In your April 25, 2021 issue . . .

DAIRY MARKETS POSTED SIGNIFICANT GAINS on the CME during a two-week window beginning in late March and extending through April 8. April to December Class III contracts traded at $18 on March 23. By April 9, the same bundle of contracts had climbed to a $19 average.

“CHEESE PLANT MANAGERS say demand upticks, particularly from the food service sector, are a factor in the increased milk prices,” reported the editors for USDA’s weekly publication Dairy Market News (DMS).

“DEMAND TONES from all regions are similar,” continued the editorial team who specializes in dairy markets for work done at USDA’s Agricultural Marketing Service (AMS). That demand was “steady from retail customers to steady/busier on the food service side as more areas ease COVID-19 related dining/public gathering restrictions.”

CLASS IV FOLLOWED CLASS III as that contract bundle traded at a $16 average on March 23. By April 8, the April-to-December Class IV futures netted $16.85, with all contracts over $17 for September and beyond.

SPOT BUTTER REACHED ITS HIGHEST VALUE in over 10 months when the dairy spread traded for nearly $1.85 per pound on the CME.

INTERNATIONAL DEMAND for U.S. dairy products also gained traction due to competitive global pricing. In February, total U.S. dairy exports climbed 11% year-over-year to reach $565.5 million. Volume, on a milk-solids basis, leapt by 15%. Main product drivers were nonfat dry milk and skim milk powder shipments to Mexico and Southeast Asia.

PRICES AT NEW ZEALAND’S Global Dairy Trade held steady in early April. As the island nation heads into the fall season, milk production is slowing for the world’s leading dairy product exporter.

OCEANIA’S SKIM MILK POWDER PRICES surged to $1.48 per pound in the first quarter of 2021, recovering from $1.17 per pound during the market lows induced by COVID-19. Once depressed, butter climbed to $2.33 per pound on New Zealand markets due to improved global food service orders; Kiwi cheese moved above U.S. prices.

USDA ECONOMISTS PREDICTED a higher 2021 All-Milk price when it moved its March forecast from $17.75 to $18.40 in April. The projections were buoyed by Class III that moved from $16.75 to $17.10 during that time; Class IV shifted upward from $14.45 to $15.15.

THESE VALUES WERE FAR BETTER than those received by dairy farmers in January and February milk checks. In the first two months of the year, the Dairy Margin Coverage (DMC) insurance program paid out $93 million in payments. The average payout was $4,947 per farm.

THE COMBINATION OF HIGHER FEED COSTS and lower milk prices drove payments. February feed climbed to $10.88 per cwt. based on $4.75 per bushel corn, $193 per ton alfalfa hay, and $427 per ton soybean meal.

CLASS III PRICES OUTPACED mailbox milk prices for the first time since the Federal Milk Marketing Order reforms of 2000. This past year, Class III milk averaged $18.16, while mailbox prices netted $16.96.

SOMATIC CELL COUNTS (SCC) reached a new low, indicating continued progress on milk quality. Herds enrolled in Dairy Herd Information Association (DHIA) testing plans averaged 178,000 cells per milliliter in 2020. This was the fourth straight year SCC was under 200,000.

WHILE 178,000 WAS THE AVERAGE, 1.2% of the nation’s herds had test-day cell counts over 750,000, and 8.3% were over 400,000 SCC.