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Mielke Market Weekly
This column was written for the marketing week ending Sept. 3.
It was a week of Covid cases shooting higher across the country. Hurricane Ida attacked the Louisiana coast — plunging New Orleans into darkness and causing flooding in Mississippi, even reaching to New York and New Jersey with rains and flooding. And, it MIELKE MARKET Louisiana. Power outages may keep them Alfalfa hay averaged $201 per ton, up $2 from was the United States, in humiliating WEEKLY at idled for some time. June and $29 above a year ago. Dairy exports are one of the key drivers behind a record-high forecast for overall U.S. agricultural exports in USDA’s latest Outlook for U.S. Agricultural Trade report, according to the Aug. 31 Daily Dairy Report. “The agency increased anticipated agricultural exports for fiscal year 2021 (ending Sept. 30) by $9.5 billion to $173.5 billion,” the Daily Dairy Report stated, “while lifting fiscal year 2022 exports by $4 billion to a record-large $177.5.” surrender, leaving Afghanistan after 20 years. With all that on our minds, I endeavor to report the dairy markets. First, the U.S. Department of Agriculture announced the August Federal order Class III benchmark milk price at $15.95 per hundredweight. This is down 54 cents from July, $3.82 below August 2020, and the lowest Class III since February. The eight month Class III average stands at $16.78, down from $17.61 a year ago and compares to $15.83 in 2019. By Lee Mielke n Looking at the cow side of the ledger, the July cull price for beef and dairy combined averaged $75.60 per cwt. This is up $1.70 from June, $5.10 above July 2020, and $4.00 above the 2011 base average of $71.60 per cwt. Meanwhile, the USDA’s latest Crop Progress report shows 60 percent of U.S. corn was rated good to excellent, as of the week ending Aug. 29, unchanged from the previous week, but 2 percent Late morning on Sept. 3, Class III futures had the September contract at $16.61 per cwt.; October, $16.84; November, $17.07; and December at $17.40 per cwt. The August Class IV price is $15.92 per cwt., down 8 cents from July but $3.39 above a year ago, and the lowest since April. Its average for the year stands at $15.12, up from $13.62 a year ago, and “Stronger exports of milk powders and cheese to Mexico and Asia motivated USDA to increase its expectations for dairy exports in fiscal years 2021 and 2022 to $7.3 billion and $7.5 billion, respectively,” according to the Daily Dairy Report, aided by internationally competitive prices and a weak U.S. dollar. n below a year ago. Fifty-six percent of the soybeans had a good to excellent rating, also unchanged from the previous week but 10 percent below a year ago. In the week ending Aug. 21, 59,000 dairy cows were sent to slaughter, down 1,100 from the previous week, but 4,400 or 8.1 percent above that week a year ago. StoneX says dairy cow slaughter is currently tracking above the three-year average. compares to $16.19 in 2019. Those exports numbers are great, but don’t appear n n U.S. dairy exports continue to impress, according to HighGround Dairy’s Lucas Fuess. Reporting in the Sept. 6 “Dairy Radio Now” broadcast, Fuess said July cheese exports, at 81.1 million pounds, were up 26.8 percent from July 2020. The increase was driven primarily by gains into Mexico, but also impressive exports to Japan. Nonfat dry milk exports, at 160.9 million, were down 3.1 percent, Fuess said, but still on track for another record year-over-year increase, up 12.7 percent. He emphasized the large increase of nonfat dry milk to China — which is buying it wherever it can in recent months. U.S. powder shipments were the highest since March of 2014. Dry whey totaled 37.3 million pounds, down 8.7 percent, though year-to-date is up 19.1 percent. U.S. butter volumes were good as well, though a fraction of the others, Fuess said. Butter totaled 8 million pounds, up 80 percent from a year ago, with year-to-date exports up an impressive 136.1 percent. Interestingly, the United States imported 8.6 million pounds, up 11 percent from a year ago, and cheese imports totaled 37.5 million pounds, up 33.3 percent. to be transferring into more profitability on the farm. A continued falling All Milk price and higher corn and hay prices in July were not offset by the drop in the soybean price and resulted in the U.S. milk feed ratio falling again, a descent that started in December, paused in April, but has resumed ever since. The USDA’s latest Ag Prices report has the July ratio at 1.55, down from 1.60 in June, and compares to 2.72 in July 2020. The index is based on the current milk price in relationship to feed prices for a ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk would only purchase 1.55 pounds of dairy feed of that blend. The U.S. All Milk price averaged $17.90 per cwt., down 50 cents from June and $2.70 below the July 2020 average. California’s All Milk price fell to $18.20 per cwt., also down 50 cents from June and $2.90 below a year ago. Wisconsin, at $17.70, was down 60 cents from June and $4.60 below a year ago. The national average corn price hit $6.12 per bushel, up 12 cents per bushel from June, and a whopping $2.91 per bushel above July 2020. Global milk prices continue to show a competitive advantage for U.S. processors, according to StoneX Sept. 1 “Early Morning Update.” “Ideally, this