High milk prices produce high milk production, and preliminary data in the USDA’s November Milk Production report proves that.
Output totaled 18.0 billion pounds, up a very bearish 3.0% from November 2019 and the biggest gain since December 2014. November output in the top 24 producing states hit 17.2 billion, up 3.1%.
Revisions lowered the October 50-state and 24-State totals by 7 million pounds, putting the 50 States at 18.55 billion pounds, still up 2.3% from October 2019.
November cow numbers totaled 9.41 million in the 50 states, up 12,000 from October’s count, which was revised up 5,000 head, and is 62,000 above a year ago.
November output per cow averaged 1,916 pounds, up 43 pounds or 2.3% from a year ago.
California milk was up a hefty 2.6% from a year ago, thanks to a 55-pound gain per cow offsetting 5,000 fewer cows milked. Wisconsin was up 2.7%, on a 60-pound gain per cow offsetting 5,000 fewer cows.
Idaho was up 2.0%, thanks to 11,000 more cows and 5 pounds more per cow. Michigan was up 3.6%, on a 45-pound gain per cow and 6,000 more cows. Minnesota was up 3.9%, on a 60-pound gain per cow offsetting 2,000 less cows. New Mexico was up 2.5%, on a 35-pound gain per cow and 2,000 more cows.
New York was up 2.1%, thanks to a 40-pound gain per cow. Cow numbers were unchanged.
Oregon was down 1.4% on 2,000 fewer cows but output per cow was up 5 pounds. Pennsylvania was up 0.9%, on a 25-pound gain per cow offsetting a loss of 3,000 cows from a year ago.
South Dakota was up 13.4%, on 13,000 more cows and 55 more pounds per cow. Texas was up 9.8% on a whopping 33,000 more cows and a 75-pound gain per cow.
Washington state was off 0.4% on 2,000 less cows, with milk per cow up 5 pounds. Only six of the top 24 states showed declines.
Hope in Vilsack
Lawmakers have cobbled together another so-called COVID relief package that will carry a $900 billion price tag, with $26 billion earmarked for nutrition assistance and agriculture and rural programs.
Meanwhile, some in the dairy industry applauded the pick of Tom Vilsack as Secretary of Agriculture in a Biden administration, due to his current position heading the U.S. Dairy Export Council.
But, that may or may not be totally positive, says Matt Gould, analyst and editor of the “Dairy and Food Market Analyst.”
Speaking in the Dec. 21 “Dairy Radio Now” broadcast, Gould discussed the expectation of government intervention in the markets due to the ongoing COVID devastation. He said that restaurant lockdowns and even the snowstorm that hit the East Coast last week are affecting demand, especially for butter and cheese.
“We’re past the rush of holiday orders, so we’re seeing the fundamentals of dairy products deteriorating,” Gould warned. “You look at that and say that’s got to be price negative. But that sits in the backdrop of a government that’s looking to intervene in markets, funding more food purchases.”
He said it remains to be seen what the new secretary’s priorities will be in terms of market intervention “but it’s likely he will be intervening.” He added that, while Vilsack would come to the job with a better understanding of the dairy industry than previous secretaries, “He is particularly sensitive about doing anything that would disrupt U.S. dairy exports.”
“Traditionally, dairy policy has focused on the domestic market,” Gould said, “but Vilsack is going to be concerned the U.S. remains export competitive, which might mean policy that creates lower domestic prices some of the time, or at least sensitive to not wanting to spike U.S. prices and make us not competitive.”
Santa came early
CME dairy prices showed little reaction to the November Milk Production report last week. The Cheddar blocks marched to $1.6525 per pound last Tuesday but closed Friday at $1.6175, unchanged on the week and 24.25 cents below a year ago.
The barrels finished Friday at $1.4750, up 3.25 cents, but 19 cents below a year ago, and 14.25 cents below the blocks; 17 cars of block traded hands at the CME last week and 16 of barrel.
The blocks fell 4 cents Monday on 7 trades, but jumped 9.75 cents Tuesday, hitting $1.6750, with 15 cars sold. Amazing what Santa, I mean lawmakers in Washington, spending more money will do.
The barrels lost 0.25 cents Monday but pole vaulted 15.25 cents Tuesday on 1 trade, and hit $1.6250, highest since Nov. 12, and only 5 cents below the blocks, as traders awaited the afternoon’s November Cold Storage report.
