More money on the way for dairy farmers
More money is on the way. President Trump, speaking in Wisconsin last Thursday, announced an additional $14 billion for “agricultural producers facing market disruptions and associated costs because of COVID-19.”
The package includes up to $1 billion for the Farmers to Families Food Box program, which has benefited the dairy industry and likely propelled Friday’s block cheese skyward (details ahead). The aid will likely keep cheese prices strong and in turn milk prices, but will no doubt result in an oversupplied milk market.
Dairy farmers can sign up for direct payments through their local Farm Service Agency office but sign-ups end Dec. 11.
Milk produced in April through August will be eligible to receive $1.20 per hundredweight. Expected milk production for September through December is also eligible. Contact your local FSA office for complete details.
August milk up 1.8%
Strong prices have incentivized U.S. dairy farmers to fill their bulk tanks. Preliminary data in the August Milk Production report showed output at 18.6 billion pounds, up a bearish 1.8% from August 2019.
Output in the top 24 producing states totaled 17.8 billion pounds, up 1.9% from 2019. Revisions added 90 million pounds to the original July 50-state total, now put at 18.735 billion, up 2.0% from July 2019, instead of the originally reported 1.5% increase.
August cow numbers totaled 9.36 million head in the 50 states, unchanged from July but 42,000 above a year ago. The July herd was revised up 8,000 head. Output per cow averaged 1,987 pounds, up 27 pounds from a year ago or 1.4%.
High temperatures, wildfires, and smoke didn’t appear to affect California’s August output, which was up 1.8% from a year ago, thanks to a 40-pound gain per cow offsetting 4,000 fewer cows milked. Revisions added 60 million pounds to the July total, up 2.3% from July 2019, instead of the originally reported 0.5% increase.
Wisconsin was off 0.3%, on 10,000 fewer cows, although output per cow was up 10 pounds. Revisions subtracted 13 million pounds from the Badger State’s July output, still 0.1% above July 2019, instead of the originally reported 0.6% gain.
Idaho was up 3.4% in August, on 17,000 more cows and 15 pounds more per cow. Revisions added 23 million pounds to Idaho’s July output, resulting in a 3.9% increase from July 2019, instead of the originally reported 2.3%.
Michigan was up 1.6%, on a 30-pound gain per cow and 1,000 more cows. Minnesota was up 2.2%, thanks to a 65-pound gain per cow offsetting 5,000 fewer cows. New Mexico was down 1.5%, on a 30-pound drop per cow but cow numbers were unchanged.
New York was up 0.6%, thanks to a 15-pound gain per cow but had 1,000 fewer cows.
Oregon was down 0.9% on 1,000 fewer cows but output per cow was unchanged.
Pennsylvania was up 1.4%, thanks to a 35-pound gain per cow. Cow numbers were down 3,000 from a year ago.
South Dakota again showed the biggest increase, up 10.8%, thanks to 13,000 more cows milked and 10 pounds more per cow. Texas was next, up 7.1%, on 23,000 more cows and a 60-pound gain per cow.
Washington state was unchanged. Output per cow was up 5 pounds but cow numbers were down 1,000.
Record cheese spread
CME block Cheddar gained a nickel last Monday, then added 11.25 cents on Wednesday, 7.25 cents on Thursday, and pole vaulted 22.75 cents on Friday on a single trade. They closed at $2.6275 per pound, up 46.25 cents on the week and 57.75 cents above a year ago and had gained 97.75 cents in four weeks.
They added 2 cents Monday on an unfilled bid, hitting $2.6475, highest CME price since July 21, but reversed direction Tuesday, dropping 4.75 cents on 2 trades, to $2.60, as traders awaited August Cold Storage data Tuesday afternoon.
The barrels finished Friday at $1.6350, up 4 cents on the week but 2 cents below a year ago. They set a new record spread last Monday and Wednesday, then expanded it on Friday to 99.25 cents below the blocks. Nine cars of block sold last week at the CME and 11 of barrel.
The barrels were unchanged Monday and Tuesday, holding at $1.6350; however, the spread widened to an unbelievable $1.0125 on Monday though it slipped back to 96.50 cents on Tuesday.
Dairy Market News reports that “after weeks and even months of cheese plants running very active schedules, some are drawing down production for various reasons.”
Some are scheduling days off for maintenance, others are simply cutting back to meet lighter, albeit still healthy, demand.
Specialty cheesemakers are preparing for fall demand. Some barrel producers suggest they have loads in inventory they could move, but inventory levels are not a current concern.
Cheese is in abundance in the West, according to DMN; however, supplies are “manageable.” Barrels are more prevalent, thus block prices are higher. Retail sales are steady but foodservice demand only increased slightly. Contacts say takeout orders remain strong, particularly for pizza.
Butter closed Friday at $1.5975 per pound, 11.75 cents higher on the week, but 51.75 cents below a year ago. There were 69 sales reported last week — a whopping 46 on Tuesday alone — beating the previous single-day record of 59 on Nov. 3, 2004, but that was when butter only traded three times per week.
Monday’s butter was up 1.50 cents, with 4 bids going unfilled, then gained 0.75 cents Tuesday, hitting $1.62, highest since July 28, 2020.
DMN reports that retail butter orders are starting to bounce back, according to regional butter makers. Fall demand increases have begun, even as retail orders have remained above previous years' figures for most weeks since the onset of COVID-19.
Foodservice has edged up week to week, as well, but still remains light compared to previous years. Market tones remain somewhat steady but current prices are well below previous years and enticing heavier buying for fall.
Western butter makers appear to be positioning for typical end-of-year demand. Butter output is steady to higher as manufacturers produce for the fall baking season and more cream is available due to the slowdown of ice cream output. DMN adds; “In a year marked by the coronavirus pandemic, social unrest, and now, severe wildfires, typical is not a normal word choice.”
A few Western butter facilities prepared for evacuation but didn’t need to however smoke and ash from the fires kept patrons away from outdoor eating at restaurants, further quelling that market outlet.
Retail butter sales saw a slight slump last week due to people staying home to avoid the poor air quality.
Air quality was expected to improve with late week rain and cooler temperatures.
However, DMN says, “Some rural towns are destroyed and thousands of residents displaced. Disruptions and challenges may be the new normal until conditions improve within the region.”
Spot Grade A nonfat dry milk climbed to a Friday close of $1.07, up 3 cents on the week but 1.25 cents below a year ago, on 21 sales reported for the week.
The powder gained a penny Monday, hitting $1.08 per pound, highest since March 9, 2020, but gave back 0.75 cents Tuesday, slipping to $1.0725.
Dry whey finished Friday at 35.50 cents per pound, unchanged on the week but 4.25 cents below a year ago, with 5 sales reported at the CME.
Traders took the whey up 0.75 cents both Monday and Tuesday and hit 37 cents per pound, highest since May 18, 2020.