GIVEN STRENGTH IN CLASS III MARKETS, USDA once again raised its 2019 All-Milk price projection. The additional 20 cents yielded an $18.20 midpoint. Since December, USDA lifted its forecast $1.40 from the $16.80 average the agency made at the beginning of the market year.
DAIRY MARKETS COULD BE EVEN STRONGER if not for the boiling trade war with China, the world’s largest dairy product importer. Since China slapped 33 to 45 percent retaliatory tariffs on U.S. dairy products last July, cheese sales to the Asian country have dropped 45 percent, whey slid 49 percent, and skim milk powder plummeted 70 percent.
AFRICAN SWINE FEVER, NOT TARIFFS, may be the larger reason that whey exports dropped in China. Whey components are a major feedstuff for hogs. It’s been estimated that 60 percent of all China’s 400 million-plus hogs have been killed or slaughtered due to the African Swine Fever, according to in-country reports obtained by Hoard’s Dairyman editors.
EVEN AS THIS MARKET BATTLE ENSUES, USDA continued a rather optimistic projection for the forthcoming market year by projecting an $18.85 All-Milk price with $16.65 Class III and $16.75 Class IV prices.
U.S. DAIRY EXPORTS HIT A FOUR-YEAR HIGH on a total dollar basis in May fueled by growing cheese exports and aided by improved global product prices. Export volumes remain off over 2 percent. On a total solids basis, exports were equivalent to 14.7 percent of total U.S. milk production, while imports were less than 3 percent.
AFTER PRICES SLIPPED on the New Zealand’s Global Dairy Trade from late May to early July trading, the blend of six dairy products rose 2.7 percent. Cheese brought $1.75 per pound and butter $2 per pound.
MORE THAN ONE-FOURTH OF ALL U.S. DAIRY FARMS — nearly 10,000 in total — have signed up for the Dairy Margin Coverage program since sign-ups began June 17. Half of the enrolled farms have taken advantage of the five-year, 25 percent premium discount. Enrollment continues through September 20 for retroactive coverage to January 1, 2019.
AMONG WESTERN DAIRY HERDS, New Mexico and Arizona were especially hard hit last year, losing $2.28 to $2.55 per hundredweight.
CROPS CONDITIONS REMAIN STRAINED as corn silking ranged from 8 to 19 percent in the two major corn states — Illinois and Iowa — that account for one-third of all U.S. corn. That compares to the five-year average of 40 to 67 percent. Only 5 percent of the corn crop ranked in the excellent category, according to the July 14 USDA market update.
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