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The Agriculture Department announced additional COVID relief


The Agriculture Department announced additional COVID relief now that the Food Box program has ended. StoneX Dairy’s Director of Dairy Market Insight, Nate Donnay, reported details in the June 14 Dairy Radio Now broadcast.

Up to $1 billion will be allocated, including $500 million in American Rescue Plan funding, in the Emergency Food Assistance Program (TEFAP), to support and expand the emergency food network so food banks and local organizations can serve their communities. USDA will work with state, tribal and local entities to purchase food from local producers and invest in infrastructure, says USDA. 

Details on the TEFAP website indicate they are limited to Cheddar and American cheese and fluid milk, says StoneX. That may not be a hard and fast rule, but Donnay says, while the program will benefit the dairy industry, it won’t be to the degree that the Food Box program did.

He speculates that overall, about $150 million will go toward dairy products in the package, whereas USDA spent about $1 billion in the Food Box program, so this announcement looks to have much less effect on markets, according to StoneX, however they add the caveat that the USDA mentioned multiple times throughout their press release that this is just the first part of the Build Back Better program. There is also financial assistance available to farmers, Donnay said, and some dairy farmers may qualify for that. Details are forthcoming.

Estimates for 2021 and 2022 U.S. milk production were raised by the USDA in the latest World Agricultural Supply and Demand Estimates report, due to higher cow numbers for both years. 

2021 production and marketings were estimated at 228.5 and 227.4 billion pounds respectively, up 600 million pounds on both from last month’s estimates. If realized, 2021 production would be up 5.3 billion pounds or 2.4% from 2020. 

2022 production and marketings were estimated at 231.1 and 230.0 billion pounds respectively, up 800 million pounds. If realized, 2022 production would be up 2.6 billion pounds or 1.1% from 2021. 

Price forecasts for butter, nonfat dry milk (NDM), and whey were raised from the previous month based on recent price strength and stronger anticipated demand. 

The cheese price forecast was lowered due to large stocks and current prices. 

The lower cheese price results in a lower Class III milk price, now expected to average $17.45 per cwt. for 2021, down 25 cents from what was predicted a month ago, and compares to $18.16 in 2020 and $16.96 in 2019. The 2022 average was estimated at $17.15, up 30 cents from last month’s estimate.

The higher predicted NDM and butter prices support a higher Class IV milk price, which USDA projects at $15.85 per cwt., up a dime from a month ago, and compares to $13.49 in 2020 and $16.30 in 2019. The 2022 average was pegged at $15.95, up 25 cents from last month’s estimate.

This month’s corn outlook is for reduced beginning and ending stocks. Beginning stocks are down 150 million bushels, reflecting projected increases for corn used for ethanol as demand approaches pre-COVID levels. Exports are also strong. Corn used for ethanol production and for export were both raised 75 million bushels. Ending stocks were lowered 150 million bushels. The season-average farm price received by producers was unchanged at $5.70 per bushel. 

Soybean supply and use projections included higher beginning and ending stocks. Higher beginning stocks reflect a lower crush forecast for 2020/21. With higher beginning stocks and no use changes, ending stocks were projected at 155 million bushels, up 15 million from last month. Soybean and product price forecasts were unchanged.

Meanwhile, the latest Crop Progress report shows 90% of U.S. corn emerged, as of the week ending June 6, up from 81% the previous week, 2% ahead of a year ago, and 8% ahead of the five year average. 72% is rated good to excellent, 3% behind a year ago.

Soybean planting was at 90%, up from 84% the week before, 6% ahead of a year ago, and 11% ahead of the five year average. 76% are emerged, 11% ahead of a year ago and 17% ahead of the five year average. 

Cotton is 71% planted, 5% behind a year ago and 7% behind the five year average.

In the week ending May 29, 53,600 dairy cows were sent to slaughter, up 100 from the previous week and 5,500 or 11.4% above a year ago. The 4-week average is above last year’s levels for the first time in nine weeks, says StoneX.

You’ll recall that April milk production totaled 19.3 billion pounds, up a hefty 3.3% from April 2020, according to USDA’s preliminary data. The April Dairy Products report shows that a lot of that milk ended up in the cheese vat.

