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CME: Dry Whey Production Down In November

05 January 2012

US - Traders emerged from their holiday hibernation with two-sided activity in the cheese session, writes Alan Levitt.

Blocks gained 1.75¢ on four sales, while barrels slipped 0.25¢ on one sale. Unfilled bids for each were left on the board. Butter held unchanged.

Milk futures were lower in the front months, mostly steady in the back. Futures are still priced at a premium over yesterday’s spot prices, which equate to a Class III price of about $16.60.

US dry whey production in November was 77.5 million lbs., down 2.5 per cent from a year ago, according to US’s “Dairy Products” report released Tuesday (see chart). However, whey futures were mostly lower yesterday.

The California 4b (cheese milk) price for December is $15.14, down $2.05 from November. This price is $3.63 below the Federal Order Class III price, the largest gap in at least nine years.

From 2003-09, the California price averaged 45¢ less than the Federal Order price. From January 2010 to June 2011, the spread stretched to $1.29. In the last six months, the difference has grown to $2.60 as soaring whey values boost Federal Order Class III prices while having relatively little effect in California.

The California 4a (butter-powder) price for December is $16.59, down $1.11 from November and the lowest since January 2011.

Further Reading

- You can view the full report by clicking here.


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