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www.thelandonline.com — “Where Farm and Family Meet”
THE LAND — DECEMBER 10/DECEMBER 17, 2021
Demand for U.S. milk is up 4 percent, supply is not week and 500 head or 0.9 percent above This column was written for the marketthat week a year ago. ing week ending Dec. 3. n The U.S. Department of Agriculture announced the November Federal order Omicron became the buzzword of “Black Class III milk price at $18.03 per hundredFriday” and ever since, as another chapter weight. This is up 20 cents from October, is written in the ongoing Covid saga. $5.31 below November 2020, but the highGrowing concern unleashed widespread est Class III price since May. The 11-month commodity market selling for those open average stands at $16.96, down from on that Friday, with crude oil taking the MIELKE MARKET $18.39 a year ago and compares to $16.74 brunt, according to StoneX Dairy Group, WEEKLY in 2019. as countries scrambled to formulate and By Lee Mielke institute travel bans in an effort to Late morning on Dec. 3 Class III contain Omicron. futures portended a December price at $18.43 which would result in a While several reports downplayed 2021 average of $17.09, down from the seriousness of the new variant, $18.16 in 2020 and compares to the President tried to ease the fear, promising there $16.96 in 2019. would be no new lockdowns. The Class IV price is $18.79, up $1.75 from October, “It may be much ado about nothing,” said StoneX $5.49 above a year ago, and the highest Class IV broker Dave Kurzawski in the Dec. 6 “Dairy Radio price since October 2014. Its 11-month average Now” broadcast. “Dairy has taken the news in stride,” stands at $15.74, up from $13.50 a year ago and he said, but “One thing is for sure, Omicron doesn’t down from $16.26 in 2019. make more milk.” Meanwhile, a sharply higher October All Milk Price That’s the issue we’re dealing with right now, he and sharply lower corn and soybean prices propelled said, and follows anemic growth and even negative the October milk feed ratio higher for the second milk growth in October. Year-to-date U.S. milk output month in a row. The USDA’s latest Ag Prices report is up 1.6 percent while domestic dairy demand is up has the ratio at 1.87, up from 1.69 in September, but 2.4 percent. Throw in exports, he said, and demand is still down from last year’s 2.49. up over 4 percent. The index is based on the current milk price in “We don’t have as much milk,” Kurzawski rearelationship to feed prices for a ration consisting of soned, “And the cost of producing milk has gone 51 percent corn, 8 percent soybeans and 41 percent through the roof for a lot of producers — especially in alfalfa hay. In other words, one pound of milk would the last few months, so $18 milk isn’t what it used to purchase 1.87 pounds of dairy feed of that blend. be.” The U.S. All Milk Price averaged $19.70 per cwt., That said, he quickly added, “The market doesn’t up $1.30 from September but 30 cents below October have to give you a profit. If demand slows down 2020. The California price climbed to $19.90, up because of Omicron or some other variant or some$1.10 from September and a dime above a year ago. thing else comes out of the woodwork, prices can sink Wisconsin, at $19.60, was up $1.30 from September back down.” but $2 below a year ago. Kurzawski says he doesn’t see people eating any The national average corn price fell to $5.02 per less because of Omicron so he still sees a stable and bushel, down 45 cents per bushel from September, slightly bullish market as we head into the end of the after dropping 87 cents from the August level, but is year. When asked how high milk prices might go in still $1.41 per bushel above October 2020. 2022 he answered, “No one knows for sure; but the Soybeans averaged $11.90 per bushel, down 30 reality is, I wouldn’t rule out $20.” cents from September, after dropping $1.50 from “We’re not out of the woods yet,” he said, “but I don’t August, but is $2.27 per bushel above October 2020. think milk production is going to turn on a dime Alfalfa hay averaged $213 per ton, up $4 from here. After talking with dairy producers all day long, September, after gaining $3 from August, and is a every day, I don’t see the capital investment being put back into dairy farming today and I don’t see whopping $44 per ton above a year ago. Looking at the cow side of the ledger, the October demand slowing down a tremendous amount.” n cull price for beef and dairy combined averaged $70.60 per cwt., down $2.30 from September, $10.60 Looking globally, we got a peek at New Zealand’s above October 2020, but $1 below the 2011 base aver- October dairy exports. Whole milk powder was off 1.3 age of $71.60 per cwt. percent from a year ago while skim milk powder was Dairy Margin Coverage payments will be triggered up 12.9 percent. for the 10th month in a row. HighGround Dairy says, “October was not an allIn the week ending Nov. 20, 59,200 dairy cows were time high for the month even as volume shipped to sent to slaughter. This is up 900 from the previous China, the top destination, did hit a record. Strong
MARKETING
powder exports were recorded into the country despite rumors of high inventories.” HighGround Dairy says the strongest increase by volume into the rest of the world was on cheese, at 69.6 million pounds, up 20.1 percent from a year ago, strongest for the month in five years. China’s market share reached 26 percent as it remained the numberone destination; but gains over prior year were strongest to Japan. Year-to-date, cheese exports were up17.1 percent. Butter totaled 41.8 million pounds, down 17.7 percent, though year-to-date is up 2.1 percent. n In politics, Senators Kirsten Gillibrand (D-N.Y.), Patrick Leahy (D-Vt.), and Susan Collins (R-Maine) introduced legislation this week which calls on the Agriculture Secretary to begin a national hearing process on Federal Milk Market Orders within six months of its passage. The hearings will consider the Class I mover, but may also address other issues as well. A task force from six Midwest dairy groups gave the measure a thumbs up and stated, “The Dairy Pricing Opportunity Act leaves the door open to considering various proposals, such as the Class III Plus proposal put forth early this year, and the ability to address other areas of the system that are just as urgent, such as increasing price transparency.” The task force also supports creation of an academic dairy pricing study that would aid in the discussion and called on lawmakers to “support this research effort to help inform whatever emerges from the hearing process. We look forward to working with the Senate and USDA to find a lasting solution for our dairy farmers.” The National Milk Producers Federation says the legislation “adds bipartisan momentum to a range of critical milk pricing discussions that dairy farmers are having through NMPF’s Economic Policy Committee. NMPF is continuing to work with USDA and Congress on how best to remedy deficiencies in the Class I mover formula and fully recoup $750 million in unintended losses felt by farmers of all sizes.” The International Dairy Foods Association recognized six individuals this week at the annual Celebration of Dairy, “whose work in federal legislation and food and agricultural policy has helped to advance the economic impact of the U.S. dairy industry.” IDFA President and CEO Michael Dykes, recognized Senator Roy Blunt of Missouri, House Agriculture Committee Chairman Rep. David Scott of Georgia, Rep. Sanford Bishop of Georgia, Rep. Mike Simpson of Idaho, and Jason Hafemeister and Bruce Summers of the USDA with the IDFA Leadership Award. 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