should continue to translate to export opportunities assuming logistics issues don’t continue to impact the market too much. U.S. milk production growth has been slowing as has milk output in the EU. Feed costs continue to be an issue so we expect milk production should be relatively constrained for the remainder of 2021.” The latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. Says, “Dairy margins were unchanged over the first half of August as increases in both milk prices and feed costs were largely offsetting since the end of July.” It credited strength in cash cheese prices the past week being supportive of Chicago Mercantile Exchange Class III futures but warned, “The overall tone of the market remains bearish with spot futures still down around $2.50 from their May highs.” “Milk production remains strong for this time of the year as demand uncertainty lingers from the advancing Delta variant of Covid-19 and indications from Open Table that U.S. restaurants are no longer Fuess also reported that Hurricane Ida impacted feed prices after damaging grain export elevators in Soybeans averaged $14.10 per bushel, down 40 cents from June after falling 30 cents the previous month, but were still $5.60 per bushel above July 2020. See MIELKE, pg. 9 showing growth in demand, with some significant slowing evident in states more heavily impacted by
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Market Report says, “Low milk prices and high feed Dairy prices at the Chicago Mercantile Exchange the current Covid-19 surge. Mobility data similarly suggests a modest slowdown in travel.” costs, a.k.a. depressed margins, are slowly bringing U.S. milk production back in line with demand. Daily average production was down almost 2 perstarted September with butter and powder climbing and cheese and whey falling, as traders anticipated the Sept. 3 July Dairy Products and the long Labor
The Margin Watch cited USDA’s decreased fore- cent from the spring flush high in April, a larger- Day holiday weekend. cast in U.S. milk output in the latest World Agricultural Supply and Demand Estimates, but said, “The bigger surprise was on the feed side where USDA cut the corn yield projection by 4.9 bushels from July to 174.6 bushels per acre, down 2 million from the average industry estimate.” “The soybean yield was similarly trimmed to 50 bushels per acre from 50.8 in July and likewise below the average pre-report estimate of 50.3 bushels. Both corn and soybean meal pushed higher following the report, and high feed costs continue to raise breakeven prices for most dairy operations which now generally need at least $18.00 per cwt. to cover all costs,” the Margin Watch concluded. than-usual drop.” “Futures markets have taken notice,” adds NMPF, “ending the long slide in their collective estimate of calendar year 2021 average milk prices beginning in mid-May. Rising cheese prices have been a key driver of this recent recovery.” “Although milk production is being channeled disproportionately into American-type cheese, growth in commercial use of such cheese hit double-digit percentages during the second quarter, while use of other types of cheese grew by fully half this amount. Domestic use of milk in all products showed a 1 percent gain, while exports continued their march toward a new record as a percent of domestic milk The 40-pound cheddar blocks started the week dropping 4 cents, but rallied late in the week to close on Sept. 3 at $1.7350 per pound. This is down 1.5 cents on the week and 39 cents below a year ago when they pole vaulted 29.75 cents to $2.125. The 500-pound cheddar barrels lost 3.75 cents on Aug. 30, then recovered some, but finished on Sept. 3 at $1.3925 per pound. This is down a penny on the week, 30.75 cents below a year ago when they jumped 27 cents to $1.70, but are 34.25 cents below the blocks. Only four cars of block were sold on the week at the market of last resort, with 23 in the month of August, up from 21 in July. There were 16 sales of barrel on the week and 72 on the month, n solids production,” NMPF concluded. down from 111 in July.
The National Milk Producers Federation’s August n See MIELKE, pg. 10
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Midwestern cheesemakers tell Dairy Market News production schedules remain busy; but staffing shortages are adding stress to a growing number. Regional cheese sales are healthy and pizza cheese producers continue to turn down orders. Mozzarella inventories are tightening. Curd and barrel sales are steady week to week. Regional cheese market movements were more bullish than bearish, says Dairy Market News, despite the CME price fluctuations.
Cheese demand remains steady in the west in retail and food service though there is concern about the current surge of Covid-19 cases affecting demand, particularly with food service. Demand remains strong from international purchasers but ongoing port congestion is causing delays. Domestic loads are also facing delays due to a shortage of truck drivers and limited available shipping supplies. Inventories of both barrels and blocks are available, says Dairy Market News n
CME butter had a great week climbing to its Sept. 3 close at $1.7975 per pound. This is 9 cents higher on the week, the highest since June 17, and 30.5 cents above a year ago. Twenty-eight cars were sold on the week and 106 in the month, up from 55 in July.
