THE FEBRUARY CLASS III price was $15.75 per cwt., with Class IV at $13.19. That was based on $1.44 per pound butterfat and $2.98 for protein.
WHILE MARCH PRICES LOOK DIM, longer-term contracts were more bullish. The March Class III traded near $16.20 at the magazine’s close. Meanwhile, April to December contracts traded at an $18.20 average. Just one month earlier, that bundle was near $17.25.
THE SAME HELD TRUE FOR CLASS IV as March netted $14.30, while the remainder of 2021 futures averaged $16.30, up 55 cents in the past month.
DAIRY PRODUCTS SOARED 15% on New Zealand’s Global Dairy Trade, propelled by whole milk powder, which climbed 21%. This marked the eighth straight market climb on activity that occurs every other week.
AS A RESULT, FONTERRA, New Zealand’s largest dairy co-op with over 90% market share, raised its Farmgate Milk Price forecast by nearly 6% from $7.20 to $7.60 per kilogram of milk solids. The Kiwis are the world’s largest dairy exporter, and milk flow there is past its seasonal peak.
DESPITE POSITIVE MARKET REPORTS, dairy is testing historical limits. “We count 42 occasions going back to the year 2000 when we had daily milk production at 3% or more,” said Phil Plourd. “In 34 of those occasions . . . 81% of the time . . . the Class III price was lower in the six subsequent months by an average of 18%,” he further explained.
CLIMBING COW NUMBERS also concerned Plourd, who noted absolute cow numbers have climbed to the highest level since the mid-1980s.
ON 15 OCCASIONS, cow numbers have climbed over 100,000 head going back to 2000. “In 14 of those 15 cases, the Class III price was down by an average of 24% year-over-year,” he said of the subsequent six months. “We are definitely flirting with historical-type growth and that has (price) implications for at least the medium term.”
EXPORTS HAVE BEEN ABSORBING the extra milk from those additional cows. Dairy exports posted a record 2 million metric tons in volume, up 13% from the previous year. On a value basis, exports reached a six-year high at $6.56 billion in sales, up 9% in just one year.
U.S. CHEESE PRODUCTION posted a record 13.2 billion pounds in 2020, up 0.4%. However, not all cheese was equal, as American-type cheese climbed 2.1% and Italian cheese fell for the first time in decades. Overall, Italian varieties were off 1.2%, with the kingpin, Mozzarella, down 1.7%.
THE PANDEMIC EXPLAINED both the production and consumption story. Retail, paced by grocers, has a Cheddar bias. On the flip-side, food service, anchored by restaurants, prefers Mozzarella and sells more of it.
FEDERAL ORDER CLASS NUMBERS were extremely distorted due to massive depooling of Class III milk throughout 2020. In the past year, the market utilization percentages were: Class I, 32%; Class II, 14%; Class III, 24%; and Class IV, 30%. In 2019, without depooling, those numbers were: Class I, 28%; Class II, 11%; Class III, 41%; and Class IV, 19%.
WORLD DAIRY EXPO has begun to explore alternative venues for hosting its 2021 show should pandemic conditions and local restrictions prevent the annual global dairy gathering from taking place in Madison, Wis.
ON A 92 TO 7 VOTE, THE U.S. SENATE confirmed Tom Vilsack as USDA Secretary. Krysta Harden, a USDA veteran, succeeded Vilsack by taking the leadership helm at the U.S. Dairy Export Council.
