Dairy Market: More aid from Uncle Sam

President Trump announced an additional $1 billion in food aid on Monday as part of government efforts to lessen the hardships caused by the COVID outbreak.


He also praised the success of the Farmers to Families Food Box program. In April, when the program was announced, $3 billion was allotted to food purchases. Monday’s announcement pushed total program funding to $4 billion.


HighGround Dairy says, “The impact on dairy markets leans bullish, but the timing of the additional funding will be a critical factor in the overall impact. A previously announced round three of the food box program begins in September, meaning this additional funding is not likely to be spent for several more months in a future round.


"The food box program was, in part, responsible for stimulating cheese demand this summer and pushing the block cheese price to a new record high,” says HGD. “Future rounds of the program are unlikely to have as significant of an impact on prices, but will instead provide underlying support to cheese markets for the next several months.”


July milk up 1.5%

U.S. milk production continued its rebound from May’s very short-lived dip as producers chased higher milk prices. Preliminary data showed July output at 18.65 billion pounds, up a bearish 1.5% from July 2019. Output in the top 24 producing states hit 17.8 billion pounds, also up 1.5%.


Revisions raised the original June 50-state total by 59 million pounds, now put at 18.37 billion pounds, up 0.8% from June 2019, instead of the originally reported 0.5% increase.


July cow numbers totaled 9.35 million head in the 50 states, up 2,000 from June and 37,000 above a year ago. Output per cow averaged 1,994 pounds, up 21 pounds from a year ago or 1.1%.


California’s July output was up 0.5% from a year ago, thanks to a 15-pound gain per cow offsetting 4,000 fewer cows milked. Revisions added 34 million pounds to the Golden State’s June total, up 2.1% from June 1019, instead of the originally reported 1.0% increase.


Wisconsin was up 0.6%, on a 30-pound gain per cow, but cow numbers were down 11,000. Revisions added 12 million pounds to the Badger State’s June total, down 0.9% from June 2019, instead of the originally reported 1.4% decline.


Idaho was up 2.3% in July, on 14,000 more cows. Output per cow was unchanged from a year ago. Michigan was up 2.7%, on a 45-pound gain per cow and 3,000 more cows.


Minnesota was up 1.5%, thanks to a 50 pound gain per cow offsetting 5,000 fewer cows. New Mexico was down 5.3%, on a 115-pound drop per cow while cow numbers were unchanged.


New York was up 1.8%, thanks to a 40-pound gain per cow, but had 1,000 fewer cows.

Oregon was down 1.8%, due to a 15-pound drop per cow and 1,000 fewer cows.


Pennsylvania was up 4%, thanks to an 80 pound gain per cow, though cow numbers were down 3,000 head from a year ago.


South Dakota took honors for the biggest increase, up 11.5%, thanks to 13,000 more cows and 20 pounds more per cow.


Texas was up 4.4% on 25,000 more cows, though output per cow was unchanged.

Washington state was down 1.5%, on a 15-pound drop per cow and 2,000 fewer cows milked.


Culling lags 2019

Dairy cow culling crept higher in July, according to the latest Livestock Slaughter report, but trails a year ago. An estimated 233,700 head were sent to slaughter under federal inspection, up 6,700 head or almost 3% from June but 23,100 or almost 9% below July 2019.


A total of 1.83 million head have been culled in the first seven months of 2020, down 68,300 head or 3.6% from 2019.


In the week ending Aug. 8, 53,000 dairy cows were sent to slaughter, up 1,100 from the week before, but 4,800 head or 9.1% below that week a year ago.


Cheese stocks down

U.S. cheese stocks fell in July from June, while the nation’s butter supply grew. The Agriculture Department’s latest Cold Storage report pegged the July 31 butter inventory at 372.8 million pounds, up 10.3 million pounds or 2.9% from June and 43.2 million or a hefty 13.1% above July 2019. It's the 13th consecutive month they were above a year ago.


American type cheese totaled 785.3 million pounds, down 7.7 million pounds or 1% from June, but 12.1 million or 1.6% above a year ago.


