In your October 25, 2019 issue . . .NOVEMBER CLASS III FUTURES PUSHED to new market highs and reached $18.78 per hundredweight during mid-October trading on the CME. December contracts netted $17.90. For the first six months of the new year, Class III averaged a more modest $16.90 per cwt.
CHEESE PRICES STARTED THE YEAR AT $1.40 and have steadily marched to $2 per pound, providing the major lift to farm gate milk prices, explained the University of Missouri’s Scott Brown.
SEPTEMBER 2019 WAS THE FIRST TIME cheese prices averaged more than $2 per pound for the entire month since October 2014.
THERE APPEARS TO BE LITTLE DEMAND SLOWDOWN at these higher prices, suggested Brown. However, pushing well beyond these current price levels may prove to be somewhat difficult, he suggested.
SOME SPECULATORS BELIEVE THERE IS MORE UPSIDE to cheese prices in the fourth quarter of 2019, and they’re putting their money where their mouth is, countered INTL FCStone’s Dave Kurzawski.
CHEESE CONSUMPTION SET A NEW RECORD in 2018 at 38.15 pounds per person, paced by Mozzarella at 12.15 pounds and Cheddar at 11.2 pounds. Per capita cheese consumption has grown by more than 10 pounds since 1998 and by almost 5 pounds since 2011.
EUROPE HAS AMERICA BEAT when it comes to cheese consumption with Denmark leading the pack at 63.6 pounds per person, reported the International Dairy Federation. Citizens in these additional countries also eat over 1 pound each week — Cyprus, Estonia, Finland, France, Germany, Iceland, Luxembourg, and the Netherlands.
DOMESTIC DAIRY DEMAND should remain strong as the U.S. jobless rate hit a 50-year low in September. As this took place, however, the global economy continued to show signs of weakness and could slow sales.
EUROPEAN CHEESE COULD FACE TARIFFS from the U.S. following a trade spat over perceived financial aid to Airbus. As a result, about 55 percent of European imports to the U.S. could face 25 percent tariffs.
ITALIAN AND IRISH DAIRY PRODUCTS could be the most vulnerable, suggested Mary Ledman, Rabobank’s global dairy strategist. About 60 percent of Italian cheese could be subject to U.S. tariffs. As for Ireland, 20 percent of cheese and 80 percent of butter could face higher costs.
OVER 22,000 DAIRY FARMERS, representing 60 percent of all U.S. dairy farms holding permits to sell milk, signed up for the Dairy Margin Coverage program. The program will pay out over $300 million this year.
ENROLLMENT IS UNDERWAY for 2020 coverage under the Dairy Margin Coverage program. Sign up at local FSA offices through December 13.
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