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Mielke Market Weekly
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This column was written for the marketing week ending May 6.
The U.S. Department of Agriculture announced the April Federal order Class III milk price at $24.42 per hundredweight. This is up $1.97 from March, $6.75 above April 2021, highest Class III since July 2020, and 18 cents shy of the record high. Late morning on May 6 Class III futures portended a May price at $25.05 (which would be a new record high), June at $24.47; and July at $24.19 per cwt. and $15.69 in 2019. n You’ll recall March milk production was down 0.5 percent from March 2021 but the month’s Dairy Products report shows cheese vats and churns still got a workout. MIELKE MARKET WEEKLY By Lee Mielke Wisconsin produced 296.6 million pounds of the March total, up 9.6 percent from February but 3 percent below a year ago. California provided 213 million pounds, up 5 percent from February and 1 percent above a year ago. Idaho added 89.3 million pounds, up 22.2 percent from February but down 1 percent from a year ago. The four-month Class III average stands at $22.04, up from $16.40 at this time a year ago, and compares to $15.84 in 2020 and $14.71 in 2019. Cheese production totaled 1.197 billion pounds, up 8.3 percent from February and 1.1 percent above March 2021. Cheese stocks were down 1 percent Italian cheese totaled 512.8 million pounds, up 10 percent from February and 2.1 percent above a year ago. Year-to-date, Italian stands at 1.5 billion
The April Class IV price set another new record at from a year ago. Cheese output for the first three pounds, up 3.8 percent from 2021. $25.31 per cwt., up 49 cents from March, and $9.89 above a year ago. Its four-month average is at months of 2022 totaled 3.5 billion pounds, up 3 percent from the same period a year ago, so we’re going American-type cheese, at 473.6 million pounds, $24.31, up from $14.14 a year ago, $14.78 in 2020, through a lot of cheese. See MIELKE, pg. 14
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MIELKE, from pg. 13
was up 7 percent from February but 1.4 percent below a year ago. Year-to-date output, at 1.4 billion pounds is up 0.1 percent. Mozzarella totaled 406.4 million pounds, up 3.5 percent from a year ago, with year-to-date at 1.2 billion pounds, is up 4.2 percent.
Cheddar output, the cheese traded at the Chicago Mercantile Exchange, jumped to 327.1 million pounds, up 19 million pounds or 6.2 percent from February’s output which was revised down 4.2 million pounds, but was down 9.7 million pounds or 2.9 percent below March 2021.
U.S. churns produced 202.6 million pounds of butter, up 19.1 million or 10.4 percent from February, and 3 million or 1.5 percent above a year ago. That ended eight consecutive months output topped the previous year. But, year-to-date butter is at 580.1 million pounds, down 5 percent from a year ago. Butter stocks were down 20 percent from March 2021, according to USDA’s Cold Storage data.
March yogurt output totaled 434.7 million pounds, down 2 percent from a year ago, with year-to-date output at 1.2 billion pounds, down 2.5 percent.
Dry whey production climbed to 82 million pounds, up 11.7 million pounds or 16.6 percent from February’s total which was revised 4.7 million pounds lower, and was 5.1 million pounds or 6.6 percent above a year ago. Year-to-date is at 232.7 million pounds, down 1.3 percent. Dry whey stocks crept up to 68.1 million pounds, up 5.1 million or 8.1 percent from February, and 4.5 million or 7.1 percent above those a year ago.
Nonfat dry milk output climbed to 190.5 million pounds, up 19.7 million pounds or 11.5 percent from February but was down 7.8 million or 3.9 percent below a year ago. Year-to-date, powder was at 531.6 million pounds, down 10 percent. Stocks totaled 288.0 million pounds, down 400,000 pounds or 0.2 percent from February and down 25 million pounds or 8 percent below those a year ago.
Skim milk powder output climbed to 33 million pounds, up 3.4 million or 11.4 percent from February, but was down 19.6 million or 37.2 percent below a year ago. Year-to-date, skim milk powder was at 106.0 million pounds, down 26.7 percent from a year ago. March was the ninth consecutive month of weaker powder production, says HighGround Dairy.
n
Fat provided the biggest pull on May 3’s Global Dairy Trade auction, which saw its fourth consecutive decline. The weighted average plunged 8.5 percent (the biggest drop since Aug. 4, 2015) and follows the 3.6 percent drop on April 19. Traders brought 55.5 million pounds to the market, up from 48.9 million on April 19.
HighGround Dairy’s Lucas Fuess, in the May 9 “Dairy Radio Now” broadcast, said Fonterra increased its offer volumes on May 3 as it attempted to clear inventories before the start of the next new milk production season.
All products offered again lost ground, led by butter, down 12.5 percent, following a 3.7 percent dip on April 19. Anhydrous milkfat dropped 12.1 percent after slipping 1.3 percent. GDT cheddar was down 8.6 percent, following a 3.9 percent loss, and the powders followed. Whole milk powder and skim milk powder were both down 6.5 percent, following respective 4.4 percent and 4.2 percent drops last time. Buttermilk powder was down 6.1 percent.
