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Mielke Market Weekly
This column was written for the marketing week ending Oct. 29.
U.S. butter stocks keep heading lower after falling below those a year ago in August for the first time since June 2019.
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The U.S. Department of Agriculture’s latest Cold Storage report shows the Sept. 30 butter inventory at 330.1 mil- MIELKE MARKET cents on the week (the lowest since Aug.8), Cream has been available and is meeting demand lion pounds. This is down 32.6 million WEEKLY 17.5 cents lower than they were on Oct. 1, in recent weeks in the West but stakeholders are and $1.1075 below that week a year ago. The barrels saw their Oct. 29 finish at $1.82 per pound, down 4.25 cents on the week, 7.5 cents above their Oct. 1 perch, 71 cents pounds or 9 percent from the August level, which was revised 4.2 million pounds lowered than what was reported a month ago. Stocks were down 13.8 million pounds By Lee Mielke now trying to find a home for it after the fire at an Idaho plant. Food service butter demand is holding steady, says Dairy Market News, but contacts report retail demand has softened. Retailers are looking to or 4 percent below September 2020. American-type cheese stocks jumped to 844.1 milbelow a year ago, and an inverted 14.5 cents above the blocks. See MIELKE, pg. 18 lion pounds, up 17 million pounds or 2.1 percent There were four sales of block on the week and 22 from August and were 71.5 million pounds or 9.3 for the month of October, up from 18 in September. percent above those a year ago. The August level The week saw 11 cars of barrel trade places and 49 was revised up 3.5 million pounds. for the month, down from 69 in September.
The “other” cheese category climbed to 592.2 mil- Cheesemakers are busy according to Dairy Market lion pounds, up 8.6 million pounds or 1.5 percent News. “Plant managers report existing employees from August, and 31.5 million or 5.6 percent above a working overtime to fulfill needs is the strategy, and year ago. even then there are shifts not being staffed.”
The resulting total cheese inventory stood at 1.46 Cheese customers have also been very busy. billion pounds. This is up 25.5 million pounds or 1.8 Demand for all varieties is strong. Midweek spot percent from August and 104.6 million or 7.7 per- milk prices ranged from Class III to $1 over. Even cent above a year ago. with plant outages in the region and growing milk
Chicago-based StoneX Dairy Group says it expect- output, milk usage kept offers quieter this week, ed cheese stocks to come in lower than forecast according to Dairy Market News. given how weak milk production was in September, Looking westward, food service cheese demand but instead were 45 million pounds heavier than remains steady and retail sales are even, year over they forecast. Cheese plants were likely getting year. Export interest is healthy, says Dairy Market more than enough milk in September, explains News, but ports are still congested and shipping is StoneX. “While the weak milk production does raise not without difficulties. Production at some plants is the upside risk for cheese prices, the relatively limited by staffing shortages, but other facilities are heavy inventories are bearish for prices.” able to operate at capacity and work through ample
StoneX added, “With milk production down and milk supplies. Cheese inventories are plentiful and cheese production still strong, butter production has growing, although block availability was said to be likely taken a hit — which is allowing inventories to looser than barrels. Some contacts believe tighter be pulled down.” barrel supplies may be contributing to the inversion.
Butter stocks were 7 million pounds lower than CME butter had a good week, closing Oct. 29 at the StoneX forecast; but they add the caveat, $1.94 per pound. This is up 10.5 cents on the week “Stocks last year were very heavy, so being down 4 (the highest since June 10, 2020), up 19.25 cents for percent still leaves butter stocks at adequate levels. the month, and 55 cents above a year ago. There With milk production expected to stay weak and were 14 sales on the week and 25 for the month, cheese production expected to stay relatively strong down from 121 in September. we are going to continue to pull butter stocks down Butter producers say cream remains tight, if not and that should be supportive for prices.” tighter. Production schedules are reportedly stunted, n due primarily to plant employee and driver shortagCash dairy product prices at the Chicago Mercantile Exchange ended October with cheese heading lower and butter, powder, and whey climbing, as traders anticipated the next Global Dairy Trade auction on Nov. 2 and the September Dairy Products report on Nov. 4. es. There have been recent improvements in hiring, but the timeframe for a more normal production situation is unpredictable, according to plant managers. As manufacturing geared for holiday retail order surges, bulk butter availability has declined and prices have done the opposite. Butter market tones are notably bullish, says Dairy Market News. Some
The cheddar blocks closed the last Friday of believe this shift could be short-lived while others October at $1.6750 per pound. This is down 13.5 are “viewing 2022 through a different lens.”
News and information for Minnesota and Northern Iowa dairy producers
MIELKE, from pg. 17
stock coolers in anticipation of strong holiday demand.
Fresh inventories of butter are tight, though older stocks are available. Labor shortages are causing producers to run shortened schedules but are running busy schedules when able, to fulfill purchases. CME butter prices increased this week but contacts report that tighter fresh butter availability and limited production are contributing to the higher prices, says Dairy Market News. n
Cash Grade A nonfat dry milk closed the week at $1.5575 per pound, 2 cents higher on the week, highest since Aug. 7, 2014, 16 cents above their Oct. 1 posting, and 45 cents above a year ago. Sales for the week totaled 13 loads and 17 for the month, down from 69 in September.
