In your February 2021 issue . . .

THE JANUARY CLASS III price was $16.04 per cwt., with Class IV at $13.75. That was based on $1.55 per pound for butterfat and $3.04 for protein.

FUTURES MARKETS HAVE BEEN IN FLUX due to the pandemic, uncertain government intervention, and restaurants that continue to hemorrhage sales. As a result, February to May Class III contracts slid $3 per cwt. to a $16.15 average on the CME from early January to early February.

BASED ON THE BELIEF THE PANDEMIC may subside later in the year, Class III futures traded at a stronger $17.25 average for June-to-December contracts. That was still off 75 cents per cwt. from just one month earlier.

CLASS IV CONTRACTS EXPERIENCED the same situation, with February-to-May contracts averaging $14.20 per cwt. and a $15.75 net for the remainder of 2021. In early January, the entire portfolio averaged $15.90.

MORE COWS, MORE MILK: Both supply-side issues also tugged markets down. In December, milk production jumped 3.1% compared to the same time last year. Cow numbers climbed a whopping 100,000 head.

“WE’VE SEEN A LOT OF COWS added in the last half year,” said Cornell’s Andy Novakovic. “Once in place, it takes a strong economic impetus and a bit of time to rein in the national dairy herd,” the dairy economist continued. “The question for the remainder of 2021 is what happens when we don’t have huge transfer payments to dairy farms or the irrational spike in cheese prices fueled by poorly managed food donations?”

THE FALLOUT CONTINUES FOR U.S. RESTAURANTS, as sales fell to $240 billion in 2020, down from a once-projected $899 billion, reported the National Restaurant Association. More than 110,000 eating and drinking places were closed for business temporarily or for good.

WHILE MILK PROTEIN DIDN’T POST A RECORD, the $3.76 price per pound in 2020 was off just 14 cents from the high watermark in 2008. This past year’s value included July’s record $5.63 per pound of protein.

THOSE HIGH VALUES CREATED A CAVERNOUS SPREAD between butterfat and protein values for milk priced under Federal Milk Market Order provisions. Butterfat fetched $1.71 per pound, down 32% from the prior year. On the flip side, protein leapt 58% from 2019 values.

NEGATIVE PPDS WERE A FALLOUT in all federal orders, with most posting all-time lows since the last major round of federal order reform.

CALIFORNIA PRODUCER PRICE DIFFERENTIALS (PPDs) were -$3.41 per cwt. in 2020; Pacific Northwest, -$2.55; Southwest, -$2.28; Central, -2.17; Mideast, -$1.85; Northeast, -$0.99; and Upper Midwest, -$0.89.

BUTTERFAT LEVELS CLIMBED TO 3.96% for milk collected throughout the Upper Midwest federal order in 2020. That number was up 3.66% from just one decade earlier. Protein averaged 3.15%.

THE SIXTH CONSECUTIVE GAIN was posted at New Zealand’s Global Dairy Trade platform. Butter has climbed 10 straight biweekly trading sessions. Fonterra subsequently raised its price forecast for its farmers.

LICENSED CHEESE IMPORTS INTO THE U.S. totaled 169.4 million pounds in 2020, down 13.4%. That was the lowest import total since 2011.

FEDERAL ORDER REFORM isn’t likely this year. “We haven’t had discussions yet,” said Debbie Stabenow (D-Mich.), chair of the Senate ag committee. “I’m sure we will. I’m certainly open to those discussions. It’s just, frankly, we just haven’t done that yet,” she said on a media call.

STRONG FEED PRICES REMAIN on the horizon, as corn posted values not seen since 2013; soybeans followed suit trading at six-year highs.