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President Biden signed a $40 billion aid package for Ukraine


U.S. butter stocks grew again in April but still remained well below a year ago. The Agriculture Department’s latest Cold Storage report shows the April 30 inventory at 299.6 million pounds, up 16.8 million pounds or 5.9% from March, but 90.5 million pounds or 23.2% below a year ago, the seventh consecutive month butter stocks were below the previous year. 

American type cheese grew to 836.3 million pounds, up 7.9 million pounds or 1.0% from the March level, which was revised up 6.2 million pounds, and were up 9.6 million or 1.2% above those a year ago. 

The “other” cheese category hit 620.5 million pounds, up 6.3 million or 1.0% from the March count, which was revised up 1.4 million pounds, and was a hefty 19.6 million pounds or 3.3% above a year ago.

The total cheese inventory hit a record 1.481 billion pounds, up 14.9 million pounds or 1.0% from March, and 31.9 million or 2.2% above a year ago.

The report is pretty bearish for cheese. StoneX Dairy group says “The cheese market has been disconnected from inventory, with the spot market running twenty to seventy cents above the price level you would expect based on inventory. The discrepancy between inventories and price action at the CME is likely supported by a material slowdown in Cheddar production combined with strong exports and high prices on the world market.”

As I briefly reported last week, China’s April dairy imports were down on just about every product except three, one of them ironically being infant formula, even as a military cargo plane brought infant formula this week to the U.S. from Europe to help the shortfall.

Starting with powder, China’s skim milk powder imports totaled 53.7 million pounds, down 31.8% from April 2021, with whole milk powder down 8.4%.

HighGround Dairy reminds us that we’re measuring imports against historically high levels a year ago, with the steepest drop coming in the form of fluid milk and cream, followed by whey, skim milk powder, and whole milk powder. New Zealand and the European Union experienced the largest losses, according to HGD, while imports, as well as market share, actually increased from the U.S.

HGD warned; "The combination of historically strong imports last year, with a slowdown in consumption due to COVID-19 lockdowns the past two months, will mean lower import figures likely through July."

Whey product imports totaled 102.3 million pounds, down 30.2%. Butter totaled 21.7 million, up 7.1%, and cheese imports amounted to 24.2 million pounds, down 28.5%. 

China’s imports played a big role in New Zealand’s dairy exports which were down 26% to that country, most landing May, according to StoneX, which added; “We can only assume May total imports are going to be down 20% plus as well.”

Overall New Zealand exports were down 2.9%, with the primary drivers being whole milk powder and infant formula, due in most part to China buying less but HighGround Dairy points out that total shipments to all other regions only dropped 2% as “Southeast Asia stepped in to procure higher volumes of nearly every commodity, taking advantage of the recently tepid bid from China; Indonesia, Thailand and Malaysia led the charge. Trade with Mexico was also strong, reaching levels not seen in approximately five years,” reports HGD.

Speaking of New Zealand, the May 26 Daily Dairy Report says milk output there dropped 5.6% in April, despite record-high milk prices, and was down 5.5% for the first four months of the year.

The DDR blamed drought-stressed pastures and a declining number of milk cows, adding; “Increasingly strict environmental protections for water and looming climate change regulations have been driving down cow numbers.” “Inflation and the country’s dependence on some imported feeds also played a role,” according to the DDR.

StoneX May 25 Early Morning Update adds; “Environmental restrictions in New Zealand and Europe will likely suppress the strength of global growth in milk production, which will provide prices some relative support moving forward.”  

Back on the home front, the last full week of May had limited USDA data to digest, other than the Cold Storage report. CME block Cheddar closed the Friday before Memorial Day at $2.28 per pound down ten cents on the week, lowest since May 10, but still 75 cents above a year ago.

The barrel’s fell to $2.2850 Thursday, lowest since Apr. 5, but closed Friday at $2.2950, down 5.25 cents on the week, 72.50 cents above a year ago, and 1.50 cents above the blocks. Three cars of block were sold on the week and eleven of barrel.

Milk availability was generally steady this week, according to Dairy Market News, with Mid-week prices at $2.50 to $2 under Class. Cheese orders have steadied after a busy spring. 

Some retail cut and wrap producers say orders are steady to seasonally strong, while other varietal cheesemakers report slow to steady sales. Generally, sales are on par with seasonal expectations, says DMN, and some contacts say year to year numbers are in the same ballpark. 

Demand for cheese is steady in Western food service markets, while retail demand softened this week. Export demand remains strong, as Asian purchasers are buying to ship in early 2023. Domestic cheese prices remain favorable compared to prices in other countries. Port congestion and the ongoing shortage of truck drivers continue to contribute to delays however.

The April Cold Storage report showing total natural cheese inventories at a record high may have contributed some bearishness to the market, says DMN. Cheese producers are running busy schedules throughout the region, as milk continues to be available. Reports continue that labor shortages and delayed deliveries of production supplies are causing plants to run reduced schedules.

After eight consecutive sessions of gain, the butter climbed to $2.8950 per pound Wednesday, highest since January 21, but shrunk back to a close Friday at $2.8775, 2.75 cents higher on the week, and $1.0675 above a year ago, on thirty three sales.

Churning is strong due to an increase in cream, says DMN. Reasons given included the holiday weekend and plant maintenance concerns at other cream end usage facilities. Some expect the recent cream price increases to resume following Memorial Day. Producers say butter demand is seasonally slower, but market expectations are “anything but bearish,” especially with the Cold Storage report showing butter stocks down 23%. “Bulls are here for the time being.”

