Milk Price Down Compared to 2020
Published: Friday, August 13, 2021
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department announced the July federal order Class III benchmark milk price at $16.49 per hundredweight, down 72 cents from June and $8.05 below the inflated price a year ago when Uncle Sam's Food Box program was buying lots of cheese. Last year's July Class III price was the second highest ever, at $24.54, 6 cents shy of the record set in September 2014. The seven-month Class III average stands at $16.90, down from $17.30 at this time a year ago and compares to $15.58 in 2019.
Last Friday morning Class III futures portended August at $16.02; September, $16.55; October, $17.05; November, $17.75; and December at $17.76.
The July Class IV price is $16 per hundredweight, down 35 cents from June but $2.24 above a year ago. Its seven-month average is at $15.01, up from $13.78 a year ago, and compares to $16.11 in 2019.
You'll recall that USDA's preliminary data pegged June milk production at 18.96 billion pounds, up 2.9 percent from June 2020. The latest Dairy Products report shows where that milk ended up, though StoneX Dairy reminds us that the year-over-year changes are mostly driven by the anomalies of last year's COVID pandemic.
Starting with cheese, June output totaled 1.12 billion pounds, down 2.9 percent from May and just .2 percent above June 2020. Year-to-date (YTD) total cheese output hit 6.8 billion pounds, up 3.3 percent from the same period in 2020.
Italian-style cheese totaled 473.1 million pounds, down 1.7 percent from May and 2.6 percent below a year ago. YTD Italian was at 2.9 billion pounds, up 1 percent.
American-type cheese, at 453.9 million pounds, was down 5.1 percent from May but 5.1 percent above a year ago. YTD American was at 2.8 billion pounds, up 6.1 percent.
Mozzarella output totaled 370.2 million pounds, down 4.9 percent from a year ago, with YTD mozzarella at 2.2 billion pounds, up .4 percent from 2020.
Cheddar totaled 327.9 million pounds, down 18.1 million pounds, or 5.2 percent, from May, but 24.9 million, or 8.2 percent, above a year ago. YTD Cheddar hit 1.99 billion pounds, up 5.6 percent from 2020.
U.S. churns produced 160.7 million pounds of butter, down 24.2 million pounds, or 13.1 percent, from May, but up 11.6 million pounds, or 7.8 percent, from a year ago. YTD butter output reached 1.12 billion pounds, down 2.1 percent from 2020.
Yogurt totaled 386.1 million pounds, down 3.2 percent from a year ago, with YTD at 2.4 billion pounds, up 3.9 percent.
Dry whey totaled 80.6 million pounds, up 2.9 million pounds, or 3.7 percent, from May, but 1.1 million, or 1.3 percent, below a year ago. YTD dry whey was at 472 million pounds, down 3.2 percent.
Dry whey stocks climbed to 80.6 million pounds, up 2.9 million, or 3.7 percent, from May, but were 1.1 million pounds, or 1.3 percent, below a year ago.
Nonfat dry milk output fell to 184.6 million pounds, down 20.8 million pounds, or 10.1 percent, from May but up 30.6 million, or 19.9 percent, from a year ago. Production YTD was at 1.1 billion pounds, up 11.4 percent from 2020.
Stocks crept up to 349.5 million pounds, up 1.3 million, or .4 percent, from May, as shipping challenges at U.S. ports continue, and were 68.4 million pounds, or 24.3 percent, above those a year ago.
Skim milk powder production totaled 32.6 million pounds, down 3.1 million pounds, or 8.7 percent, from May and 27.9 million pounds, or 46.1 percent, below a year ago. YTD skim milk powder, at 222.6 million pounds, was down 26.9 percent from 2020.
June regular hard ice cream output totaled 66.5 million pounds, down 8.6 percent from a year ago, with YTD output at 378.3 million pounds, up just .9 percent from 2020.
Speaking in the Aug. 9 Dairy Radio Now broadcast, StoneX broker Dave Kurzawski said Dairy Product reports don't tend to move markets, though he admitted June cheese output was 12 million pounds less than they expected while nonfat dry milk stocks were 20 million pounds heavier than they forecast.
He said the report was basically neutral for cheese and bearish on butter and powder but added: "As we walk into August, we're getting into a different time of year demand wise. If you look at the GDT numbers, which have been weak for eight events in a row, if you look at the dollar value, $3,000 a metric ton is somewhat of a benchmark. If you're below that, you're in kind of a bear market," he said, "and if you're above that you're in kind of a bull market," adding that he views the summer as a "correction in prices both domestically and globally."
He also said that USDA's solicitations last week for fresh milk and string cheese for fourth quarter food assistance and school lunch programs exceeded his expectations and should provide some degree of support for the market.
The USDA will spend $20 million to purchase fluid milk and announced last Thursday that it would buy another 3.6 million pounds of cheese through Section 32 in Cheddar chunks and shreds, plus Swiss blocks and slices. StoneX said, "This is to say nothing of the potential 15 million pounds of cheese that could be purchased for fourth quarter through the Emergency Food Assistance Program."
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