The “other” cheese category slipped to 586.8 million pounds, down 12.1 million pounds or 2.0% from June, but was 26.7 million or 4.8% above a year ago.


The total cheese inventory slipped to 1.393 billion pounds, down 23.3 million pounds or 1.6% from June, but 32.1 million pounds or 2.4% above July 2019, the fourth consecutive month that total cheese stocks topped prior year levels.


Cheese price searching

CME cash cheese weakened in the third week of August. The Cheddar blocks saw a Friday finish at $1.65 per pound, down 17 cents on the week and 23 cents below a year ago.


The barrels fell to $1.3175 last Wednesday but closed Friday at $1.33, also down 17 cents on the week, 33.5 cents below a year ago, and 32 cents below the blocks; 9 cars of block were traded last week at the CME and 28 of barrel.


The blocks jumped 8 cents Monday, on 4 unfilled bids, and added a dime Tuesday on 3 bids, as traders weighed the Cold Storage data, and hit $1.83, highest since Aug. 4.


The barrels were up 3 cents Monday and gained 4.5 cents Tuesday, climbing to $1.4050, expanding the spread to 42.5 cents.


Cheese consumption will be impacted by whatever the NFL decides. Lots of cheese gets into consumer mouths via pizza and nachos while watching the game. That and the huge number of students not returning to classrooms are illustrative of COVID’s continuing after effects plaguing the dairy industry. FC Stone predicts dairy prices could be 5-10% lower because of the school situation.


Cheese producers continue to report fairly active production in the Midwest, according to Dairy Market News. Spot milk availability and prices vary. The farther east in the region, the higher the price, but upper Midwestern managers reported healthy discounts. Cheese demand reports are mostly steady. Food service demand is lackluster, as schools and restaurants face continuing COVID-19 related hurdles but retail demand remains steadfast.


Cheese market tones remain unsettled after a notably bearish first half of August. A current concern is the CME block to barrel price spread.


The western cheese market is plagued with a lot of uncertainties, according to DMN. Prices are dropping but several market participants have not changed their buying schedules as they hope for more declines. Cheese sales remain active for retail but not so much for the food service industry. With the combination of declining prices and the devaluation of the U.S. dollar compared to the euro, the U.S. cheese market has a competitive advantage in the international market so some believe there is a possibility of increased export demand.

Butter shot up to $1.54 per pound last Monday but ended Friday at $1.5150, up 3 cents on the week and 71.25 cents below a year ago, with a whopping 79 cars sold.


Monday’s butter was unchanged but it inched up a half-cent Tuesday, to $1.52.


Bulk butter is more available, says DMN, but butter makers report that cream is less available both locally and from Western sources. Food service butter demand has been stunted as restaurants and school districts face COVID setbacks. Retail demand has eased the lack of demand elsewhere but grocers are also easing back week to week. With fourth quarter around the corner, butter makers expect a strong fall demand season, particularly in the retail sector.


Western butter production is steady and cream is available but demand remains mixed.


Retail print butter orders, while lighter than a few months ago, are still above year over year averages. Manufacturers suggest a slowdown during the dog days of August is typical. Buyer interest should regain momentum once summer vacations subside, families settle into school year routines, and the industry begins to plan for the fall baking season.


The Grade A nonfat dry milk climbed to $1.0150 per pound last Wednesday but closed Friday at 99.75 cents, up 3.25 cents on the week and 4 cents below a year ago, on 16 sales.

The powder eased back a quarter-cent Monday but jumped 1.75 cents Tuesday, to $1.0125.


Dry whey crept up to 34.25 cents per pound last Monday but closed Friday at 33.50, up a penny on the week but 6 cents below a year ago, with 11 sales reported.


CME whey was down a half-cent, both Monday and Tuesday, sliding to 32.50 cents per pound.





From: Capital Press

Featured Posts
Recent Posts
Archive
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
How can we help?
0

KeyAg Distributors, 4525E, 3425N, Murtaugh, ID 83344          800-388-3659

Disclaimer/Privacy Policy  © 2016-2020 Pacer Technology

  • Facebook Clean
  • LinkedIn Clean
  • Twitter Social Icon
  • Instagram Social Icon