, prices were a few cents lower in the second half of the year and ranged as high as 15-16 cents higher in the first half of the year.