In your October 10, 2020 issue . . .
SPOT CHEDDAR BLOCK PRICES SHOT SKYWARD, moving 84.5 cents from September 1 to 21 on the CME. After reaching $2.64-3/4 per pound, prices retreated to $2.54 at the magazine’s close on September 24.
THE PRICE TURBULENCE included a 22-3/4 cent advance on September 18, the largest on record for spot Cheddar blocks. That move also created a never-before-seen spread of 99-1/4 cents between blocks and barrels.
CLASS III FUTURES PUSHED 30 CENTS HIGHER throughout September to reach nearly an $18 average for the final three months of 2020. The first six months of the new year held near a $16.50 mean.
NEGATIVE PPDS COULD PERSIST should Class IV future with a $14.50 average for October to December come to fruition. That $3.50 spread would invoke negative producer price differentials for the rest of 2020. In the new year, the spread shrinks to $1 with Class IV projected at $15.50.
USDA HELD FIRM on its forecast for 2021, projecting a $17 All-Milk price, according to its September 2020 World Agricultural Supply and Demand Estimates. It also forecasted a $16 Class III and a $13.60 Class IV.
DESPITE THE PANDEMIC, DAIRY DEMAND remained strong with sales up 0.6%. Dairy exports carried the day, however, as domestic consumption has been down about 2% due to slumping restaurant sales.
NEARLY ONE IN SIX RESTAURANTS CLOSED either permanently or long term due to the coronavirus pandemic, reported the National Restaurant Association. Overall sales were down 34% compared to the same time last year . . . roughly 50% of all dairy products are sold through eateries.
“WE’RE RIDING THE CHEESE HORSE,” said Mark Stephenson of the 2019 metric in which per capita dairy product consumption reached 653 pounds per person . . . the highest since President Lyndon Johnson.
IN THE 1960s, THE LEADING PRODUCT was fluid milk. “Since the 1960s, our long climb back to higher levels of dairy product consumption has really been riding that cheese horse hard,” said the well-known University of Wisconsin-Madison dairy economist.
THE FALL HARVEST WAS IN FULL SWING as Hoard’s Dairyman editors traversed 3,400 miles in late September. While isolated pockets of corn and soybeans had issues, the roadside view throughout America’s heartland matched USDA’s projection of a near-record harvest this fall.
MIDWEST AND NORTHEAST FARMERS reported a far easier corn silage harvest that was well ahead of last year’s “mudfest,” where tow straps and lead tractors helped guide forage harvesters, and skid steer operators worked nonstop to remove mud from country roadways.
A SECOND ROUND OF USDA PAYMENTS was announced in September as part of the Coronavirus Food Assistance Program. Dairy farmers will receive $1.20 per hundredweight for the last nine months of 2020 based on actual milk production from April through August.
NONBREEDING ANIMALS SUCH AS STEERS could garner $55 per head. Crops such as alfalfa, corn, sorghum, and soybeans could earn flat payment rates of $15 per acre, plus other marketing factors. Contact your local FSA office for more details.
KRAFT HEINZ WILL SELL ITS NATURAL CHEESE business to Lactalis for $3.2 billion. The transaction will transfer all natural, grated, cultured, and specialty cheese assets to the French company.
FARMING AND AGRICULTURE RANK NO. 1 by consumers, according to the 25 business sectors tracked by Gallup. Tracking closely behind were grocers and restaurants in the poll taken during the pandemic.