Butter production remains busy, says Dairy Market News, in spite of lighter seasonal cream supplies. Plant managers’ reports of staffing shortages are growing and plant schedules would be more routine if it were not for thinly stretched workforces. Cream multiples are a little steeper week to week and some producers are bidding for fourth quarter cream supplies. Butter sales remain somewhat steady. Retail sales have yet to lift, but fall demand upticks are expected near-term.
Cream availability continues to taper in the West and contacts note staffing issues and delivery delays are interrupting production at some plants. Cream would be tighter if facilities were able to operate full steam, says Dairy Market News. Other contacts, however, report unhindered churning schedules and receipt of steady cream supplies to maintain typical seasonal butter production. Inventories are available.
Retail sales are stable and contacts say some grocers are increasing orders heading into fall and the holiday season. Food service demand remains steady to growing, despite lingering concerns about the Delta variant. The restaurant sector is reportedly particularly busy, says Dairy Market News.
Grade A nonfat dry milk had a good week, closing Sept. 3 at $1.34 per pound, up 4.75 cents on the week and 31 cents above a year ago. Sixteen carloads traded hands on the week, with 34 sold in August and 34 sold in July.
Dry whey had a down week, finishing at 48.5 cents per pound, down 1.5 cents (the lowest since Aug. 4), but still 15.25 cents above a year ago. Two sales were reported for the week at the CME and 13 for the month, down from 17 in July. n
In politics, The National Milk Producers Federation stated that dairy farmers welcomed assistance from USDA in August via the new Dairy Donation program as well as the adjustments to the Dairy Margin Coverage program; and the new Pandemic Market Volatility Assistance program which will partially reimburse farmers for losses that arose from how the department approached dairy purchases for food-insecure families in 2020.
“These initiatives will help farmers during difficult times, and they happened because NMPF worked closely with USDA and Congress to help dairy farmers better manage their risks and serve their communities,” a NMPF press release stated. “The $350 million in reimbursements is a partial balm that begins to redress policies that created unintended harm, but it isn’t a fair deal for all dairy farmers,” NMPF argued.
“USDA’s new program attempts to rectify two policy actions that left many in dairy on the wrong end of unplanned consequences,” NMPF charged. “The immediate trigger was government food-box program purchases that were heavily weighted toward cheese. That over-emphasis sent Class III cheese prices to all-time highs and caused unusual and uneven impacts on milk checks, most commonly noticed via the record negative Producer Price Differentials seen during the pandemic.”
“The other culprit was an attempted good-faith policy change that inadvertently became a ticking time bomb, exploded by those same milk-price gyrations. A change to the Class I mover formula, which sets the price of Class I fluid milk, in the 2018 farm bill was originally proposed as a revenue-neutral adjustment designed to encourage increased fluid milk sales without hurting farmers. It turned out to be anything but that,” NMPF stated.
Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. v
www.TheLandOnline.com Funds to update livestock operations
Minnesota livestock farmers and ranchers seeking to improve their livestock operation are encouraged to apply for the Agricultural Growth, Research, and Innovation (AGRI) Livestock Investment Grant program. The Minnesota Department of Agriculture anticipates awarding up to $1.3 million using a competitive review process.
There will be two rounds of funding. In Winter/ Spring 2022, a second RFP will be issued for any remaining funds.
The AGRI grants encourage long-term development in Minnesota’s livestock industry through investment in facilities, infrastructure, and equipment.
Applicants may apply for up to 10 percent of their project’s total cost. Grant awards can range in size from $400 to $25,000. Each livestock operation is eligible to receive a lifetime maximum of $50,000 from this grant program. To be eligible for reimbursement by this grant, you must be invoiced and pay for all project materials and services after Jan. 1, 2022.
Proposals must be received no later than 4 p.m. on Nov. 17 for it to be considered. Applicants are encouraged to use the online application.
More information about the grant can be found at https://www.mda.state.mn.us/business-dev-loansgrants/agri-livestock-investment-grant.
This article was submitted by the Minnesota Department of Agriculture. v
Webinars for Farm Safety and Health Week
AgriSafe has prepared daily webinars to help bring attention to the risks of working agriculture.
Daily themes are: Sept. 20 — Tractor Safety and Rural Roadway Safety; Sept. 21 — Overall Farmer Health; Sept. 22 — Safety and Health for Youth in Agriculture; Sept. 23 — Agricultural Fertilizer and Chemical Safety; and Sept. 24 — Safety and Health for Women in Agriculture.
AgriSafe’s free webinars will share information on tractor and roadway safety, safeguarding our youth, anhydrous ammonia safety, respiratory protection, mental health, and women’s health issues.
AgriSafe is an international 501©3 organization representing health and safety professionals who strive to reduce health disparities found among the agricultural community.
For more information on National Farm Safety and Health week webinars, visit https://www.agrisafe. org/event/national-farm-safety-and-health-week/.
This article was submitted by AgriSafe. v