StoneX Dairy says foodservice data from Black Box Intelligence showed sales in the last week of November down 16% from a peak of about negative 6.5% in early October. It was the third consecutive week of decline and all regions it collected data from saw declines, “clear that the winter weather is taking its toll on foodservice on top of many cities banning indoor dining.”
StoneX calculated domestic sales disappearance year-over-year levels without government purchases and warned, “It paints a grim picture. Without a renewal of government purchases we could likely see a movement towards the trend that our milk, butter and cheese figures are presenting. Over the course of the pandemic we have seen a decline in non-government domestic sales compared to 2019 levels. It isn’t a factor of consumers not wanting dairy products as much as it is an issue of demand disappearing due to the removal of normal school and restaurant purchases.”
Dairy Market News reports that Midwest cheese market tones have “steadied.” Mozzarella and or pizza style cheesemakers say buyers are returning. Curd and barrel producers say interest remains but sales have slowed. Foodservice demand is “tricky at best.”
Spot milk is widely available and offers remain well below Class but production is steady. Cheesemakers also report that employees are returning after COVID quarantines but staffing remains a concern in plants.
Western cheesemakers have no issue getting milk, thus cheese output is active. Retail and pizza cheese sales have been adequate to solid but food service demand is disappointing, says DMN. “As schools enter their winter breaks and pockets of the region face tighter restrictions on sit down dining, foodservice demand could diminish into the abysmal category.”
One positive note is that with the lower market prices, buyers, including those from export markets, are more interested in seeking cheese deals, says DMN.
Cash butter got a small boost from last week’s GDT, climbing to $1.4750 per pound Tuesday, but it was short-lived and closed the week at $1.4550, 2.50 cents lower and 55 cents below a year ago, with 36 cars finding new homes.
The butter gained 2 cents Monday and added 4.50 cents Tuesday, climbing to $1.52.
Bulk butter is available, according to most contacts, but plant managers report continued interest in keeping supplies in check, says DMN. Cream availability is wide and putting stress on suppliers trying to find homes for the cream Christmas and New Year’s Week. Butter market tones are “uncertain.”
Western butter output shows no sign of slowing as cream supplies are heavy. Butter makers’ concerns have pivoted to processing bulk butter for storage and use for near term 2021, says DMN. Interest is following normal seasonal patterns as a few buyers assess near term needs.
The domestic butter price remains competitive in the export market, as evidenced in the latest GDT, and “industry representatives are keeping a close watch on the global butter price.”
Grade A nonfat dry milk closed Friday at $1.15 per pound, up 2.25 cents on the week but 10 cents below a year ago; 11 sales were reported on the week.
The powder was unchanged Monday but inched back 0.25 cents Tuesday to $1.1475 per pound.
Spot dry whey finished Friday at 45.50 cents per pound, 1.25 cents lower on the week but 14 cents above a year ago, with 3 sales for the week.
The whey was unchanged Monday but gained 1.25 cents Tuesday, climbing to 46.75 cents per pound.
Fluid sales down 1.8%
October fluid milk sales did not fare well. The USDA’s latest data shows 3.97 billion pounds of packaged fluid products were sold, down 1.8% from October 2019.
Conventional product sales totaled 3.7 billion pounds, down 2.1% from a year ago. Organic products, at 237 million pounds, were up 2.8%, and represented 6.0% of total sales for the month.
Whole milk sales totaled 1.3 billion pounds, down 1.6% from a year ago. Sales for the 10-month period totaled 12.9 billion pounds, up 3.5% from 2019, and made up 32% of total milk sales for October.
Skim milk sales, at 232 million pounds, were down 16.3% from a year ago and down 14.6% year to date.
Total packaged fluid milk sales, January through October, amounted to 38.4 billion pounds, up 0.2% from 2019. Conventional product sales so far, totaled 36.0 billion pounds, down 0.5%. Organic products, at 2.4 billion pounds, were up 11.1% and represented 6.2% of total fluid milk sales so far for the year.
Last but not least, I would like to take this opportunity to extend my best wishes to you and your family for a blessed and joy-filled Christmas. Though COVID may affect the day, it cannot affect the Spirit and the joy this day truly represents, the “reason for the season.”
As the Proverb says, “A joyful heart, makes a cheerful face.” I hope you have both this year and on into 2021.
From: Capital Press
