Russia has suspended shipments of natural gas to Poland and Bulgaria
U.S. butter stocks grew in March but remained well below a year ago. The Agriculture Department’s latest Cold Storage report shows the March 31 inventory at 283.1 million pounds, up 20.1 million pounds or 7.6% from February but were a hefty 72.7 million pounds or 20.4% below those a year ago, the sixth consecutive month butter stocks were below the previous year.
American type cheese stocks fell to 822.2 million pounds, down nine million pounds or 1.1% from the February level, which was revised down 2.3 million pounds, and were down 12.2 million or 1.5% below a year ago.
The “other” category inched up to 612.8 million pounds, up just 2.2 million or 0.4% from February, but were 900,000 pounds or 0.1% above a year ago.
The total cheese inventory stood at 1.458 billion pounds, down 8.9 million pounds or 0.6% from February, but 10.9 million or 0.7% above a year ago.
Dairy prices were mixed the last week of April. The Cheddar blocks closed Friday at $2.37 per pound, down 2.25 cents on the week, ending five consecutive weeks of gain, but 7.50 cents above where they were on April 1, and fifty seven cents above a year ago
The barrels finished the month at $2.34, three cents lower on the week but 8.75 cents above their April 1 perch, 50.50 cents above a year ago, and three cents below the blocks.
Sales totaled three cars of block for the week and thirty three for the month of April, down from thirty eight in March. Barrel sales totaled twelve for the week and seventy five for the month, down from one hundred and eight in March.
Milk is readily available for cheese production in the Midwest, according to Dairy Market News, but staffing shorthandedness is keeping a lid on output in some plants, which pushes more milk to others. Cheddar inventories are balanced to available, while other varietal cheesemakers say their stores are balanced to tight. Demand notes are and have been strong, says DMN.
Strong demand for cheese is present in both western domestic and international markets, though previously mentioned Asian buying slipped lower this week. Like a broken record, port congestion and the shortage of truck drivers continues to cause delays to cheese deliveries throughout the region. Inventories are growing. Milk is available, allowing plants to run busy schedules but ongoing labor shortages and delayed deliveries of supplies are keeping output below capacity.
Cash butter fell to $2.6150 per pound Wednesday, lowest CME price since February 25, but reversed direction Thursday, first gain in six sessions and closed Friday at $2.6750, up 7.50 cents on the week, 3.50 cents lower on the month, but still 92.25 cents above a year ago. There were nine loads of butter sold on the week and fifty seven for the month, down from ninety nine in March.
Cream is reportedly available for butter producers both within the Central region and from the West, according to DMN. Bulk butter remains tight and at a premium. Contacts have mixed views regarding late summer and fall inventories. Domestic demand is steadily hearty week over week and global inquiries are not expected to ebb in the near-term so many expect butter stores to be short. And, while market prices have fallen, marketers do not view the big picture as bearish, says DMN. “Globally short milkfat, continued domestic food service strengths and worker-supply chain shortages at the plant level are inimical to bears.”
Cream inventories are steadily available in the West. Contacts report that demand is steady from purchasers in other regions. Regional ice cream makers continue to purchase loads of cream. Demand for butter is steady to lower in both food service and retail markets and the higher prices caused some retail customers to start utilizing alternatives to butter. Butter makers in the region say they are running busy schedules to meet current demand and to build inventory, but labor shortages and delayed deliveries of supplies continues to keep plants from running at capacity, according to DMN.
Grade A nonfat dry milk fell to $1.7075 per pound Tuesday, lowest since January 6, but it rallied Wednesday, first gain in eight sessions, and closed Friday at $1.7550, unchanged on the week, 9.50 cents lower on the month, but forty three cents above a year ago. There were eight sales on the week and fifty five for the month, down from eighty two a month ago.
StoneX points out that Russia has suspended shipments of natural gas to Poland and Bulgaria as they are not being paid in Rubles. “This was a new requirement imposed by Russia to bolster their currency,” says StoneX, “but many countries have been unwilling or unable to pay this way. From a dairy perspective this is calling into question the ability to produce skim milk powder in certain parts of Europe.” The result of this development, remains to be seen.
The whey fell to 57.50 cents per pound Tuesday, lowest since September 27, 2021, but regained three cents Friday to close at 60.50 cents per pound, down three cents on the week, a half-cent below its April 1 post, and 5.50 cents below a year ago. There were ten sales on the week and thirty three for the month, up from nineteen in March.
Sentiment was mixed at this week’s annual conference of the American Dairy Products Institute and American Butter Institute, according to StoneX Dairy staff, underscored by tremendous supply chain issues that have not abated.
“On the slightly bearish side there seems to be some evidence that buyers are willing to push out delivery times perhaps indicating they have built up enough extra inventory for now. On bullish side, milk is still snug. Normally this is the meeting we hear all about too much milk. We didn’t hear that this time. While processors seem to have enough milk, the lack of abundance here in mid-April has some concerned what fresh milk supplies will look like come July or August.”
Speaking in the May 2 Dairy Radio Now broadcast, Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter, said there was a lot of optimism about exports at the conference, with many deals being made there, but on the other hand, there was pessimism regarding China’s lockdowns.
He reported that there are about five hundred ships anchored off the coast, waiting to unload in China and those ships have about a fifth of the world’s shipping containers on them, which has worsened the container shortage in the rest of the globe. He said it will take two months to clear, once China ends the lockdowns.
Meanwhile, Gould’s April 22 issue reported on the concern over eight dollars per bushel corn that dairy farmers face and stated, “At current feed prices, we estimate the average cost of production in the second quarter is above twenty three dollars per cwt. for farmers that are purchasing feed.”
When asked about it, Gould warned that a corn price that high means “We can’t stomach much of a decrease in dairy product prices and resulting milk prices because it won’t take much to fall below that level. That’s a really high number.”
