Block cheese closed Dec. 18 at $1.32 per pound, unchanged on the week, but 11 1/2 cents below that week a year ago. Barrel closed at $1.28, down 2 cents on the week and also 11 1/2 cents below a year ago. Nine cars of block traded hands on the week and five of barrel. The latest NASS-surveyed U.S. average block price hit $1.3737, up 2.7 cents. Barrel averaged $1.4170, up 2.2 cents.

Butter closed at $1.25, down 2 3/4 cents on the week, 12 cents below a year ago, and the lowest price since late July. Thirty-five cars were sold. Extra Grade nonfat dry milk hit $1.45, up a nickel on the week, while Grade A remained at $1.65. The NASS butter price averaged $1.2644, down 0.6 cent. Nonfat dry milk hit $1.0167, up 1.9 cents, and dry whey averaged 40.13 cents, up 2.6 cents.

Jim Tillison, in his monthly update by the Alliance of Western Milk Producers, said the corn price is starting to have an impact on milk production and, with corn at over $3 a bushel, California producers at least are starting to change their rations and that's starting to affect milk output.

Demand for milk protein is very strong, he said, and the Super Bowl will help cheese sales. He looks for a low of $1.25 on block cheese and $1.20 on butter.

The CME's Daily Dairy Report says the market tone is typical for this time of year, with milk volumes and component levels rising and cheese orders mostly complete. Cheese users typically wait until after the first of the year to rebuild inventories and the abundance of cream for butter is pulling prices lower.

The California Department of Food and Agriculture held a hearing Dec. 4 to consider adjusting Class I milk prices. State law mandates that CDFA, on an annual basis, examine weighted average producer milk prices with those in the contiguous states, according to Tillison, and if they are not in a "reasonable relationship," they must hold a hearing to consider adjustments.

Source: Capital Press