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Australian milk output was unchanged from a year ago in April

The Agriculture Department announced the June Federal order Class III milk price at $17.21 per hundredweight (cwt.), down $1.75 from May and $3.83 below last year’s COVID-driven benchmark. The six month Class III average is at $16.96, up from $16.09 at this time a year ago and $15.25 in 2019.

Late Friday morning Class III futures showed July at $16.79; August, $16.77; September, $17.35; October, $18.11; November, $18.26; and December $17.98.

The Class IV price is $16.35, up 19 cents from May, $3.45 above a year ago, and the highest Class IV price since January 2020. The Class IV average stands at $14.84, up from $13.78 a year ago, and compares to $15.98 in 2019.

This week’s much anticipated Grain Stocks report showed June 1 corn stocks totaled 4.11 billion bushels, down 18% from June 2020. 1.74 billion bushels were stored on farms, down 39% from a year earlier, with off-farm stocks, at 2.37 billion bushels, up 11%. The March to May disappearance was 3.58 billion bushels, compared with 2.95 billion bushels in the same period last year. 

Corn planted area was estimated at 92.7 million acres, up 1.87 million acres or 2% from last year. Planted acreage is expected to be up or unchanged in 28 of the 48 estimating States, with area harvested at 84.5 million acres, up 2%.

The corn acreage is 1.6 million more than what the USDA’s Prospective Plantings report indicated in March, according to HighGround Dairy’s Lucas Fuess in the July 5 Dairy Radio Now broadcast. But, it was weaker than industry expectations and sent prices to a limit up finish on the day.

Soybean stocks totaled 767 million bushels, down 44% from a year ago. On-farm stocks totaled 220 million bushels, down 65%, and off-farm stocks, at 547 million bushels, were down 27%. Disappearance for the March to May quarter totaled 795 million bushels, down 9% from a year ago.

Soybean planted area was estimated at 87.6 million acres, up 5% from last year, with  planted acreage up or unchanged in 28 of the 29 estimating States. That figure was lower than what was expected in March, according to Fuess.

Corn, soybean, and wheat stocks were all below expectations, Fuess said, which implies decent demand over the past few months, but both reports do not bow well for feed prices which peaked in early May and June.

The June 30 Daily Dairy Report also points out that extremely dry weather has withered crop potential in some of the key growing regions of the country.

Dairy farmers are watching this closely, as feed costs are expected to be the highest in years and perhaps in a decade, according to Fuess. That could result in drops in milk output, particularly in the western states, and stop the U.S. herd from growing, after topping last year’s herd by an incredible 145,000 head.

The continued rising feed prices could not be offset by the higher all milk price in May, so the slide in the U.S. milk feed ratio resumed after pausing in April. The USDA’s latest Ag Prices report showed the May ratio at 1.69, down from 1.75 in April, and compares to 1.78 in May 2020.

The index is based on the current milk price in relationship to feed prices for a ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk would only purchase 1.69 pounds of dairy feed of that blend.

The U.S. all milk price averaged $19.20 per cwt., up 80 cents from April and $5.50 above the May 2020 average. California’s all milk price climbed to $19.30 per cwt., up 80 cents from April and $6.10 above a year ago. Wisconsin’s, at $19.70, was up 90 cents from April and $6 above a year ago.

The national average corn price hit $5.91 per bushel, up 60 cents per bushel from April, after jumping 42 cents the previous month, and is a budget busting $2.71 per bushel above May 2020. 

Soybeans averaged $14.80 per bushel, up 90 cents from April, following a 70 cent rise a month ago, and is a whopping $6.52 per bushel above May 2020. 

Alfalfa hay averaged $194 per ton, up $7 from April and $15 above a year ago.

Looking at the cow side of the ledger; the May cull price for beef and dairy combined averaged $70.80 per cwt., down 30 cents from April, $2.50 above May 2020, but 80 cents below the 2011 base average of $71.60 per cwt.

Lots of eyes are on weather and crops throughout the country and the USDA’s latest Crop Progress report showed 64% of the corn crop was in good to excellent condition, as of the week ending June 27, down from 65% the previous week and 9% below a year ago.

Soybeans were 96% emerged, 2% ahead of a year ago and 4% ahead of the five year average. 60% were rated good to excellent, unchanged from the previous week, but compares to 71% a year ago.

Record breaking blistering heat pounded the Pacific Northwest and lower mainland of British Columbia, Canada early this week. Temperatures soared well over 100 degrees, a rare sight in this part of the USA, and was termed a “heat dome” seen once every 1,000 years. Sections of Washington State highways even buckled, including one just a few miles from my home. The heat extended into Oregon and California and was drawing much attention as to what its effects will be on the dairy industry and many others.

Dairy prices ended June and entered the July 4 holiday weekend a bit mixed, as traders anticipated Friday afternoon’s May Dairy Products report and Tuesday morning’s Global Dairy Trade auction.

The Cheddar blocks closed Friday at $1.5550 per pound, up 6.50 cents on the week, highest since May 27, but $1.12 below a year ago. The barrels finished at $1.50 per pound, up a penny, 91.50 cents below a year ago, and 5.50 cents below the blocks. 2 cars of block were sold on the week and 17 of barrel.

Cheese production remains busy in the Midwest, according to Dairy Market News. Inventory growth is a concern but, given the amount of milk being produced, cheesemakers have no other option than to take advantage of the $6 under Class III discounts. Spot milk purchasing the previous week was strong but this week may have been even busier, as spot offers flowed in. Some contacts expect things to tighten up a bit following the holiday weekend. Cheese sales remain mixed but steady and cheese market tones are a little steadier.

