In your September 25, 2021 issue . . .
STRONG INTERNATIONAL DEMAND moved Class IV-related contracts higher. At New Zealand’s Global Dairy Trade, skim milk powder prices rose 7.3% in early September trading. Stateside, January-to-June Class IV futures contracts nearly matched Class III values at $17.40.
USDA RAISED ITS FORECAST for dairy product exports to $7.3 billion in sales for this year. If that projection comes to fruition, dairy exports would grow by 15.4% when compared to last year’s $6.5 billion total.
HIGHER VALUE AND UNIT SALES to China have led to growth in skim milk powder, whey, and whey product sales. Mexico, Indonesia, and Vietnam also have purchased more skim milk powder and cheese.
DESPITE IMPROVED CLASS IV PRICES, Class III values have been sluggish. The $17.50 price projections are “low enough to encourage demand and discourage overproduction,” wrote Sarina Sharp in Milk Check Outlook on page 607. “At the same time, $16 to $18 milk simply won’t pay the bills for many producers, especially while feed remains pricey.”
DMC PAYOUTS REACHED A NEW HIGH due to the combination of higher feed costs and falling milk prices. This July’s $5.68 milk-to-feed margin led to a $3.82 per cwt. payout for farmers buying the maximum $9.50 coverage level in USDA’s Dairy Margin Coverage (DMC) program.
MILK FELL FROM $18.40 TO $17.90, while corn climbed by 12 cents to reach $6.12 per bushel, and blended alfalfa hay rose by $2 to reach $216.50 per ton. Both feed values were highs for the year. The only bright spot? Soybean meal slid to $365.23 per ton, down from January’s $439.24.
REPORTS OF DELAYED DMC PAYMENTS were phoned into our office by farmers. Purportedly, USDA miscalculated July’s DMC payouts, resulting in an “administrative funding apportionment issue.” Once USDA makes adjustments and releases funds, payments should be fulfilled.
THE 5 MILLION-POUND MILK LIMIT for USDA’s Pandemic Market Volatility Assistance program will be based on six months of production, not a full year as announced in August. As a result, the cap for payouts doubled from 210 to 420 cows based on a 23,800-pound production average.
EXPENDITURES FOR FOOD AWAY FROM HOME dropped 32.6% in 2020. That’s based on data from the U.S. Bureau of Labor Statistics. Meanwhile, at-home food expenditures grew 6.4%. Despite large changes in the overall food categories, dairy product sales were relatively stable.
DAIRY SPENDING, as a portion of total food at-home expenditures, continued a long-term decline, reported the University of Missouri’s Scott Brown. In 2020, dairy accounted for 9.6% of all at-home sales . . . compared to 10.5% in 2010, 10.8% in 2000, and 11.9% in 1990.
FLUID MILK SALES DWINDLED TO A 62-YEAR LOW. Last year, beverage milk totaled 46.4 billion pounds. Not only did those sales cap off an 11-year sales slide, those 46.4 billion pounds marked the lowest sales volume since 1958 when the U.S. population was 175 million people.
NEARLY 90 NORTHEAST ORGANIC DAIRY FARMS will lose their milk markets, reported the Associated Press. Danone, the parent company of Horizon Organic, notified farmers in late August that the organization would quit purchasing milk in the region within one year.
GLOBALLY, FRENCH-BASED LACTALIS supplanted Nestle as the world’s largest dairy company, reported Rabobank. Among North American-based entities, Dairy Farmers of America ranked No. 3; Saputo, No. 10; Kraft Heinz, No. 15; Agropur, No. 16; and Schreiber Foods, No. 19.