Cheese output totaled 1.136 billion pounds, down 3.4% from March, but a bearish 8.0% above April 2020. Year to date (YTD) cheese output hit 4.49 billion pounds, up 3.7% from the same period in 2020. 

Wisconsin produced 282.6 million pounds of that cheese total, down 6.8% from March but 6.4% above a year ago. California delivered 207.3 million pounds, down 1.7% from March but 4.8% above a year ago. Idaho contributed 87.0 million pounds, down 3.5% from March but 1.7% above a year ago. 

Italian style cheese totaled 480.7 million pounds, down 4.3% from March but 7.4% above a year ago. YTD Italian hit 1.9 billion pounds, up 2.1%.

American type cheese, at 473.4 million pounds, was off 0.7% from March but 6.0% above a year ago. YTD American was at 1.85 billion pounds, up 5.8%.

Mozzarella output totaled 376.4 million pounds, up 6.6% from a year ago, with YTD mozzarella at 1.5 billion pounds, up 0.8% from 2020.

Cheddar, the cheese traded daily at the CME, totaled 334.2 million pounds, up 400,000 pounds or 0.1% from the March level which was revised down 4.9 million pounds, but was 4.1 million or 1.2% above a year ago. YTD Cheddar hit 1.3 billion pounds, up 4.0% from 2020.

U.S. churns produced 185.2 million pounds of butter, down 13.7 million pounds or 6.9% from March, and 42 million pounds or 18.5% below a year ago. YTD butter totaled 780 million pounds, down 5.7% from 2020. April 2020 saw the highest single month butter output ever, and was up 31.8% from 2019.

Yogurt output totaled 412.1 million pounds, up 13.9% from a year ago, with YTD at 1.6 billion pounds, up 5.6%.

Dry whey totaled 74.4 million pounds, down 5.2 million pounds or 6.5% from March and 1.4 million pounds or 1.8% below a year ago. YTD dry whey was at 313.4 million pounds, down 2.6%. 

Dry whey stocks slipped to 60.5 million pounds, down 5.1% from March and 16.5 million or 21.5% below those a year ago.

Nonfat dry milk output fell to 194.6 million pounds, down 4.7 million pounds or 2.4% from March and 8 million or 3.9% below a year ago. Powder production YTD is at 775.5 million pounds, up 5.5% from 2020. 

Stocks dropped to 302 million pounds, down 15.1 million pounds or 4.7% from March and were a whopping 90.6 million pounds or 23.1% below a year ago.

Skim milk powder production crept to 41.6 million pounds, up 2 million pounds or 5.0% from March but were 10 million pounds or 19.4% below a year ago. YTD skim milk powder, at 148.9 million pounds, is down 20.6% from 2020.

April regular hard ice cream output amounted to 68.4 million pounds, up 7.8% from a year ago, with YTD output at 251.0 million pounds, up 5.7% from 2020.

Dairy prices were mixed the second week of June Dairy Month. The Cheddar blocks oscillated some but closed at $1.50 per pound, unchanged on the week but $1.02 below a year ago. Noteworthy; it was July 13, 2020 that block cheese hit the highest CME price ever, at $3 per pound, for one day.

The barrels saw a $1.6725 per pound close Friday, up 5.75 cents on the week, 66 cents below a year ago, and an inverted 17.25 cents atop the blocks. There were 29 cars of block traded on the week at the CME and 23 of barrel.

Midwest cheesemakers remain busy, according to Dairy Market News. Retail cheese demand varies from slow to very busy. Temperatures have begun to signal summertime in the upper Midwest but milk availability suggests spring is not over yet. Spot milk prices remained at similar discounts to the previous week and cheese plant managers are turning away offers. 

Retail and food service cheese demand held steady this week in the West. The lower prices have reportedly led to increased export demand, with contacts noting interest from Asian markets. Some contacts report difficulty in obtaining transportation and shipping supplies causing delays as well as increased freight costs. Cheese production is strong in the region, says DMN. 

StoneX reports there’s concern about the availability or lack of wooden boxes used to ship 640 pound blocks. With the price of lumber having sky-rocketed this year, shortages have developed, says StoneX, and “may result in some plants switching up their product mix in the short-term and produce more barrels.”