Gould believes Chinese dairy imports will continue to lag below year ago levels through second quarter, due to the coronavirus lockdowns, the biggest occurring in Shanghai, but new cases are being seen in Beijing.
The good news, according to the Analyst, is that “Chinese dairy consumption surged since the pandemic. Consumption of dairy set a new high and increased by twelve percent last year to 42.3 kilograms per person, according to the Ministry of Agriculture and Rural Affairs. That increase is massive. It works out to about fifteen billion pounds of milk or the output of more than 600,000 cows,” wrote Gould.
One Chinese import that is growing is corn in the 2021 and 2022 marketing year. StoneX reported that “An April 22 sale added seven hundred and thirty five thousand tons (twenty nine million bushels) of old-crop to bring cumulative sales to 14.2 million tons (five hundred and fifty nine mbu) through almost two-thirds of the marketing year. That number had hit its roughly twenty three MMT top at this point last season. China already has another 1.5 plus MMT of U.S. corn purchased for 2022 and 2023 as well, after a six hundred and twelve thousand buy on April 22.”
The dairy industry awaits the first Global Dairy trade auction of May on May 3. Meanwhile we got a look at New Zealand dairy exports for March.
Whole milk powder shipments fell again, down 17.4% from a year ago, as China pulled back purchases. Skim milk powder exports were up 30.2%, a sixteen month high, according to HighGround Dairy. Volume to China was down however there was strength noted into Southeast Asia as well as the Middle East and North Africa.
Cheese exports were up six percent, and reached an all-time high, says HGD, even as volume dropped into China, the number one destination. There was a strong increase into Japan, up fifty five percent from 2021. Butter exports were up 19.1%.
One thing is sure. There are plenty of headwinds to deal with, including the ongoing war in Ukraine, inflationary prices particularly in food and fuel, strange repeated occurrences of destruction at food processing facilities around the country, and the newest addition, is a slowdown in U.S. trucking.
Add higher hay prices to the corn and soybeans. The April 28 Daily Dairy Report says “Drought, minimal hay stocks, and low hay acreage are coming together to push hay prices to all-time highs in key dairy states. Farmers are expected to harvest 50.3 million acres this year, lowest since 1907. For perspective, the DDR says “1907 was just fifteen years after Iowan John Froelich invented the tractor.”
The Agriculture Department’s latest Crop Progress report shows seven percent of the U.S. corn crop has been planted, as of the week ending April 24, up from five percent the previous week but nine percent behind a year ago and 8% behind the most recent five year average. The report shows three percent of the soybeans are in the ground, four percent behind a year ago and two percent behind the five year average.
In the week ending April 16, 54,800 dairy cows were sent to slaughter, down 6,100 head from the previous week and 5,600 or 9.3% below a year ago.
Checking the rear view mirror, the USDA’s 2020 Dairy Products Summary showed total cheese production at 13.3 billion pounds, up just 0.9% from 2019. Wisconsin remained the leading state with 1.06 billion pounds or 25.6% of U.S. production. Idaho was second, with 623.1 million pounds, followed by Minnesota at 608.3 million, and California with 581.1 million pounds. Wisconsin had five additional plants on line in 2020 and California added three.
Italian varieties totaled 5.63 billion pounds, down 0.8% from 2019 production and accounted for 42.4% of total cheese output in 2020. Mozzarella accounted for 79.1% of Italian production followed by Parmesan with 7.4% and Provolone at 6.5%. Wisconsin was the leading state in Italian cheese with 29.3%.
American type cheese hit 5.34 billion pounds, two percent above 2019 and accounted for 40.3% U.S. cheese. Wisconsin was the leading State in American output with 19.9%.
Butter production totaled 2.15 billion pounds, 7.6% above 2019. California was the leading state with 31.1% of the production.
Nonfat dry milk for human consumption amounted to 1.99 billion pounds, up 7.6%. Skim milk powders, at 695 million pounds, were up 21.4%, and dry whey totaled 951 million pounds, down 2.7%.
Milk production trends are increasing in most areas around the country, according to Dairy Market News. The exception is in the Southwest, namely Arizona, where warm spring weather is keeping milk output down year over year. Class I fluid milk demand reports are mixed throughout the country. Firm interests in the Northeast are being offset by slowdowns in the South. A number of contacts say Class I demand is unchanged. Soon to be school closings will change that data.
Cheesemakers are clearing discounted loads of spot milk in the Midwest, ranging from $2.50 to $1.50 under Class. Condensed skim availability remains similar, but hauling/processing continues to burden milk handlers and plant managers.
The Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) had praise this week for the U.S. Trade Representative.
A joint press release praised the “prioritization in this year’s Special 301 report of the importance of preserving U.S. food and beverage producers’ market access rights in the face of persistent efforts by the European Union (EU) to misuse geographical indications (GIs) and create non-tariff barriers to trade in markets around the world.”
The report follows detailed comments on the global scale of various common name threats submitted in January by CCFN and supported by USDEC and NMPF.
“The report outlines global challenges on intellectual property issues,” according to the press release, “and describes in detail the European Union’s (EU) campaign to eliminate competition by restricting the use of common food and beverage terms, such as ‘parmesan,’ ‘bologna’ and ‘chateau.”
“The EU’s strategy, active in numerous countries around the world, erects unfair barriers to trade that negatively impact non-EU exporters relying on common food names, as illustrated by USTR’s report which noted, ‘As part of its trade agreement negotiations, the EU pressures trading partners to prevent any producer, except from those in certain EU regions, from using certain product names, such as fontina, gorgonzola, parmesan, asiago, or feta. This is despite the fact that these terms are the common names for products produced in countries around the world,” the joint release stated.
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 firstname.lastname@example.org.