Americans Continue to Favor Cheeses
Published: Friday, May 19, 2023
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The U.S. makes a lot of cheese and it's a good thing because American's love it. The May 8 Daily Dairy Report says, "Cheese consumption has been booming for decades. While Cheddar, Italian styles and charcuterie-board-worthy artisan cheeses get most of the attention, their poorer cousins, processed and powdered cheeses, are also popular. Mozzarella and Cheddar are the favored cheeses, with 2021 per capita consumption at 12.28 pounds and 11.41 pounds, respectively, but processed cheese consumption is not far behind at 8.24 pounds," the DDR stated.
Pizza is likely the biggest favorite food that includes cheese. However, the DDR says macaroni and cheese is right up there. I hate to think where milk prices would be if we didn't have a love affair with cheese.
StoneX says in its May 10 "Early Morning Update," "Even with inflation persisting, consumers remain willing to spend on food service. The U.S. Food Service Index has actually risen from the end of 2022 while on the contrary the Retail Food Sales Index has dipped slightly. The Food Service index is well above last year's levels and 2021 levels while the Retail Food remains below the last two years."
Broker Dave Kurzawski, in the May 15 "Dairy Radio Now" broadcast, said retail sales normally increase in times of recession as people eat at home, but to see food service so strong, "We don't know if it's because the economy is so strong or is this a hangover from COVID?" "They're spending money on food and they're spending a premium to feed themselves," he said. "If you look at the unemployment rate etc. the economy is still chugging along despite inflation."
Kurzawski admits this good economic news is not showing up in farm milk prices yet, "but it's coming." May Class III is hovering around a low to mid-$16 range and that will ding a lot of dairy farmers, he said, but this is the time of year that price lows are made, as we have plenty of milk. "This is a much more normal year for the first time this decade," he concluded. "The price strength and better demand should be on tap (for farmers) the second half of the year."
We export a lot of our cheese and those exports in March totaled 91.6 million pounds, down .4% from March 2022. Mexican demand soaked up a hefty 34% share, according to HighGround Dairy, and U.S. export volume to that market grew 16%. Cheese sailing to Australia jumped 39%, while exports to Asia fell, down 61% to South Korea and down 23% to Japan.
March U.S. dairy exports showed a lot of negatives, however. From a volume standpoint, total exports fell from March 2022, but, historically speaking, HGD says they were in the top three, just behind 2022, according to U.S. Census data.
Mexican demand remained robust, says HGD, up 25%. During first quarter, the U.S. exported 408 million pounds of dairy products to its southern neighbor, an increase of 33%, and through first quarter, Mexico held a nearly 28% share of U.S. exports, compared to first quarter 2022, when that figure was slightly above 21%.
Exports to South Korea were down 54%, warned HGD, and dropped 33% compared to the first quarter of 2022. Exports to China rose annually in March and on the quarter, driven by whey, fluid milk, cheese and butter shipments.
Nonfat dry milk exports totaled 172 million pounds, down 2.7%, though year to date were up 3%. Shipments to Mexico soared by 45%, totaling almost 93.6 million pounds, a 54% market share, says HGD. Lost sales to Asian markets, such as China, the Philippines and Vietnam, drove the overall drop in volume.
Butter exports totaled 8.6 million pounds, down 36%. In fact the U.S. was a net butter importer by 5.8 million pounds, as high year-end prices took a toll. Butter exports to key markets like Canada, Mexico and South Korea were down. Kiwi butter made up 93% of the imports to the U.S., according to HGD.
Dry whey exports totaled 46.9 million pounds, up 8.3% from a year ago, with YTD exports up 8.8%.
The Daily Dairy Report credits a strong Mexican peso for "making American dairy products look like a bargain, which suggests shipments will remain robust."
Midwestern cheese demand is mixed, says Dairy Market News. Some plants say cheese demand is steady to strong and are turning away orders as capacity is full. Others are scheduling maintenance downtime due to slower demand. Milk remains abundant in the region with spot offers as low as $12 under Class III at mid-week. Prices ranged $2.50 under to 50 cents over a year ago. Current prices are not expected to increase until flush level milk runs its course, says DMN.
Retail and food service demand is strong to steady for cheese in the West. A few manufacturers indicate tight inventories for retail demand, as production keeps moderately ahead of contracted obligations. Sources indicate softening exports though Mexico and South America show strong to steady demand while purchasers for Asia look to focus on additional fourth quarter bookings.
The May 11 Daily Dairy Report says the Northeast Federal Milk Marketing Order has authorized cooperatives and processors to dump surplus milk "due to labor shortages, trucking and freight shortages, as well as equipment hindrances."
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