Cheese demand in the west was higher this week as contacts reported increased purchasing leading up to the holiday. Export demand is strong as the lower prices are favorable to international purchasers but market tones are steady to firming. Cheese producers are running full schedules, as milk is readily available. Barrel holdings, which were notably tight near the beginning of June, have loosened in recent weeks. A shortage of truck drivers and port congestion however continues to cause delays to loads in the region, says DMN.

Cash butter started the week strong, jumping a nickel, a likely response to the reports of the heat in the west, but it closed Friday at $1.74, up 2.25 cents on the week and 0.25 cents above a year ago, with 26 sales reported for the week.

Midwest butter makers were finding cream at pre-holiday bargains, reports DMN, and showed a spike in availability as the weekend approached. Butter demand has seemingly taken a holiday, says DMN, and producers relay that buyers' interests edged lower this week. “Steady inventory growth and unprecedented demand ebbs and flows the past year have markets awaiting direction.”

Cream supplies are steady in the west despite the high temperatures but most is staying relatively local as tanker shortages continue to curtail movement. The record-setting heat caused some butter makers to run shortened schedules. Inventories are “fairly stable,” says DMN. Retail butter orders are seasonally soft but steady. Food service demand is strong but leveling off though a handful of full service outlets have not yet returned to pre-pandemic levels of operation.

Grade A nonfat dry milk saw its Friday closing at $1.2575 per pound, down 0.75 cents on the week but 24.75 cents above a year ago, with 11 cars sold.

Dry whey finished Friday at 55 cents per pound, 2.75 cents lower on the week and the lowest since February 25, but 22 cents above a year ago, on 3 sales.

In the week ending June 19, 53,200 dairy cows were sent to slaughter, up 600 from the previous week and 500 or 0.9% above that week a year ago.

There was continued good news on the export front. May nonfat/skim milk powder milk exports climbed to a May record of 195.6 million pounds, up 9.4% from April and 12.1% above a year ago. Mexico remained the biggest customer, according to HighGround Dairy (HGD).

Dry whey totaled 46.9 million pounds, down 1.8% from April, but 29.8% above a year ago, as purchases from China are reported to be slowing.

Butter exports amounted to 9.7 million pounds, down 13.7% from April but 195% above those a year ago, while cheese exports totaled 68 million pounds, down 26.2% from April and 13.4% below a year ago. Export deals became more difficult, says HGD, as cheese prices strengthened in March and April.

Cooperatives Working Together (CWT) member cooperatives accepted seven offers of export assistance this week on sales of 1.2 million pounds of cheese, 149,914 pounds of cream cheese and 216,053 pounds of whole milk powder. 

The product is going to customers in the Middle East, Asia, and Oceania through November and raised CWT’s 2021 sales to 23 million pounds of American-type cheeses, 11.1 million pounds of butter (82% milkfat), 7.1 million pounds of anhydrous milkfat, 17 million pounds of whole milk powder, and 7.3 million pounds of cream cheese. The products are going to 32 countries.

In politics, The National Milk Producers Federation (NMPF) gave a thumbs up to legislation passed in the Senate called the Growing Climate Solutions Act. NMPF President and CEO Jim Mulhern stated; “This important legislation will enable USDA to informally endorse technical service providers that help farmers implement stewardship practices that can generate carbon and other environmental credits. The Growing Climate Solutions Act will encourage more farmers to participate in environmental markets, a crucial part of dairy’s Net Zero Initiative that helps dairy farmers of all sizes across the country meet our industry’s 2050 environmental stewardship goals.”  

The dairy industry is and has been proactive on this front and about 7.6% of the country’s manure is now being processed through manure digesters, according to USDA’s Livestock Anaerobic Digester Database. 

Based on their figures, manure from a total of 718,000 cows is being digested, according to the June 25 Dairy and Food Market Analyst. “California leads the pack with digesters for 264,000 cows, followed by Wisconsin (112,000 cows) and Idaho (51,000),” according to the DFMA.

The House Committee on Appropriations passed its fiscal year 2022 appropriations bill for the USDA, Food and Drug Administration, and related agencies. Michael Dykes, D.V.M., President and CEO of the International Dairy Foods Association (IDFA), stated that “IDFA is pleased to see the House appropriations bill include important provisions that encourage milk consumption amongst school children and adults, find sustainable solutions for ice cream byproducts, and provide support to the FDA to modernize its outdated standards of identity for dairy products.” 

The bill would triple current funding for the Healthy Fluid Milk Incentive Projects, a pilot program that IDFA says “incentivizes SNAP beneficiaries to purchase fluid milk, making it easier for families to get more of the nutritional benefits of milk. It would also extend flexibilities for schools to continue to offer low-fat flavored milk, a nutrient-dense food that provides children with the health benefits they need as they grow during the upcoming school year.”

IDFA also called on the full House and Senate to adopt these measures that “support American health, innovation and sustainability.” 

Down on the farm; U.S. milk output is steady to lower seasonally due to rising summer temperatures, according to the USDA’s weekly update, although milk is far from scarce in any region. 

Looking down under; New Zealand milk output increased 9.4% in May and ended a strong season, up 2.7% season to date. DMN says “At this time of year most dairy producers have dried off most cows. Milk production will trail along the bottom of the production trough until increases begin to register in July. Even as production resumes the seasonal climb, it will not be until about October that the peak is reached.”

Australian milk output was unchanged from a year ago in April, following two months of declines. Production will begin climbing during July but it will be in the fall before the peak is expected to be reached, according to DMN. Dairy producers in South Australia are pleased with strong opening prices being quoted by several dairy processors. Competition to secure milk supplies has led to what some people call a bidding war. Some dairy processors have already revised milk process higher only days after initially announcing prices. 

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