The holiday had an impact on western cream demand and spot availability. Some plants looked to sell loads in preparation for the weekend, though buyers were less inclined to purchase for the same reason. Demand is strong for cream that will ship after the holiday, as butter and ice cream makers will be running busy schedules to build inventories. Butter output is steady, though plant managers say a shortage of labor continues to prevent them from running busier schedules. Food service butter demand is steady, though retail demand is soft, according to DMN. European butter remains in the mid-$3.00 range.

Grade A nonfat dry milk climbed to $1.86 per pound Friday, up 6 cents on the week, highest since March 24 and 56.75 cents above a year ago, on twenty six sales.

StoneX says Mexico remains aggressive with purchasing, which has been consistent throughout the year. Skim milk powder exports were up 8% in March and likely to be the same for April.

Dry whey fell to 48.50 cents per pound Monday, lowest since August 4, 2021, but rallied back to Friday’s close at 52.25 cents, up 1.50 cents on the week, but ten cents below a year ago, with ten sales reported on the week at the CME.

President Biden signed a $40 billion aid package for Ukraine but the Dairy and Food Market Analyst says the bill provides $5.1 billion for “food aid,” including $4.348 billion “to respond to humanitarian needs in Ukraine and in countries impacted by the situation in Ukraine.” It encompasses “emergency food and shelter and for assistance for other vulnerable populations and communities” and up to $760 million “to prevent and respond to food insecurity,” says the DFMA.

Speaking in the May 30 Dairy Radio Now broadcast, analyst and editor Matt Gould the funds would be price-supportive for dry dairy products like nonfat dry milk and possibly cheese and butter if the government seeks to offset the food inflation hitting our nation’s poor and result in helping low income food programs. Reminiscent of the Food Box program during the Trump Administration which benefited dairy markets, Gould said both programs involves “billions of dollars.”

Cheese, butter and powder prices are at historic levels, Gould said, in large part because feed is so expensive to produce milk on the farm. Those high prices are being seen at retail, he said, and near term nothing is happening to change that, adding that Europe’s milk supplies also continue to be constrained because they’re experiencing the same high feed prices. “As we sit today, there isn’t any wind of change. We’re going to stay at these elevated prices, he concluded. 

U.S. milk output is trending higher across much of the northern tier of states, according to the USDA’s weekly update, transitioning to steady in the middle and southwestern states, and lower in the southern states, from New Mexico to Florida. “The specific demarcation line varies week to week,” says DMN. “Higher temperatures and humidity are starting to take hold in the south, suppressing cow comfort and milk output.” 

This week’s Crop Progress report shows 72% of the U.S. corn crop planted, as of the week ending May 22, up from 49% the previous week, 17% behind a year ago and 7% behind the most recent five year average. The report shows 39% emerged, down from 61% a year ago and 12% behind the five year average.

Soybean planting was at 50%, up from 30% the previous week, but 23% behind a year ago, and 5% behind the five year average. The report adds that 21% have emerged, 17% behind a year ago and 5% behind the five year average.

Cotton is 54% planted, 7% ahead of a year ago and 3% ahead of the average.

In the week ending May 14, 54,300 dairy cows were sent to slaughter, down 2,100 head from the previous week, and 1,100 or 2.0% below a year ago.

In politics, the National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) applauded the Biden administration this week for its initiation of a second U.S.-Mexico-Canada Agreement (USMCA) dispute panel concerning Canada’s ongoing refusal to meet its USMCA dairy trade obligations, specifically its tariff-rate quota provisions. 

NMPF’s Jim Mulhern stated; “Prime Minister Trudeau regularly pledges Canada supports a rules-based global order built on cooperation and partnership, yet Canada continues to flout these trade commitments and plays games rather than meet its signed treaty commitments.” “Dairy farmers appreciate USTR’s continued dedication to aggressively pursuing the full market access expansion into the Canadian market that USMCA was intended to deliver. At the same time, given Canada’s history of persistent violations and the high likelihood Ottawa will once again disregard its USMCA obligations, USTR and USDA must be prepared to deploy the strongest-possible retaliatory measures envisioned under the USMCA should this ‘whack-a-mole’ approach continue. Canada’s actions must have consequences.” 

The International Dairy Foods Association also gave the action a thumbs up.

Meanwhile, NMPF and the USDEC welcomed the USDA’s announcement to offer additional support to American agriculture exporters through the new Commodity Container Assistance Program (CCAP). “The initiative will provide funding from the Farm Service Agency to exporters to reduce the costs of sourcing containers at the Oakland and Seattle-Tacoma ‘pop-up’ port locations.” 

Lastly, the International Dairy Foods Association announced the return of its annual Capitol Hill Ice Cream Party on June 22. “The Ice Cream Party has been an essential summertime event for members of Congress, their families, Capitol Hill staff and many other special guests since it began in 1983,” an IDFA press release stated. The event was not held in 2020 or 2021 due to the pandemic. 

“The celebration on the National Mall just outside the U.S. Capitol Building is one of Washington’s most anticipated for professionals working in food and agriculture,” says the IDFA, “bringing together thousands of guests, including members of Congress and officials from the executive branch, in a fun event showcasing America’s favorite frozen treat.”

“The return of the IDFA Ice Cream Party is the biggest scoop on Capitol Hill in years,” said IDFA President and CEO Michael Dykes, D.V.M. “We always say ice cream is as bipartisan as you can get. The IDFA Ice Cream Party is our way of showing appreciation on behalf of America’s dairy producers and dairy foods makers to public servants, members of Congress and all the individuals working in Congress and in our federal agencies.”

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.