StoneX says the GDT 80 percent butterfat butter price equates to $2.5698 per pound U.S., down 36.9 cents, after dropping 11 cents in the last event, and compares to CME butter which closed May 6 at $2.64, 7 cents above the GDT. GDT cheddar, at $2.5635, was down 24.2 cents after losing 13 cents last time, and compares to May 6’s CME block cheddar at $2.35. GDT skim milk powder averaged $1.8731 per pound, down from $1.9995, a drop of 12.6 cents. Whole milk powder averaged $1.7764 per pound, down from $1.9083, a loss of 13.2 cents. CME Grade A nonfat dry milk closed May 6 at $1.74 per pound.
n
Nate Donnay, StoneX Director of Market Intelligence, warn in last week’s “Udder Intelligence” report that China’s imports in March were much lower than forecast, down 28.6 percent from 2021. “When the largest buyer in the world is down 20-30 percent, we have a significant global demand problem,” Donnay writes.
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Thankfully, this week’s GDT saw a bit of an uptick from China, according to StoneX. “The slowdown came from the Middle East. We don’t know if that was related to Ramadan or if there is something else driving the weaker demand.”
The global market is vital for U.S. farmers and processors and March provided confirmation. Cheese exports totaled a record 91.9 million pounds, up 12.9 percent from March 2021. HighGround Dairy points out volume was driven by product moving to Mexico, up 26 percent and the secondlargest monthly figure on record.
Butter exports totaled 13.5 million pounds, up 47.4 percent (the highest since April 2014) thanks to Canada which imported a record amount for the month, up 26 percent.
Nonfat dry milk shipments totaled 176.7 million pounds, down 7.4 percent, but was measured against a strong year in 2021. Exports were the highest of any month since June 2021, according to HighGround Dairy, but a 98 percent decline in product moving to Egypt, negatively impacted the total. Powder moving to Mexico improved from the prior year and recent months, reaching the highest monthly volume since August 2021, up 9 percent, according to HighGround Dairy.
Dry whey totaled 43.3 million pounds, down 17.9 percent and down 23.2 percent year-to-date. n
Even as the United States experiences a baby formula shortage, CME dairy prices saw little reaction to May 3’s GDT fall or the Dairy Products report — buoyed perhaps by the strong export data. The cheddar blocks closed May 6 at $2.35 per pound, down 2 cents on the week but 60.25 cents above a year ago.
The barrels saw a May 6 finish at $2.38, up 4 cents on the week, 65.25 cents above a year ago, and 3 cents above the blocks, as America puts cheeseburgers on the grill again. There were seven sales of block on the week and 18 of barrel.
Cheese producers continue to report logistical issues to Dairy Market News, but more on the supply side. Shortfalls included production and packaging equipment but no shortness in milk. Spot prices mid-week were around $2 under Class III. Demand remains robust, according to Midwest cheese plants, and some expect demand to remain healthy through second quarter and beyond.
Domestic cheese demand was steady to lower in the West. Contacts report that purchases have begun to slow as schools approach summer break. Retail demand is steady and food service demand is increasing, according to Dairy Market News. Export demand is strong. Cheese output is steady, as milk is available, but port congestion and a shortage of truck drivers continues to cause delays.
See MIELKE, pg. 15
MIELKE, from pg. 14
CME butter closed May 6 at $2.64 per pound, down 3.5 cents on the week, but 87 cents above a year ago, on 14 sales for the week.
Butter producers report seasonal demand slowdowns are giving them time to build inventory. The churning question among contacts is how tight butter will be by the expected seasonal upshift in demand. Cream volumes are slightly lower, according to Midwestern butter producers, as ice cream production upticks are beginning to, at least slightly, “thin out the cream pool,” says Dairy Market News.
Demand for cream is steady in the West. Ice cream makers are running busy schedules. Some butter makers are processing their cream internally to build inventory. Butter production is steady, though some plants report labor shortages and delayed deliveries of production supplies continues to prevent running full schedules. Butter demand is steady in food service, though declining at retail as higher store prices may have caused some switching to butter substitutes.
Grade A nonfat dry milk saw its close May 6 at $1.74 per pound, 1.5 cents lower, but 41.75 cents above a year ago, with 12 sales reported on the week.
Dry whey continued to head lower, closing the week at 58.5 cents per pound, down 2 cents, and 4.25 cents below a year ago, on seven sales at the CME.
The April 29 Dairy and Food Market Analyst reported “USDA keeps upping its estimate of retail dairy prices. The bureau now predicts the Consumer Price Index for dairy products will increase 6 to 7 percent this year, according to the latest Food Price Outlook report.”
