Mielke Market Weekly

This column was written for the marketing week ending Dec. 17.

The U.S. Department of Agriculture gave us the latest on U.S. dairy product demand. Starting with cheese, October disappearance totaled 1.18 billion pounds, up just 0.7 percent from October 2020, with strong exports overcoming weaker domestic disappearance, MIELKE MARKET buying appeared earlier than normal. He according to the Analyst. European 82 percent-fat according to HighGround Dairy’s Lucas WEEKLY says that’s not overly concerning because butter traded above $3.00 per pound the week of Fuess in the Dec. 20 “Dairy Radio Now” broadcast. It was the weakest October By Lee Mielke butter output is weaker and inventories are declining at a pretty quick pace. Dec. 6, and cheddar cheese traded between $2.20 and $2.30 per pound. domestic disappearance since 2017, according to HighGround Dairy. American-style cheese disappearance, at 458.8 million pounds, was down 4.1 percent from a year ago and down for the second consecutive month. Fuess warned that, if the domestic disappearance decline persists, we could prices drop after holiday demand subsides. n Meanwhile, the big topic of the recent American Dairy Products Institute’s Dairy Ingredients Seminar in Santa Barbara, Calif. was inflation, according to the Dec. 3 Dairy and Food Market Analyst. Editor and analyst Matt Gould wrote that attendance was high and so were spirits, as most attendees were bullish. European milk production is crashing, the Analyst reported, and the latest period saw output down 3.7 percent in the big-three milk producing regions of Germany, France, and the United Kingdom. Things aren’t much better ‘down-under.’ Dairy Market News reports that Australian milk output through October, the fourth month of the season, continued to be disappointingly low. “October is the Butter disappearance totaled 209.8 million pounds, down 1.3 percent in total and down 3.6 percent domestically, first year over year decline since June following impressive gains in third quarter. Exports were up 91.4 percent but only totaled 9.8 million pounds. However, “Virtually everyone is experiencing significant cost pressure and, looking into 2022, will raise prices and overages on their customers,” wrote Gould. “The million-dollar question: How much of a cost increase can we pass on? Answers that we heard ranged from 5 percent to 15 percent.” usual high point of seasonal milk production. While there are more seasonal months to follow than have occurred so far, production will be trending lower, so making up for the past will be a challenge in the future.” Season to date, the Daily Dairy Report says Fuess speculated that holiday butter demand may have been front loaded in August and September as Dairy product prices are soaring in Europe, See MIELKE, pg. 14

News and information for Minnesota and Northern Iowa dairy producers

MIELKE, from pg. 13

Australian milk production is down 2.9 percent compared to July through October 2020.

“New Zealand milk production through October is also termed disappointing,” says Dairy Market News. “While hopes are for a recovery, the typical trend of lower production month after month through the rest of the season will require a decent rebound to overcome the deficit so far. Early observations of the November results are said to suggest that when official results are released, November will offer little help.”

The New Zealand dairy herd declined for the third consecutive year during the 2020-21 season, according to the Analyst, after finishing last season at 4.9 million head, 1.8 percent lower than the count in 2018 and 0.4 percent smaller than a year earlier. The number of acres in dairy production shrank to a total of 4.2 million, which was an eightyear low and down 1 percent from a year earlier. n

Back on the home front, Chicago Mercantile Exchange dairy prices were mixed the week before Christmas. The markets didn’t have a lot to feed on as regularly monitored USDA reports were few. However, traders were anticipating Monday’s November Milk Production report. The last Global Dairy Trade of 2021 is Dec. 21 and the November Cold Storage report is released Dec. 22.

The cheddar blocks appeared to make an attempt at $2 per pound and got to $1.9475 per pound on Dec. 15 (the highest since Jan. 12) but closed Dec. 17 at $1.8875. This is 2.25 cents higher on the week and 27 cents above a year ago.

The barrels didn’t fare so well, closing at $1.63, down 5 cents on the week, ending four consecutive weeks of gain, 15.5 cents above a year ago, and 25.75 cents below the blocks. CME sales included nine cars of block and 38 of barrel.

Retail cheese orders are very busy, according to several Midwest cheesemakers. Curd and barrel producers, particularly, told Dairy Market News that demand is strong, supplies are limited, and do not foresee a change in upcoming weeks. Spot milk pricing mirrored the previous week, at Class III to

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Select int’l games excluded. NFL SUNDAY TICKET subscription required. • Watch your favorite live sports, news and entertainment anywhere * slightly over. That said, some plants are already getting offered milk for the upcoming holiday weeks at slight discounts. Cheese market tones remain on similar ground to the past few weeks. It’s not a necessarily bearish sentiment, says Dairy Market News, but the block-over-barrel price gap “keeps the bulls corralled.”

