Milk Prices Rise Amid Bird Flu Outbreak in Central California
Source: DairyNews.today
The Agriculture Department has announced the federal order Class III milk price for August at $20.66 per hundredweight, marking an 87-cent increase from July and $3.47 above the price in August 2023. This is the highest Class III price since November 2022. The year-to-date average now stands at $17.75, an increase from $16.98 a year ago.
Class III futures indicate continued upward momentum, with September projected at $22.81, October at $23.06, and November at $22.63 per hundredweight. Meanwhile, the Class IV price for August rose to $21.58, up 27 cents from July, reflecting the highest level since December 2022.
The rise in milk prices is being fueled by a range of factors, including the outbreak of Highly Pathogenic Avian Influenza (bird flu) in Central California. The outbreak has been confirmed in three dairies in the region, compounding existing struggles with milk output, which typically falls by 10-25% during such events. The bird flu has also affected 13 other states, with 17 cases reported in the last 30 days. To combat the spread, the USDA has authorized a field safety trial for a bird flu vaccine for dairy cattle.
Additionally, the cheese market continues to show strength, with cash block Cheddar closing the week at $2.27 per pound, the highest price since June 2022. Barrels finished slightly higher at $2.2750. Cheese demand remains steady to strong, and some processors are shifting focus back to barrels to capitalize on the bullish market trends.
Butter prices also increased, closing the week at $3.1750 per pound, up half a cent and significantly above year-ago levels. Butter production has ramped up in the Midwest, while retail demand is gathering strength ahead of the fourth quarter.
On the international front, U.S. dairy exports remain robust. July exports were up 7.8% year-on-year, with strong growth in cheese and nonfat dry milk exports, particularly to Southeast Asia and Mexico. Cheese exports reached 88.7 million pounds, a 9.6% increase, although Cheddar exports declined. Butter exports also showed growth, increasing by 16.3% compared to last year. However, the U.S. remains a net importer of butter, with imports rising 44.8%.
Global dairy markets showed mixed results, with the latest Global Dairy Trade auction seeing a 0.4% decline in its weighted average. Despite this, skim milk powder prices increased, driven by demand from China and Southeast Asia.
In trade developments, the U.S. and Chile have strengthened their Free Trade Agreement to protect U.S. cheese exports, which account for over half of U.S. dairy exports to Chile, ensuring continued access to this crucial market.
The rise in milk prices is being fueled by a range of factors, including the outbreak of Highly Pathogenic Avian Influenza (bird flu) in Central California. The outbreak has been confirmed in three dairies in the region, compounding existing struggles with milk output, which typically falls by 10-25% during such events. The bird flu has also affected 13 other states, with 17 cases reported in the last 30 days. To combat the spread, the USDA has authorized a field safety trial for a bird flu vaccine for dairy cattle.
Additionally, the cheese market continues to show strength, with cash block Cheddar closing the week at $2.27 per pound, the highest price since June 2022. Barrels finished slightly higher at $2.2750. Cheese demand remains steady to strong, and some processors are shifting focus back to barrels to capitalize on the bullish market trends.
Butter prices also increased, closing the week at $3.1750 per pound, up half a cent and significantly above year-ago levels. Butter production has ramped up in the Midwest, while retail demand is gathering strength ahead of the fourth quarter.
On the international front, U.S. dairy exports remain robust. July exports were up 7.8% year-on-year, with strong growth in cheese and nonfat dry milk exports, particularly to Southeast Asia and Mexico. Cheese exports reached 88.7 million pounds, a 9.6% increase, although Cheddar exports declined. Butter exports also showed growth, increasing by 16.3% compared to last year. However, the U.S. remains a net importer of butter, with imports rising 44.8%.
Global dairy markets showed mixed results, with the latest Global Dairy Trade auction seeing a 0.4% decline in its weighted average. Despite this, skim milk powder prices increased, driven by demand from China and Southeast Asia.
In trade developments, the U.S. and Chile have strengthened their Free Trade Agreement to protect U.S. cheese exports, which account for over half of U.S. dairy exports to Chile, ensuring continued access to this crucial market.
