Block, Barrel Prices Break $1.60, Futures Lower

US - Despite a strong milk production report and significantly lower prices at the recent Global Dairy Trade Auction (GDT), CME Cheddar block and barrel prices closed 2.0¢ higher at $1.6025/lb. and $1.6125/lb., respectively, writes Alan Levitt, on 20 March 2012.

21 March 2012

1 minute read

North America

There was one sale in the barrel market at $1.60/lb. The block and barrel markets were bid higher before the close. CME spot butter traded as much as 0.75¢/lb. higher but settled unchanged at $1.5225/lb. after four trades. Outgoing dairy futures closed lower in response to the bearish milk production report and GDT auction results.

New Zealand-based Global Dairy Trade (GDT) auction results released this morning show declines in every product category vs. the previous bi-monthly auction. The average price for Cheddar cheese for May through August is $3,114/MT, or $1.4125/lb. which is significantly lower than current US Cheddar cheese price.

Anhydrous Milkfat (AMF) prices averaged $3,284/MT, or $1.1941/lb. at 80 per cent butterfat equivalent. However, the most recent range of Oceania butter prices, 82 per cent butterfat, reported by Dairy Market News was $3,300/MT to $4,000/MT. The low end of the range is equal to US 80 per cent butterfat price of $1.4604/lb. Based upon the AMF to butter relationship, the Daily Dairy Report expects US imports of AMF to increase.

Low Heat Regular SMP, supplied by Dairy America, closed at $2,765/MT for the May 2012 contract period. This is equivalent to a $1.268/lb. at 35.0 per cent protein, compared to a New Zealand SMP price of $3,195/MT, or $1.4919/lb., for the same delivery period.