Average Corn, Soybean Prices Rose to 'Astounding' Levels Early this Year
Published: Friday, April 9, 2021
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The national average corn price jumped to $4.75 per bushel, up 51 cents per bushel from January, which followed a 27-cent rise the month before, and was a whopping 97 cents per bushel above February 2020.
Soybeans averaged $12.70 per bushel, up an astounding $1.80 per bushel from January, which followed a 40-cent rise from December. Soybeans were an unbelievable $4.10 per bushel above February 2020.
Alfalfa hay averaged $175 per ton, up $4 from January and $7 above a year ago.
Looking at the cow side of the ledger, the February cull price for beef and dairy combined averaged $65.60 per hundredweight, up $5.90 from January, 20 cents below February 2020, and $6 below the 2011 base average of $71.60 per hundredweight.
In the week ending March 20, 62,300 dairy cows were sent to slaughter, down 6,500 from the previous week and 5,200, or 7.7 percent, less than that week a year ago.
Cash dairy prices moved higher in the Good Friday holiday shortened week. The Cheddar blocks closed last Thursday at $1.775 per pound, up 5.5 cents on the week and 62.5 cents above a year ago when the blocks saw the second largest week-to-week plunge ever, losing 44 cents.
The barrels finished at $1.5125, up 5 cents on the week, 37.5 cents above a year ago when the barrels lost 20.25 cents, and are 26.25 cents below the blocks. Sales for the week amounted to 11 cars of block and four loads of barrel.
Central cheesemakers tell Dairy Market News that regional dairy farmers are seeing increases in day-to-day milk output.
Cheese demand has remained steady on the retail side and food service orders have picked up. Barrel producers report that steadily busy customer activity has kept loads moving out the door. Some report hearing of potential carnivals and fairs, but this year's spring and summer events could be 11th-hour decisions due to the pandemic. Cheese market tones are "holding somewhat steady, although some contacts view them more bullishly than not," said DMN.
Western retail cheese demand was slightly lower this week, while food service demand continued to increase. Export demand is also strong. There is plenty of milk available for cheese as plants continue to run at or near capacity. Inventories are mixed as some inventories grow, others are committed to surging food service sales. Plenty of Cheddar style cheese is available, though much is currently contracted. Hard Italian cheese demand is currently stable.
Butter climbed to last Thursday's close of $1.845 per pound, 7 cents higher on the week and the highest since June 19, 2020. It was 56.5 cents above a year ago when the butter fell 20.75 cents to $1.28. Nineteen cars found new homes on the week.
The last trading day in February saw butter at $1.47 per pound but, as food service demand continues its upswing, butter producers say the push into the $1.80s at the end of March is not surprising. Retail orders have continued to outdo expectations, but food service customers refilling pipelines have definitely given the market tones some life. That said however, contacts question the longevity as butter prices push higher, which could offset some of the recent international luster. Cream availability remains somewhat tight and plant managers say the heavy availability of much of the pandemic era has dissipated.
Some Western butter makers are producing additional 82 percent unsalted butter to keep up with steady export interest. Inventories are up year-over-year but much of it is already on contract, and butter makers expect to work through the stock over the next few months. Contacts hold varying opinions on how responsive consumers will be to retail holiday promotions; changes in grocery shopping habits and in-home gatherings pose challenges to accurate forecasting. However, as spring weather returns and vaccination rates increase, consumers are venturing out more, and food service demand is burgeoning, says DMN.
Grade A nonfat dry milk closed last Thursday at $1.19 per pound, up two cents on the week and the highest it has been since Jan. 20, and was 32.75 cents above a year ago. Eight cars were traded on the week.
CME dry whey set another CME record-high last Wednesday and stayed there last Thursday to close at 66 cents per pound, up 3.25 cents on the week and 33 cents above a year ago. There were four sales recorded for the week.
Exports are moving again now that the stuck cargo ship in the Suez Canal has been freed. The canal is a busy one.
About 30 percent of the world's shipping container volume moves through the 120-mile canal daily, according to Maersk, a Danish integrated shipping company that has been the world's largest since 1996.
There seems to be no end to money from Uncle Sam to offset the effects of the COVID. We talked about it in the April 5 Dairy Radio Now broadcast with Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter. Gould said USDA provided an update on its plan for COVID relief but, with respect to dairy, "They left us with as many questions as we probably had before."
Starting with the Food Box program, which successfully lifted cheese prices last year, we know it will end at the end of April, Gould said, however we don't know what will happen then.
They also left open ended the possibility of any future direct payments to dairy farmers or dairy processors or any new programs. That said, Gould reported that the USDA has stated it will implement a $400 million dairy donation program, which was funded in the stimulus bill passed last December.
They will also reopen the Coronavirus Food Assistance program II payments for dairy farmers who may have missed the deadline the last time around.
A lot of details are not available yet, he said, but he expects some pretty material changes in policy from the new administration. He believes there be a bigger emphasis on trade agreements and be more trade friendly compared to the Trump administration. However, in terms of direct payments, farmers probably fared better under Trump than they will under the Biden administration.
Cooperatives Working Together (CWT) member cooperatives accepted 14 offers of export assistance this week from CWT that helped them capture sales of 354,958 pounds of Cheddar cheese, 408,958 pounds of butter and 374,786 pounds of cream cheese. The product is going to customers in Asia, North Africa and Oceania from April through August.
CWT's year-to-date export sales now total 11.56 million pounds of American-type cheeses, 8.757 million pounds of butter (82 percent milkfat), 3.649 million pounds of AMF, 13.54 million pounds of whole milk powder and 4.239 million pounds of cream cheese. The products are going to 26 countries in six regions and are the equivalent of 534.9 million pounds of milk on a milkfat basis, according to CWT.
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