Mielke Market Weekly

This column was written for the market- bargain $1.90. GDT skim milk powder ing week ending Feb. 4. averaged $1.8375 per pound, up from

The U.S. Department of Agriculture $1.7977. Whole milk powder averaged announced the first Class III benchmark $1.9614 per pound, up from $1.8517. milk price of 2022 at $20.38 per hundred- CME Grade A nonfat dry milk closed at weight for January. This is up $2.02 from $1.8325 per pound on Feb. 4. December, $4.34 above January 2021, and Shedding some light on what is going on the highest Class III price since November in the global market, the Daily Dairy 2020. Late morning on Feb. 4, Class III futures portended a February price at $20.45; March, $21.31; April, $21.39; May, $21.30; MIELKE MARKET WEEKLY By Lee Mielke Report’s Monica Ganley wrote in the Jan. 28 Milk Producers Council newsletter, “European (milk) production is trailing prior year levels with some of the greatest MARKETING losses seen in major dairy nations like Germany and France. In the Southern Hemisphere, the New Zealand milk production season continues to disappoint with December output down 5 percent compared to prior year. Argentina is still posting strong and June at $21.22. The January Class IV price is $23.09 per cwt., up $3.21 from December, $9.34 above a year ago, and the highest Class IV price since August 2014.

International dairy prices remain strong. The Feb. production figures, but the volumes are modest and 1 Global Dairy Trade auction saw the weighted logistical challenges are preventing the resulting average jump 4.1 percent following the 4.6 percent dairy products from making a dent in global demand. increase on Jan. 18. The average metric ton price As such, global milk supplies are lacking and are genclimbed to $4,630 U.S., up from $4,463 and the erally expected to support prices at higher than hishighest in eight years. torical levels over the coming months.”

All products offered were again in the black, led December milk equivalent exports out of New by buttermilk powder, up 9.7 percent. It did not Zealand were down 0.1 percent from December trade in the last event. Whole milk powder was up 2020, according to StoneX, and a little weaker than 5.8 percent following a 5.6 percent rise last time, the 0.8 percent increase they were expecting. “It’s and skim milk powder was up 2.1 percent after estimated that stocks have been pulled down 4 to 5 jumping 5 percent. Butter was up 3.3 percent after percent compared to the previous year, but stocks a 5 percent boost, and anhydrous milkfat moved 1.4 weren’t pulled down quite as much as was expected. percent higher after a 0.6 percent advance. GDT Shipments to China being down 14 percent yearcheddar was up 2.4 percent after a 1.1 percent gain over-year is a little concerning, but lines up with the last time. weak official import numbers for China in StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.8140 per pound December. We’ll see if that bounces back for January,” StoneX concludes. U.S. The price is up 8.9 cents after jumping 12.8 n cents on Jan. 18, and compares to Chicago Mercantile Exchange butter which closed Feb. 4 at $2.50. GDT cheddar, at $2.5783, was up 6.3 cents and compares to Feb. 4’s CME block cheddar at a Dairy traders in Chicago pretty much ignored the GDT and CME prices to start February mixed, as a massive winter storm hit the nation’s midsection — covering nearly 2,000 miles with freezing temperatures and heavy snow. Traders were also anticipating the December Dairy Products report issued on the afternoon of Feb. 4.

The cheddar blocks recovered the previous week’s losses and then some — ending three weeks of decline and closing Feb. 4 at $1.90 per pound. This is up 11 cents on the week, highest since Jan. 14, and 26 cents above a year ago.

The barrels finished at $1.895, which is 15.25 cents higher on the week. It is the highest since Jan. 19, 39.5 cents above a year ago, and a half-cent below the blocks. There was one sale of block reported for the week at the CME and seven of barrel.

Midwest cheesemakers continue to tell Dairy Market News that milk availability is generally balanced; but cheese plant downtime, due to logistic and staffing shortages, kept discounts on hand. Prices at report time ranged from Class to $2 under. Supplies are stalled in shipping and plants are thus prone to downtime. Cheese demand remains slower than it was in late fall, at least partially due to market price downward pressure; but markets experienced some bullish correction this week. Inventories have grown, but are not at concerning levels.

Steady demand for cheese remains in western retail markets while food service demand has declined, says Dairy Market News. Many restaurants in the region reportedly remain closed due to Covid concerns and labor shortages. International demand remains strong but exports continue to face delays due to port congestion but alternative transportation is being sought. Delays also continue due to a shortage of truck drivers. Stocks are available and cheese output is steady though some plants are running below capacity due to labor shortages. n

After plunging 39.5 cents the previous week, the butter fell to $2.4525 per pound Feb. 2 (the lowest since Dec. 30) but closed two days later at $2.50,

See MIELKE, pg. 14

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MIELKE, from pg. 13

down 4 cents on the week and $1.2325 above a year ago. Eighteen sales were reported.

Cream is readily available in the Midwest, according to Dairy Market News, and a lot of it is moving to churns. Plant managers suggest sales in retail and food service have slowed; but is giving them opportunity to build spring holiday inventory.

Market tones are undecided despite the bullish Cold Storage report, says Dairy Market News, and double digit leaps and falls in the latter half of January have buyers hesitant.

Western cream demand is unchanged but labor shortages are causing some churns to run below capacity. Strong demand for butter is present in domestic and international markets. Port congestion and a shortage of truck drivers continues to cause delays. Butter output is steady to lower as labor shortages and delayed deliveries are causing reduced schedules, says Dairy Market News.