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Butter, after jumping 12 cents the previous week, suffered a melt-down on Dec. 13, dropping 6.25 cents; but rallied to close Dec. 17 at $2.0925 per pound, down 3 cents on the week but 63.75 cents above a year ago, on 42 sales on the week.

Bulk butter remains notably tight in the Midwest, according to Dairy Market News, and producers say customer interest is very active. Cream is available, at least from Western suppliers, however freight costs and general limitations are tribulations for plant management. Cream, regionally, was not as available as the previous week but demand is expected to trend lower Christmas Week and the final week of 2021. Butter market tones continued to shift bullishly on tight quantities and demand health.

Cream is available in the west and some contacts report sending loads to other regions. Demand is seasonally strong, though some contacts believe demand will decline in the coming weeks. Demand for butter is steady across retail and food service markets. International demand is strong though some contacts say export sales are being limited by increased delivery times due to port congestion. Spot butter inventories are limited and unsalted butter is especially tight, and that is what is exported. A shortage of truck drivers continues to cause delays to deliveries of cream and production supplies and labor shortages have caused some butter producers to reduce output, according to Dairy Market News.

Grade A nonfat dry milk saw daily gains and finished Dec. 17 at $1.6775 per pound, up 5.25 cents on the week, highest since July 18, 2014, and 52.75 cents above a year ago. There were eight carloads that found new homes on the week. In case you’re wondering, the CME record was $2.16 per pound on Dec. 5, 2007.

CME dry whey held at its record high 71.25 cents per pound for five consecutive sessions, but jumped 1.75 cents Dec. 17 on a sale to set a new record 73 cents per pound, 27.5 cents above a year ago. n

The USDA’s latest Livestock, Dairy, and Poultry Outlook, issued Dec. 15, mirrored milk price and production projections in the Dec. 9 World Agricultural Supply and Demand Estimates report.

The Outlook reported that the number of U.S. milk cows has continued to decline each month since June 2021. Year-over-year growth in milk supply was low in August and September and fell below the previous year in October.

The number of dairy cows is expected to continue declining in first and second quarter 2022, according to the Outlook. Accordingly, the annual 2022 forecast was lowered to 9.385 million head, 10,000 head below the last month’s forecast and 65,000 less than the forecast for 2021. The 2022 forecast for milk per cow is 24,265 pounds, 15 pounds lower than last month’s forecast. The projection for 2022 milk production was lowered to 227.7 billion pounds, 0.4 billion pounds below last month’s forecast but 1.5 billion pounds above 2021.

From the week ending June 12, 2021, to the week ending on November 6, federally inspected dairy cow slaughter has been above the corresponding weeks in 2020. In most recent weeks, federally inspected milk cow slaughter has been below corresponding weeks in 2019.

In the week ending Dec. 4, 63,800 dairy cows were sent to slaughter, up 15,600 from the previous week, but 2,100 head or 3.2 percent below a year ago.

Cull prices continue to be strong, says StoneX, but slaughter levels are slowing, perhaps “indicating that farmers aren’t taking advantage of the opportunity, which could indicate that the dairy herd contraction is beginning to slow.”

“Bull or bear, producers should not overlook good price levels especially as it related to insurance,” StoneX warns. “Whether you believe in $25 milk or not, insurance in 2022 has likely never been cheaper. Producers should be looking at Dairy Revenue Protection and Livestock Gross Margin dairy insurance.”

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In politics, The National Milk Producers Federation thanked Wisconsin Senator Tammy Baldwin for her “continued advocacy for accurate labeling and public health” in her questions for Dr. Robert Califf during this week’s hearing on his nomination to be commissioner of the U.S. Food and Drug Administration.

“Labeling integrity needs to be a top-of-mind issue for Dr. Califf as he moves toward his second stint as FDA commissioner. The ground has shifted since his previous tenure in the Obama administration, both as dairy imitators proliferate and the abuse of lax labeling enforcement creates nutritional confusion for consumers,” said NMPF president Jim Mulhern. Califf said he would make the issue a priority should he be confirmed.

They urged the Administration to “call out profiteering by foreign-owned carriers at the expense of dairy exporters and take steps to address the supply chain crisis that’s cost the dairy industry $1.3 billion the first three quarters of 2021.”

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