In your July 2020 issue . . .
MILK PRICES RALLIED over the past 60 days, with July-to-December Class III future contracts climbing to a $17.60 average by mid-June. Those same contracts netted $16.20 in mid-May and $15.30 in mid-April.
THE TURNAROUND WAS SO SWIFT that USDA economists lifted their 2020 All-Milk price projection to $16.65 per hundredweight (cwt.). That was a $2.10 improvement from the May-to-June forecast. USDA also raised its 2021 projection by $1.20 to a $16.20 average.
THE UNPRECEDENTED RECOVERY was partially possible because of USDA’s Farmers to Families Food Box Program. USDA spent an estimated $317 million on milk and dairy products through June. Initial projections for that time period were $100 million, but the federal agency implemented the program faster than anticipated.
CLASS III MILK, NOT CLASS I, could be the price leader in June milk checks. “June’s Class III price (driven by cheese price gains) is expected to jump over $7 per cwt., exceeding $19 per cwt.,” stated Cary Hunter, interim market administrator for the California federal marketing order.
“THE CLASS I PRICE (announced the first two weeks of May) will not reflect the price spike that will be captured in the June class and component prices (Class II, III, IV),” continued Hunter. “Class I, therefore, will likely end up as the lowest class price for the month.”
A FALL COVID-19 WAVE COULD SINK dairy’s big sales days. “You’re at the point in the dairy cycle where production is declining and consumption is usually coming up,” said Cornell’s Andy Novakovic. “You’re talking about Thanksgiving, Christmas, and the third most important dairy holiday of the year, which is the Super Bowl,” he said.
“CONSUMER CONFIDENCE IS KEY to where we’re going,” added Cornell’s Steven Kyle, speaking on Hoard’s Dairyman DairyLivestream. “Let’s remember, consumer spending is something close to 70% of gross domestic product (GDP). So, whether consumers are in a good mood makes a huge difference as to whether they’ll spend more or they won’t.”
SIGN-UPS CLIMBED FROM 13% TO 28% for the Dairy Revenue Protection (DRP) program. That’s when comparing the nation’s milk supply in 2019 versus 2020. While enrollments for 2020’s third quarter have closed, that 28% figure could climb as farmers buy more fourth quarter contracts.
WITH PRICE VOLATILITY, there could be more interest in signing up for the 2021 Dairy Margin Coverage (DMC) program. In 2019, dairy farmers enrolled 83% of the nation’s milk supply, and that percentage slumped to 55% as farmers anticipated 2020 would be a better price year. Then, the COVID-19 pandemic set in and sent markets into a free fall.
MORE THAN $667 MILLION in dairy producer payments have been paid out through the Coronavirus Food Assistance Program (CFAP) as of June 15. FSA will accept applications through August 28.
THREE SERVINGS OF DAIRY remains central to a healthy diet, advised the Dietary Guidelines Advisory Committee. The federal government’s review panel recommended three dairy servings a day for all ages. While continuing to promote low-fat and fat-free, it did not endorse full-fat dairy.
ASTHMA AND BREAST CANCER also were addressed by the panel. The committee dispelled misinformation about dairy’s link to both conditions.
CHINA DOUBLED DOWN ON DAIRY as its government reemphasized its recommendation to consume 300 grams of dairy daily. That’s more than three times the current average, according to Rabobank.
CANADA MAY NOT BE HONORING its portion of the U.S.-Mexico-Canada (USMCA) trade agreement. U.S. trade negotiators suggest a lawsuit.