CME dry whey closed Oct. 29 at 63 cents per pound, up 1.25 cents on the week, highest since May 26, up 5 cents on the month, and 23 cents above a year ago. There were six sales on the week and 16 for the month, up from 13 in September. Domestic and international whey demand is good.
Cull prices have been supportive — even with the increase in cattle moving through the supply chain, says StoneX. And, slaughter rates are stronger than the rate of replacement heifers entering the herd. n
Meanwhile, on-farm milk output is increasing in most areas of the country, according to the USDA’s weekly update; though there are reports it’s slightly tight in areas of the Northeast. Milk output is up in parts of the West, although Pacific Northwest contacts relay that milk supplies are somewhat lighter.
Bottling demand is mostly steady. Seasonal retail products, like eggnog and aerated cream, have increased production for customer demands. Cream markets are stable. Internal cream supplies are
THE LAND EARLY DEADLINE
meeting the needs of end users. Cream prices have increased in the Central and Eastern region, says Dairy Market News.
StoneX reports that New Zealand milk solids production was down 4 percent in September, which was weaker than the minus 1.3 percent they expected.
“Season to date milk production was down 3.5 percent (down 3.1 percent on a milk solids basis). New Zealand has experienced plenty of rain recently which could have had an affect on production as well as calving issues which was something that was a concern in August.”
HighGround Dairy reports New Zealand’s third quarter whole milk powder shipments were down from a year ago, “but gains continued into China as New Zealand prioritizes their demand needs.”
“Milk production has been lower and continues to limit availability and boost prices,” says HighGround Dairy, “resulting in weaker movement to price sensitive regions such as Sri Lanka. Sri Lanka is traditionally another top destination for whole milk powder.”
It was a record third quarter for total dairy exports heading to China, says HighGround Dairy, “due to whole milk powder, fluid milk and cream, skim milk powder and butter gains. Shipments to the Middle East were the strongest in three years in the quarter, driven by whole milk powder and cheese.”
Cheese eked out slight gains, says HighGround Dairy, with volume to Southeast Asia up 52 percent from a year ago and led by the Philippines, Indonesia and Malaysia. Volume to China eased however, after the country built up inventories throughout the first half of the year.
New Zealand is the number-one dairy exporter, so the United States keeps a sharp eye on conditions “down under.” They and the European Union are our biggest competitors in the international marketplace, and this at a time when dairy exports contribute more to U.S. dairy farm bottom lines than ever before.
Australian milk production in September was weaker than expected, according to StoneX’s Dustin Winston, down 2.9 percent year-on-year. Fat and protein content were both down which left component adjusted production down 3.2 percent. Milk output for the 2021-22 season is currently lagging 3.3 percent, says Winston.
Mexico is the U.S. biggest customer, while Southeast Asia is a growing market. South Korea is a particularly large buyer of U.S. cheese. The Oct. 26 Daily Dairy Report stated, “South Korea remains in a dairy deficit and will continue to be a key cheese market for U.S. exporters going forward, according to a new USDA Global Agricultural Information Network report.”
“Korea’s per-capita cheese consumption has more than doubled in the past 10 years,” says the Daily Dairy Report, “with total cheese consumption poised to hit a record 192,000 metric tons next year and imports forecast to grow to 152,000 metric tons.”
The Daily Dairy Report adds, “Because South Korea has free trade agreements with all major exporters, cheese imports will continue to grow due to tariff reductions, tariff rate quota increases, growing consumption, and limited domestic production.”
Last year, the United States accounted for 41percent of the value of all cheese imported by Korea, followed by the European Union with 36 percent; New Zealand, 16 percent; and Australia, 6 percent. The U.S.-Korea Free Trade Agreement helped boost U.S. cheese exports to Korea to 61,821 metric tons in 2020, according to the Daily Dairy Report.
Like the United States, Korea’s fluid milk consumption continues to fall. The Daily Dairy Report cites rapidly declining birth rates as partly responsible. “In 2018, Korea’s fertility rate fell below one child per woman and it decreased to 0.84 child per woman last year.”
That, warns the Daily Dairy Report, means more domestically-produced milk will be available for its own cheese production.
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
Agricultural literacy grants available
ST. PAUL — A public-private partnership between the Minnesota Department of Agriculture and the Minnesota Agriculture in the Classroom Foundation is offering grants to K-12 teachers, 4-H, and FFA groups in Minnesota to develop educational experiences around agriculture and food systems education.
A total of $5,000 in grants of up to $500 each are available to help students experience agriculture in a cross-curricular manner. Funded activities can include new ideas as well as enhancements to current curricula/activities.
Examples of eligible expenses include field trips to working farms or agriculture businesses, purchasing needed supplies, and supporting “Ag Day” events at schools.
Priority will be given to first-time applicants. All applications will be evaluated by a grant review committee of the MAITC Foundation.
Applications are due by Nov. 15. Apply and find more information at https://minnesota.agclassroom. org/grants/literacy/.
This article was submitted by the Minnesota Department of Agriculture. v
