8 minute read
Mielke Market Weekly
This column was written for the mar- month. USDEC says, “The region ranked $1.57 per pound, down 3.75 cents on the week, down keting week ending May 28. Number 2 for sales, buying $1.26 billion 24.25 cents on the month, 45.25 cents below a year The ‘fridge is far from empty, but the U.S. Department of Agriculture’s latest Cold Storage report shows inventories are not getting out of hand, at least on in U.S. dairy products and ingredients, a 36 percent increase over the previous year, despite the challenges presented by a global pandemic.” ago when they jumped 13.25 cents, but at an inverted 4 cents above the blocks. There were 36 cars of block traded on the week, 123 for the month, up from 85 in April. Barrel sales cheese. USDEC also opened its Center for totaled 33 for the week, 110 for the month, up from Dairy Excellence in Singapore, stating “The investment signals a long-term commitment to a region that encompasses Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, plus Brunei Darussalam, Burma, Cambodia and Laos.” The combined population of those countries is more than 670 million, more than double American-type stocks fell to 830.8 million pounds, down 3.6 million pounds or 0.4 percent from March (which was revised up 2.6 million pounds) and they were 3.5 million pounds or 0.4 percent below those a year ago. The “other” cheese category saw stocks dip to 601.2 million pounds, MIELKE MARKET WEEKLY By Lee Mielke MARKETING 81 in April. Some Midwestern cheese producers told Dairy Market News they were planning on running through Saturday and continuing on the Monday holiday. Others were down for updates and maintenance. Spot milk loads were being reported more regularly and cheesemakers were finding heavily discounted loads. down 10.7 million pounds or 1.7 percent from March the U.S. population. Cheese demand remains mixed. Some retail chedand 17.5 million or 2.8 percent below a year ago. dar producers say buyer interest is and has been The total cheese inventory stood at 1.45 billion pounds on April 30, down 15.9 million pounds or 1.1 percent from March and 25.5 million pounds or 1.7 percent below a year ago, ending five consecutive months that total cheese stocks grew. The decline in cheese is a rare occurrence during the spring flush. It is the first April decline since 1993, according to HighGround Dairy’s Lucas Fuess n Checking prices at home, the Cold Storage data put the brakes on cheese prices falling, for a day at least. After plunging 15.5 cents the previous week, the cheddar blocks closed the last Friday of May at $1.53 per pound. This is down 4 cents on the week, 27 cents below where it was on May 3, and 70 cents below a year ago when they pole-vaulted 29.25 cents to $2.23 per pound. quite busy while other varietal cheesemakers were less busy. Barrel prices topping the blocks is viewed with a skeptical eye, says Dairy Market News. Cheese demand in the west has slowed in both retail and food service. Cheese production has remained strong, causing supplies to outpace demand. The weaker Chicago Mercantile Exchange prices have some believing that is favorable for in the May 31 “Dairy Radio Now” broadcast. Fuess said the expanded cheese production capacity which The barrels entered the Memorial Day weekend at See MIELKE, pg. 17 came online in recent months leads us to believe production was strong. However, this report would indicate, “demand is almost off the charts” and driv- Give better incentives for CRP participationen by retail and foodservice channels as the economy quickly reopened. THIESSE, from pg. 12 CRP program, unless there are some added finan-
Butter stocks climbed to 385.3 million pounds, up a Pothole” region can now enroll in the Soil Health cial incentives. hefty 27.9 million pounds or 7.8 percent above the and Income Protection Program (SHIPP), which is a Increasing CRP annual rental rates back to comMarch inventory, which was revised up 2.8 million pilot program being offered under the CRP program. parable farm land rental rates in a given area is pounds. They were 12.7 million pounds or 3.4 percent The SHIPP program is a short-term CRP option to likely to face kickback by some members of above April 2020, making April the 22nd consecutive plant cover vegetation on less productive agricultur- Congress and by farm organizations. The reduction month butter stocks topped those of a year ago. al lands, while improving soil health and enhancing factors in the maximum CRP rental rates which Fuess says the butter data was “pretty normal,” but the heavy inventory will weigh on prices. HighGround Dairy warns that butter stocks will only climb further in second quarter before reaching the yearly peak. carbon sequestration. The SHIPP program takes farm land out of crop production, while still allowing livestock producers to utilize the land for haying and grazing. States eligible for the SHIPP program include Minnesota, Iowa, Montana, North and South Dakota. The current SHIPP enrollment periwere put in place in the last Farm Bill were due to CRP competing with farmers who were trying to rent farm land for crop production — especially younger beginning farm operators. This CRP rental rate reduction had bipartisan support in Congress during the development of the 2018 Farm Bill.
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Keep in mind a year ago, Covid lockdowns had od continues through July 16. Hopefully, USDA and Congress kind find a workrestaurants closing their doors, thus butter stocks grew quickly. It will be interesting to see what April butter output looked like in the next Dairy Products report issued June 4. The StoneX Dairy Group, however, says that overSummary The CRP program has a long and successful history of preventing soil erosion, improving water quality, enhancing wildlife habitat, and aiding in carbon sequestration. While it may seem quite logical to able solution to the CRP rental rate situation, as the CRP program does seem to be a sensible approach toward further enhancement of carbon sequestration efforts in many areas of the United States. all, they are still bullish on butter and expect stocks utilize expansion of the CRP program to reach fur- For more information on the current CRP enrollto fall below year ago levels by August, as competi- ther goals related to carbon sequestration, there ment, expiring CRP acres, rental rates, etc., contact tive U.S. butter prices increase exports. could be some obstacles in accomplishing those the local USDA Farm Service Agency office or refer n goals. Commodity prices for corn and soybeans are to the USDA CRP web site at http://www.fsa.usda. Speaking of exports, the U.S. Dairy Export Council reports that Southeast Asia surpassed Mexico to become the U.S. number-one dairy export market for volume in 2020, absorbing the equivalent of more than one day of total U.S. milk production per their highest levels in eight or nine years. Farm profit levels have improved considerably in the past couple of years, which is also resulting in higher land rental rates in many areas. This may make it difficult to convince farmers and landowners to take farm land out of production in order to enroll in the gov/crp Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com. v
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