Spot butter was trading at $1.7925 per pound at Friday’s close, up 1.75 cents on the week but 7.75 cents below a year ago, with 17 sales reported for the week.

Demand tones and estimates are similar to pre-pandemic levels, says DMN. Food service has leveled off from the pipeline replenishment earlier in the spring but sales are well above last year overall. Cream is available for Midwestern churners, but plant managers say they are finding it in other areas, primarily the West. Ice cream manufacturers have taken lighter amounts of cream than expected, therefore more is available for churning.

Cream is widely available in the West but movement to other regions is somewhat limited by tanker availability. Some butter manufacturers have reduced output seasonally while others are building stocks for fall demand. Retail sales are lackluster and below pre-pandemic levels. Food service demand continues to strengthen but dine-in restrictions are still in place in some states and capacity limits and staffing shortages have restaurants running abbreviated hours and or a limited menu.

Grade A nonfat dry milk finished Friday at $1.30 per pound, 4 cents higher on the week and 29.50 cents above a year ago, on 19 trades on the week.

StoneX stated in its June 8 Early Morning Update; “We know that tightness on milk production is likely to come first and foremost out west where we make a lot of powder.” Very severe drought conditions exist in a huge part of the west.

CME dry whey closed Friday at 62.75 cents per pound, up 2.50 cents on the week and 31.50 cents above a year ago, on 3 sales for the week at the CME.

U.S. dairy exports in April kept a lot of product away from the CME and out of storage. Cheese exports hit a record 89.1 million pounds, up 51.2% from April 2020 and up 12.5% year to date. Strong gains were recorded into Mexico, South Korea, Japan and Australia, according to HighGround Dairy (HGD).

Nonfat and skim milk powder exports amounted to 173.1 million pounds, up 15.5%, with YTD up 19%. While down slightly from March, HGD says nonfat dry milk exports had the third highest of any month on record and for the first four months of the year, were at a record level, surpassing the prior high set in 2018. Shipments to Mexico were up 43%, strongest monthly volume since October and the highest April exports since 2018. Drought there may have played a role in Mexico’s increased activity, according to the June 8 Daily Dairy Report.

Butter exports totaled 10.9 million pounds, up 343.9%, with YTD up 166.3%. HGD says exports to Canada moved to multi-year highs of 1,219MT versus just 243MT last year and were the highest volumes since August 2018. The U.S. also experienced another impressive month of butter moving to the Middle East.

Dry whey totaled 46.2 million pounds, up 24.1% from a year ago, with YTD up 30.5%.

HGD credited “competitive pricing and ample availability of dairy products” for the good report, adding that “China has been outbidding so many buyers throughout the Middle East and North Africa for Oceania-sourced product that demand has turned to the U.S. to meet needs.”

Cooperatives Working Together (CWT) member cooperatives accepted 13 offers of export assistance this week to help capture sales of 1.2 million pounds of Cheddar, Gouda, and Monterey Jack cheese, and 158,733 pounds of butter. 

The product is going to customers in Africa, Asia, and Oceania through September and raised CWT’s 2021 exports to 19.1 million pounds of American-type cheeses, 10.5 million pounds of butter (82% milkfat), 7.1 million pounds of anhydrous milkfat, 16.6 million pounds of whole milk powder, and 6.9 million pounds of cream cheese. The products are going to 30 countries and are the equivalent of 780.9 million pounds of milk on a milkfat basis.

Last but surely not least in this June Dairy Month, the International Dairy Foods Association (IDFA) reports that “The U.S. dairy industry continues to play a strong role in the U.S., supporting 3.3 million total jobs and $41.6 billion in direct wages, according to the IDFA’s latest economic impact report.

The study measured the combined impact of the dairy products industry and showed an economic impact totaling $752.93 billion. The figures also indicate that the U.S. dairy industry contributes 3.5% of U.S. GDP and $67.1 billion in federal, state and local taxes (not including sales taxes paid by consumers)

Total export values were included for the first time in the study, revealing the dairy industry is responsible for $6.5 billion in exported goods and “reinforces the importance of fair international trade agreements for the industry,” says IDFA.

Lee Mielke is a graduate of Brown Institute in Minneapolis, MN. He’s formerly the voice of the radio show “DairyLine,” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.