China Importing Less Dairy from U.S. as It Raises Domestic Output
Published: Friday, October 9, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
U.S. dairy prices depend a lot on what's happening globally and the elephant in the global room is China. August imports of whole milk and skim milk powder in China only amounted to 126.8 million pounds, down 15.2 percent from August 2019, and are down 4.2 percent year to date from the record highs of a year ago.
Cheese imports totaled 23 million pounds, down 20.5 percent, but butter imports, at 11.1 million pounds, were up 17.8 percent.
HighGround Dairy points out that whey product imports amounted to 122.4 million pounds, down 12.8 percent from July's record total, but were up 23.5 percent from a year ago and the strongest August on record, as China continues to rebuild its hog herd, devastated by African swine fever.
Fluid milk and cream imports also achieved record levels for any month yet again after July, says HGD. "Buyers increased purchases to build inventories ahead of the upcoming holidays, Mid-Autumn Festival and Golden Week. Imported milk remains more affordable, but a recent study by the China Skinny warns that foreign brand market share is shrinking and a big reason is that domestic brands offer smaller, single-serve packaging," according to HGD.
The Sept. 28 Daily Dairy Report warned that Chinese milk production has grown more than expected this year and is poised to continue expanding. That may affect future imports, the DDR warned: "The evolution of China's economy will influence global dairy prices in coming months. A sustained resurgence in demand could pull imports back on to the strong trajectory witnessed earlier this year. However, if recovery stalls and domestic production and stocks prove sufficient for China's needs, prices could weaken," the DDR stated.
Back home, a large drop in the latest All-Milk price and a higher soybean price served to lower the August milk feed price ratio, reversing two months of gains. The USDA's latest Ag Prices report showed the ratio slipped to 2.50, down from 2.69 in July, but compares to 2.26 in August 2019.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. One pound of milk could purchase 2.50 pounds of dairy feed of that blend in August.
The U.S. All-Milk price averaged $18.80 per hundredweight, down $1.70 from July and 10 cents below August 2019.
California's All-Milk price slipped to $20, down 90 cents from July but $1.30 above a year ago. Wisconsin's, at $19.40, was down $2.90 from July but was 30 cents above a year ago.
The national average corn price averaged $3.12 per bushel, down 9 cents per bushel from July and 81 cents per bushel below August 2019. Soybeans averaged $8.66 per bushel, up 16 cents from July, after jumping 17 cents the previous month, and were 44 cents per bushel above a year ago. Alfalfa hay averaged $172 per ton, down $2 from July and $7 per ton below a year ago.
Looking at the cow side of the ledger, the August cull price for beef and dairy combined averaged $70.70 per hundredweight, up 20 cents from July, $2.40 above August 2019, but was 90 cents below the 2011 base average of $71.60 per hundredweight.
In the week ending Sept. 19, 59,800 dairy cows were sent to slaughter, up 5,100 from the week before but 4,700 head, or 7.3 percent, below a year ago.
In politics, skipping past "the debate" and COVID afflicting the president, the House passed a revised $2.2 trillion stimulus bill last Thursday. You'll recall House Democrats crafted a $3.4 trillion bill in May but Republicans opposed both.
HighGround Dairy reports that the Democrat's bill includes similar provisions to the CARES Act, including another round of $1,200 cash payments to many Americans and additional unemployment aid. The bill includes aid to state and local governments, airline assistance, support to schools and restaurants, money for COVID-19 testing and tracing, and other provisions for the broader economy. HGD adds that there are four provisions specific to the dairy industry and are the same as the proposals in the May bill.
Bob Gray points out in his Northeast Dairy Farmers Cooperatives newsletter that "the sticking point with the Senate will be the $436 billion for state and local governments. The Senate has consistently balked on providing additional financial assistance to states they believe have not managed their budgets well. The House feels that states have been hurt financially by the COVID shutdown. So at this point, the standoff between the House and Senate continues."
Return to Top of Page