Grade A nonfat dry milk fell to $1.7975 per pound on Feb. 2, then reversed gears and closed Feb. 4 at $1.8325. This is up 2.75 cents on the week and 71.25 cents above a year ago, with 28 sales reported.

Dry whey kept pushing its record higher, finishing Feb. 4 at 85.75 cents per pound, up 1.75 cents on the week and 32.25 cents above a year ago, on two sales.

StoneX says high protein whey demand has improved as gyms closings aren’t a concern anymore and people look to get back into shape. n

The Jan. 28 Dairy and Food Market Analyst gave some insight on why butter prices crashed the last week of January, stating, “Domestic foodservice sales have taken a hit from the latest surge in (Omicron) cases. According to technology firm Open Table, restaurant traffic fell to a nearly nine-month low during the second week of January, down 30 percent from pre-pandemic levels. Since then, sales have only recovered modestly with the latest weekly data showing restaurant traffic down 23 percent — a level comparable to April 2021.”

Editor and analyst Matt Gould also reported there was much talk at the International Dairy Foods Association’s Dairy Forum about the supply chain shortages affecting manufacturers. “From minor ingredients, to trucking, to packaging, to labor, manufacturers are managing through extreme supply chain challenges,” Gould said.

Port congestion is another continuing issue and prompted U. S. Agriculture Secretary Tom Vilsack to announce a new program to help deal with it. The initiative was addressed at a webinar of agriculture industry and policy leaders hosted by the National Milk Producers Federation and the U.S. Dairy Export Council.

The program was launched in partnership with the Port of Oakland, according to a joint press release, and will “set up a new ‘pop-up’ site at the port dedicated to easing the loading of empty containers with agricultural exports. The new site will also have a dedicated gate with the ability to precool refrigerated shipping containers in order to reduce bottlenecks at the main entrance to the port. The new arrangement should be available beginning in March.”

“Congestion in and around U.S. ports is one of a series of export supply chain challenges undercutting dairy exporters’ ability to reliably meet the needs of overseas customers for high-quality U.S. dairy products,” said USDEC’s Krysta Harden. “This new partnership should help alleviate some of those challenges.”

Meanwhile, legislation was introduced in the Senate this week that would also help. Sponsored by Senators Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), the Ocean Shipping Reform Act (S. 3580) is the Senate response to the House version (HR 4996) passed by a wide bipartisan vote (364 - 60) in December.

The International Dairy Foods Association also gave the legislation a thumbs-up and touted a USDA final rule IDFA says will “maintain low-fat, flavored milk and other needed flexibilities in USDA child nutrition program meal requirements through the 2023-24 school year”

“Today’s announcement clears up several years of confusion and takes a positive step toward restoring more varieties of milk to the school meals program. The final rule allows schools to continue to serve milk that students prefer to drink while remaining consistent with the Dietary Guidelines,” according to the IDFA. “The rule gives clarity to school meals professionals and food makers as they plan ahead amid supply chain challenges, and it will improve students’ access to dairy products, particularly milk and its 13 essential nutrients, and cheese as a nutrient-rich protein alternate.” NMPF also praised the final rule.

n

A higher December All Milk Price offset higher corn, soybean, and hay prices to nudge the December milk feed ratio higher for the fourth month in a row. The USDA’s latest Ag Prices report has the ratio at 1.98, up from 1.94 in November, but well below last year’s 2.17.

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 purchase 1.98 pounds of dairy feed of that blend.

The U.S. All Milk Price averaged $21.80 per cwt., up $1.00 from November and $3.50 above December 2020.

The December national average corn price added another 20 cents, jumping to $5.47 per bushel and is $1.50 per bushel above December 2020.

Soybeans averaged $12.50 per bushel, up another 30 cents from November and $1.90 per bushel above December 2020.

Alfalfa hay averaged $213 per ton, up $3 from November and $47 per ton above a year ago.

Looking at the cow side of the ledger, the December cull price for beef and dairy combined averaged $69.10 per cwt., down a dime from

See MIELKE, pg. 17

USDA introduces market news app

The U.S. Department of Agriculture recently announced a new USDA market news mobile application, providing instant access to current and historical market information. The initial version of the free app includes nearly 800 livestock, poultry, and grain market reports, with additional commodities added throughout the coming year. “USDA is focused on building more resilient and transparent markets and is taking steps to promote competition and fairer prices from farmers to consumers,” said Agriculture Secretary Tom Vilsack. “This new Market News app helps create a more level playing field for small and medium producers by delivering critical market information to them where they are, when they need it.”

Producers and other users can search for markets based on their location, by state, or by commodity. They also can add market reports to their favorites for easier access, share reports via text or email, subscribe to reports, and receive real-time notifications when a new report is published. For additional data analysis, the app lets you share the source data behind the reports via email as well. “One of the best features of the app is its simplicity,” Under Secretary for Marketing and Regulatory Programs Jenny Lester Moffitt said. “The USDA Market News app was designed with small producers in mind. Regardless of whether you market livestock throughout the year or once a year, you can navigate through this easy-to-use tool and access the information you need on your mobile phone. Built-in tutorials help first-time users get the most out of their experience.”

There are both iOS and Android versions available to download through the Apple and Google Play stores. The iOS version is available now and the Android version will be available later this week. Search for “USDA Market News Mobile Application” to download the app.

This article was submitted by the U.S. Department of Agriculture. v