Sunday, January 3, 2010

2009 Component Prices End on a High

Prices for December 2009 were announced on December 31. Both Protein and Butterfat prices reached new highs of $2.88/lb and $1.54/lb respectively. This calculated to a $14.98/cwt price for Class III milk.

These increases reflect the increase in NASS Survey prices for cheese barrels and blocks as shown graphically in the following two charts.
Barrels leveled off near $1.50/lb with a slight dip in the last week.

Barrels continued their increase reaching $1.69/lb in the last week.

So much for the good news, it's now time to think ahead to January, 2010. Unfortunately, cheese blocks fell dramatically on the CME in the last two weeks. The NASS survey price which lags the CME price by about 2 weeks, will reflect this in the first two weeks of January.

In previous posts, the high inventory levels of cheese were forecast to be a problem which will have to be reckoned with before cheese prices stabilize at higher levels. The historically high inventory levels were expected to drop as the milk pricing recovery got underway. Unfortunately, just the opposite has happened.

Cheese inventories have taken a significant leap to historic levels for this time of the year. Only November inventory levels are available until this Friday when December's should be available.

Also troubling is the significant drop in Butter prices on the CME in the last few weeks of the year.

Simply stated, celebrate now because January prices are not trending positively. In future posts, these trends will be followed.

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