“That increase marked the fourth consecutive month of USDA revising prices higher. In March, the Bureau of Labor Statistics calculated the Dairy CPI had already increased by 7 percent year-overyear. The latest revision suggests that the government now believes prices are going to stay at this elevated level at least for the rest of the year,” the Analyst stated.
n
High farm milk prices are not giving dairy producers much comfort. While the March All Milk Price hit a record high and jumped $1.20, rising feed prices and fuel — particularly diesel — and fertilizer are eating up the milk returns.
The USDA’s latest Ag Prices report shows the March milk feed price ratio at 2.06, down from 2.07 in February, but compares to 1.76 in March 2021.
The U.S. All Milk Price averaged a record high $25.90 per cwt., up $1.20 from February, seventh consecutive increase, and was $8.60 above March 2021. California’s price hit $26.20, up $1.30 from February and $9.50 above a year ago. Wisconsin’s, at $25.30, also up $1.30 from February, was $7.60 above a year ago.
The national average corn price jumped to $6.56 per bushel, up 46 cents from February, after gaining 53 cents in February, and was $1.67 per bushel above March 2021.
Soybeans averaged $15.40 per bushel, up 60 cents from February, after shooting $1.90 higher in February, and $2.20 per bushel above March 2021.
Alfalfa hay averaged $221 per ton, up $7 from February and $44 above a year ago.
The March cull price for beef and dairy combined averaged $84.70 per cwt., up $6.80 from February, $17.60 above March 2021, and $13.10 above the
IDF bulletin on heat treatment of milk
The International Dairy Federation has released a bulletin on heat treatments of milk, which looks at the processing of milk, which is the oldest processing technology in the dairy sector. The publication provides an overview of the different heat treatments applied to milk for direct consumption or before further processing and their verification procedures.
The 33-page publication can also be described as a very accurate global guidance, as it contains information on these treatments — not only in one country but worldwide — as most countries provide legal requirements for heat treatments of products.
Heat treatment is the most widely used processing technology in the dairy sector, which guarantees product safety and longer shelf life, without affecting its nutritional value, quality, and taste. It also serves as a technique to destroy pathogenic bacteria, stressing the importance of food safety. The bulletin also investigates the appropriate types of heat treatment for a specific food.
Furthermore, the shelf life of each product can differ depending on the time and temperature of the heat treatment. Walter Bisig, author of the publication states: “ESL (extended shelf-life) milk is the type of milk most recently introduced to the market. It has a refrigerated shelf-life of 15 to 60 days, depending on raw milk quality, applied ESL technology, type of packaging and packaging system, the extent of post-processing contamination, and the temperature during post-processing, storage, and distribution” The bulletin is available to download at www.idf.org.
Interested parties are invited to take part in a webinar dedicated to the publication, which will be held on June 28. Register for the webinar at https:// us02web.zoom.us/meeting/register/tZElfuGsqzIpEtD96767dcd2YoYfXc5dgmOO.
This article was submitted by the International Dairy Federation. v 2011 base.
Quarterly milk cow replacements averaged $1,570 per head in April, up $190 from January, and $200 above April 2021. Cows averaged $1,440 per head in California, up $110 from January, and $40 above a year ago. Wisconsin’s average, at $1,710, was up $240 from January, and $220 above April 2021.
Dairy economist Bill Brooks, of Missouri-based Stoneheart Consulting, says “The milk margin over feed costs will be above the maximum coverage of $9.50 per cwt. every month in 2022 with a range of $10.70 in December to $12.35 in April.”
Meanwhile, the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC, says “Dairy margins weakened slightly as the milk market has dropped from recent highs while feed costs have held steady. Milk prices have been facing resistance lately as they trade at historically high price levels with concern of potential demand destruction as inflation continues to bite consumers’ purchasing power.”
The Margin Watch highlighted the GDT’s 8.5 percent drop, stating “The lockdowns in China have obviously had a big impact although there has been a generally weaker tone recently in the global dairy market.”
It reported on USDA’s Milk Production report, stating, “The March contraction represented the slowest rate of year-over-year declines so far in 2022,” and warned, “A growing herd and expanding milk yields may be signaling that producers are responding to high milk prices, although input costs likewise have risen sharply and cut into producer margins, particularly in states like California.”
“Diesel costs are up 70 percent from a year ago to an all-time high of $5.29 per gallon,” according to the Margin Watch, “while natural gas prices have nearly doubled since the beginning of the year. Feed prices likewise remain at very elevated levels, and slow corn planting progress has supported prices.”
The USDA’s latest Crop Progress report shows 14 percent of U.S. corn in the ground, as of the week ending May 1, up from 7 percent the previous week, but a concerning 28 percent behind a year ago and 19 percent behind the most recent five-year average.
The report says 3 percent of the corn has emerged, down from 4 percent a year ago and 3 percent behind the five-year average. Soybeans are 8 percent planted, up from 3 percent the previous week, but 14 percent behind a year ago and 5 percent behind the five-year average
In the week ending April 23, 56,400 dairy cows were sent to slaughter, up 1,600 head from the previous week but 2,700 or 4.6 percent below a year ago.
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
