COVID-19 Disrupting Milk System
Published: Friday, December 4, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Back home, the cash dairy markets were mixed in the shortened Thanksgiving Week. The 40-pound Cheddar blocks closed last Wednesday at $1.68 per pound, up 3.50 cents on the week but 28.25 cents below a year ago.
The 500-pound Cheddar barrels finished at $1.4225, unchanged on the week but 82.50 cents below a year ago when they were priced 28.5 cents above the blocks. This year they are 25.75 cents below the blocks. There were only two sales of block on the week at the CME and 22 of barrel.
Midwest cheese producers continue to report COVID-19-related quarantines affecting staff, from production to the office, according to Dairy Market News. But cheese output continues as well, with spot milk at "notably declining prices during the holiday week." Cheese plant managers said they were receiving call after call from milk suppliers looking to find homes for the milk during the holiday weekend.
Retail demand has picked up a little for some cheese producers, says DMN, but they say it's more of necessity based purchasing, whereas most customers remain on the sidelines waiting to see how low prices go before returning. "Cheese market tones continue to struggle to find their footing," said DMN.
Western cheese markets also had a tone of uncertainty this holiday week, according to DMN, as "Block and barrel cash market prices have fallen to levels comparable to the other 2020 low watermarks in August and March." While some contacts suggest this may prompt more buys, others are wary and want to let the dust settle first. Demand within retail and pizza channels has remained solid, but food service demand is weak. Some market participants suggest buyers have their pipelines filled and are not looking to add to their inventories. Cheese supplies are available to meet most needs and cheese output is active with plenty of holiday milk to contend with, says DMN.
Butter continued its meltdown, no thanks to the Cold Storage data, falling to $1.31 per pound last Tuesday, lowest since May 8, but rallied last Wednesday, regaining a nickel, and closed at $1.36, up 1.50 cents on the week, but 63.75 cents below a year ago. A lot of butter found its way to Chicago in the three days, 73 loads to be exact, 44 last Wednesday alone.
DMN says some butter plants were allotting a day off for the Thanksgiving holiday while others were down Thursday through the weekend. Churning has been busy with plenty of cream at decreasing multiples. Retail butter demand has been very busy, says DMN, while food service demand "continues to struggle in these questionable times for restaurants, schools and the like."
Western contacts expected lots of cream over the Thanksgiving weekend due to manufacturing facilities closing. DMN said, "As butter makers shift production to end of year holiday orders, the underlying focus is to manage surplus levels. Requests for holiday print butter remain active but inventories appear to be quite adequate."
Spot Grade A nonfat dry milk finished at $1.0950 per pound, up a penny on the week, but 14.25 cents below a year ago, with 23 loads making their way to the CME, looking for a home.
Dry whey finished at 43 cents per pound, down .75 cents on the week, but 7.75 cents above a year ago, with only one sale on the week.
The U.S. cotton harvest is 77 percent complete, as of the week ending Nov. 22, up 2 percent from the same week a year ago, and 6 percent ahead of the five-year average.
One last reminder to dairy producers. The deadline to enroll in Dairy Margin Coverage for the 2021 program year is Dec. 11. Contact your local Farm Service Agency county office for complete details.
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