More Cows Equates to More Milk
Published: Friday, April 16, 2021
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
More milk is on its way. The Agriculture Department raised its estimate on 2021 milk production in the latest World Agricultural Supply and Demand Estimates report issued April 9, based "primarily on increased cow numbers."
2021 production and marketings were estimated at 227.7 and 226.7 billion pounds, respectively, up 400 million pounds on both. If realized, 2021 production would be up 4.5 billion pounds, or 2 percent, from 2020.
The 2021 fat basis import forecast was reduced while fat basis exports were raised on higher expected shipments of cheese. The skim-solids basis import forecast was reduced on lower imports of milk proteins and several other dairy products while the export forecast was raised on strong gains in shipments of skim milk powders and whey. Lactose shipments remain relatively weak.
Dairy product price forecasts were raised on improving demand, both domestically and in international markets. Prices of cheese, butter, nonfat dry milk and whey were raised, boosting both Class III and Class IV prices.
Look for a 2021 Class III milk price average of about $17.10 per hundredweight, up 35 cents from last month's estimate, and compares to the 2020 average of $18.16 and $16.95 in 2019.
The 2021 Class IV milk price is now estimated to average $15.15, up 70 cents from a month ago, and compares to $13.49 in 2020 and $16.30 in 2019.
In the week ending March 27, 65,900 dairy cows were sent to slaughter, up 3,600 from the previous week but 1,600, or 2.4 percent, less than that week a year ago.
The April 6 Global Dairy Trade auction reversed gears again. The weighted average inched back up .3 percent, after dropping 3.8 percent on March 16. Traders brought 55.3 million pounds of product to market, down from 59.2 million in the last event, and the average winning price was $4,081, down from $4,089.
Buttermilk powder led the gains, up 17.6 percent. It did not trade in the last event. GDT Cheddar was up 2.2 percent and butter was up 2 percent, after falling 2.8 percent last time. Anhydrous milkfat inched .8 percent higher, following a 3.7-percent rise. Skim milk powder was up .6 percent, after inching .7 percent higher, and lactose was down 6.5 percent, after shooting up 8.6 percent last time.
StoneX Group says the GDT 80-percent butterfat butter price equates to $2.5558 per pound U.S., up 5.2 cents, and compares to CME butter which closed last Friday at $1.88. GDT Cheddar, at $1.9928 per pound, compared to last Friday's CME block Cheddar at $1.83. GDT skim milk powder averaged $1.5272 per pound, up from $1.5197, and whole-milk powder averaged $1.8531 per pound, up from $1.8521. CME Grade A nonfat dry milk closed last Friday at $1.205 per pound.
Speaking of trade, the U.S. had a good February. StoneX Dairy reported that U.S. milk equivalent exports were up 16.3 percent from February 2020 when adjusted, and broker Dave Kurzawski talked about it in the April 12 Dairy Radio Now broadcast.
Nonfat dry milk/skim milk powder exports hit 157.8 million pounds, up 36.1 percent from a year ago, adjusted for the Leap Day, and up 11.2 percent year to date. Kurzawski said that powder exports to Mexico were up 27 percent.
Dry whey exports were good, thanks to China likely being the largest buyer of U.S. dry whey right now, up 22 percent from a year ago, according to Kurzawski.
Cheese exports totaled 66.5 million pounds, up just 1.1 percent from a year ago but down 3.9 percent for the two-month period. However, February Cheddar exports were up 23.7 percent, according to Kurzawski.
Butter exports, which pale in comparison to powder for example, totaled 7.6 million pounds, but up 120.4 percent from a year ago and up 102.3 percent year to date.
Kurzawski admitted that we are comparing against some weaker numbers a year ago and that may account for some of the percentage increases this year. However, "the absolute numbers are above our expectations," he said.
Also, the much-talked-about logistic problems seemed to have little impact, he said, and February shipments showed strength even as there was one less day for deliveries compared to the 2020 leap year.
The discussion of late has been on rising food service demand, he said, and retail demand remains consistent, though he cautioned "we're still in this pandemic. We don't know if we will have another shutdown, retailers know that and want to keep their shelves stocked. We may be exporting more than we think," he concluded, "but they're all good signs for demand."
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