In your August 10, 2020 issue . . .
CHEDDAR CHEESE BLOCKS SLIPPED to the $1.60-per-pound range in mid-August trading on the CME. From mid-June to mid-July, Cheddar fetched between $2.50 and $3 per pound on the spot market. In late April, however, prices had dipped to just $1 per pound.
WITH HIGH SPOT CHEESE PRICES, the July Class III came in at $24.54 per hundredweight, up $3.50 from the value posted in June milk checks.
PROTEIN POSTED A RECORD $5.62 per pound and drove Class III prices higher. That value climbed by $1.10 when compared to one month earlier. Meanwhile, butterfat fetched $1.96 per pound, up just a dime from June.
NEGATIVE PRODUCER PRICE DIFFERENTIALS (PPDs) returned to July milk checks in a larger fashion as the spread between Class III and Class IV values widened to a $10.78 gap; it had been $8.14 in June.
IN THE CALIFORNIA ORDER, negative PPDs went from June’s $7.91 to July’s $9.82. Negative PPDs in other orders were: Southwest, $7.62 (June) and $8.84 (July); Central, $7.51 (June) and $8.69 (July); Northeast, $5.35 (June) and $5.46 (July); Upper Midwest, $3.81 (June) and $4.86 (July).
THIS SITUATION COULD LINGER as August Class III futures contracts traded near $19.50, while Class IV sold closer to $13 on the CME.
BY 2020’s FINAL QUARTER, Class III could be near $16.60 with Class IV pushing $14. That would significantly ease negative PPDs.
AS FOR THE FIRST HALF OF 2021, Class III futures traded at a $16.30 average with Class IV at $15.10. However, the markets remain topsy-turvy due to the unfettered coronavirus pandemic.
USDA ECONOMISTS PEGGED A $17.95 All-Milk price for 2020 in its World Agricultural Supply and Demand Estimates. The new-year forecast was a $17.05 All-Milk price with a $16.10 Class III. USDA’s $13.65 Class IV price projection was more pessimistic than the CME.
IT COULD BE A BOUNTIFUL CROP YEAR. Driven by near-ideal growing conditions, the U.S. corn and soybean crop could post both record yields and production. At the moment, 71% of the nation’s corn crop was in good-to-excellent condition and it could yield 181 bushels per acre.
IN JUNE, CORN AVERAGED $3.16 per bushel and soybeans netted $8.34, according USDA’s Agricultural Prices. Alfalfa hay brought $179 per ton, while Premium quality alfalfa averaged $200 in Central California.
U.S. EXPORTS CLIMBED 28% by volume and 22% by value, capping off double-digit growth in the first six months. Much of those sales took place based on deeply discounted U.S. dairy product prices in the few months preceding June. Exports accounted for 17.7% of total U.S. milk production.
CHINA’S WHEY NEEDS HAVE BEEN EXPANDING, largely due to restocking the swine herd following last year’s African Swine Fever outbreak. June volume rose 79%, reaching the highest level since May 2018.
WISCONSIN LED ALL STATES with 12% of the nation’s farm bankruptcies from June 2019 to June 2020. That 12% represented 69 farms.
A BATTLE CONTINUED IN CALIFORNIA over the state’s Quota Implementation Plan (QIP). A judge ruled that Stop QIP’s petition was defective in its attempt to immediately terminate the program.
CONVERSELY, THE CALIFORNIA DEPARTMENT of Food & Agriculture ruled that the United Dairy Families of California (UDFC) had achieved the necessary threshold required to conduct a review of its petition. If adopted, QIP would sunset on March 1, 2025.