In your January 10, 2021 issue . . .
MILK MARKET PROJECTIONS REMAIN IN FLUX as USDA economists adjusted the 2021 All-Milk price forecast, down by $1.10 to a $16.60 per hundredweight (cwt.) average. This was based on strong projected milk production and lowered price projections for cheese and butter.
CLASS III FUTURES SHOWED SOME STRENGTH with a $17.15 average for February to November 2021 contracts, up 15 cents during two weeks of trading on the CME. That mean came with a $1 range of February’s $16.60 to September’s $17.56 just one week prior to Christmas.
ON THE FLIP SIDE, CLASS IV CONTRACTS held steady with a $15.70 average for February to November 2021. Unlike Class III, contracts for milk destined for butter and powder had a far wider range, with a low of $14.32 in February to a high of $16.60 for November.
PRICE VOLATILITY COULD CONTINUE well into the new year due to unsettled demand from the battered food service sector and growing milk production in some parts of the U.S. “Dairy producers should have plans ready in case they see the return of tiered-pricing and base programs,” stated Ben Laine, a dairy analyst with Rabo AgriFinance.
COW NUMBERS HAVE CLIMBED 57,000 HEAD in just six months from June to November. “By comparison, this recent expansion in the dairy herd has more than offset the 35,000 head that were cut between March and June,” said the University of Missouri’s Scott Brown.
THE “BIG FIVE” STATES GREW BY 194,000 HEAD, adding 83,000 cows from January 2018 to July 2019 and another 111,000 head from July 2019 to November 2020. Those five states, ranked by growth in cows, include: Texas, Idaho, South Dakota, Colorado, and Kansas.
FEED PRICES CONTINUED TO INCH UPWARD, with USDA economists projecting soybean prices at $10.55 per bushel and corn at $4. Soybean stocks were forecasted at 175 million bushels, and that level would be the lowest since the 2013 to 2014 production season.
STRONG SIGN-UP RATES TOOK PLACE for the 2021 rendition of the Dairy Margin Coverage (DMC) program. Overall, 17,131 dairy farmers signed up for the program compared to 13,000 farmers in 2020.
THE DEAN FOODS ESTATE DEMANDED that hundreds of dairy farmers who shipped milk to Dean Foods during its November 2019 bankruptcy repay a portion of their milk checks. The estate claimed that the milk checks fell under “Preference Period from the Debtor.”
QUICK ACTION by the American Farm Bureau Federation, the Commonwealth of Pennsylvania Milk Marketing Board, and the Pennsylvania attorney’s office helped develop a mechanism for farmers and milk haulers to demonstrate that payments they received from Dean Foods were made in the ordinary course of business. For more insight, turn to page 16.
THE PETITION TO SUNSET CALIFORNIA’S Quota Implementation Plan (QIP) may proceed to a producer vote. That ruling came from Administrative Law Judge Timothy Aspinwall. If approved by Golden State dairy farmers, the program would retire on March 1, 2025.
TOTAL U.S. DAIRY EXPORTS GREW 16% on a milk solids equivalent, while value was up 12% to a $5.54 billion total through October. Overall, the U.S. remained on pace for a record volume of shipments this year.
FORMER USDA SECRETARY TOM VILSACK will serve a second tour of duty for President-elect Joe Biden. Congressman David Scott (D-Ga.) will chair the House Committee on Agriculture with G.T. Thompson (R-Pa.) chosen as the ranking member. On the Senate side, either John Boozman (R-Ark.) or Debbie Stabenow (D-Mich.) could chair the Senate Ag Committee depending on the January 5, 2021, Georgia Senate election results.
