In your May 2022 issue . . .
FUTURES MARKETS COOLED from April 1 to May 5 trading on the CME. Class IV prices dropped from $24.70 to $23.70 per hundredweight (cwt.) for the May to December bundle of contracts. Class III held steady during that time to settle at a $23.70 average at the magazine’s close.
CHINA’S BUYING APPETITE WANED as its two most densely populated cities, Shanghai and Beijing, went into new COVID-19 lockdowns. These two cities have a combined population larger than California, America’s most populous state. As a result, China’s buying interest at Global Dairy Trade (GDT) fell to the lowest level since 2015.
IT’S A SLOW ROLL to get products into China. There were over 500 vessels waiting to berth outside of Chinese ports, with Shanghai accounting for roughly half of them, reported the shipping analytics firm Windward. This is a concern as China is the world’s largest dairy importer.
THE CONGESTION AT West Coast ports has improved considerably. As of May 2, only 11 cargo vessels were waiting to unload outside of America’s two largest ports – Los Angeles and Long Beach.
SUPPLY CHAIN ISSUES STILL PREVAIL across the U.S. as on-time delivery rate to grocery stores has fallen below 50% for national brands. “That means of the orders you made, 50% got there on time,” said Mike Brown, director of the dairy supply chain at the Kroger Company.
WILL DAIRY DEMAND HOLD? “I think dairy is very competitive from the standpoint of what we give the consumer for price,” said Brown. “That will continue to help us through the fall, and we’re pretty confident dairy may decline a little bit, but it’s going to be fairly stable.” For more on price inflation as it relates to dairy, see the chart below.
HAY IS FETCHING A PREMIUM as the amount of land dedicated to the crop reached its lowest point since 1907. In California’s Central Valley, Premium quality alfalfa topped $425 per ton delivered in late April, according to The Hoyt Report. That’s up from $270 to $285 just a year ago.
REPLACEMENT PRICES JUMPED OVER $200 per head to reach a $1,570 average, according to the April 2022 edition of Agricultural Prices. That’s the highest price point since October 2017, reported USDA.
AT $1,710 PER HEAD, WISCONSIN topped the list. Arizona, Pennsylvania, and Vermont closely followed at $1,700 for replacement values.