The Agriculture Department announced the July benchmark Class III milk price at $17.55 per hundredweight, up $1.28 from June, $3.45 above July 2018, and the highest Class III price since December 2014. It equates to $1.51 per gallon, up from $1.40 in June and $1.21 a year ago.
The Wisconsin all milk price for June 2019 was $17.90 per hundredweight according to the latest National Agricultural Statistics Service’s Agricultural Prices report. This was 20 cents lower than last month’s price but $1.40 higher than last June’s price.
The U.S. all milk price for June was $18.10 per hundredweight, 20 cents higher than Wisconsin’s price and 10 cents higher than last month’s U.S. price. Sixteen of the 24 major milk producing states had a higher price when compared with May, six had a lower price, and two were unchanged. Florida and Arizona had the largest increases, up 60 cents and 40 cents, respectively, from last month. South Dakota and Iowa had the largest decreases, both down 30 cents. California’s All Milk price was 20 cents higher than Wisconsin’s.
The Chicago Mercantile Exchange 40‐pound block cheese price closed at $1.8200 per pound on July 31, while barrels were $1.6975 per pound. The CME butter price was $2.3450 per pound.
For the week ending July 27, 2019, the Agricultural Marketing Service U.S. weekly 40‐pound block cheese price averaged $1.8599 per pound, and 500 pound barrels adjusted to 38 percent moisture averaged $1.7715 per pound. The U.S. butter price was $2.3815 per pound.
FC Stone stated in its July 29 Early Morning Update that “Dairy product demand seems to have slumped somewhat this month, but that doesn’t eliminate issues with milk production or cow culling on US dairy farms.” It adds that US milk production was flat versus last year through June but “Dairy producers have done a great job of increasing component production, particularly fat, for several years now. Component production bumps US milk production to 0.8 percent growth for the first six months of this year. Still that’s down from last year.”
Dairy Market News says most Midwest cheesemakers report that demand is meeting expectations but some say the early summer upticks have steadied somewhat. Curd and process cheesemakers continue to report positive sales numbers. Cheese production has slowed, as spot milk availability is dwindling and those looking for spot milk are finding discounts harder to find. Spot prices ranged from $1 under to $2 over Class. Stocks are balanced regionally.
Higher feed prices and just a small gain in the All Milk Price resulted in another slip in the June milk feed price ratio. The USDA’s latest Ag Prices report puts it at 2.08, down from 2.10 in May but it is up from 1.98 in June 2018.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk today purchases 2.08 pounds of dairy feed containing that blend.
June trade data is indicative of China’s continuing increase of dairy imports, unfortunately it is of small benefit to U.S. dairy farmers, according to Lucas Fuess, director of dairy market intelligence with HighGround Dairy in Chicago.
Speaking in the Aug. 5 Dairy Radio Now broadcast, Fuess reported that whole milk and skim milk powder imports were strong. Fat imports, including anhydrous milkfat and butter, were down from a year ago, but last year was a very strong year, he said. The only area of “no hope in sight for recovery” is whey and lactose, due to the African Swine Fever outbreak.
China also continues to diversify what countries it purchases dairy products from, according to Fuess. He cited skim milk powder as an example. June imports were up 27 percent from a year ago, he said, but the U.S. market share fell from 18 percent to just 2 percent. U.S. sales were down 88 percent from a year ago, he said, “So it continues to be a struggle for the U.S. to fight for market share but hopefully Chinese purchases will remain strong into the back half of the year and the U.S. regain and fight for some of that market share.”
There will be a protein deficit in China, due to the slaughter of the pig herd there and some of that will have to be made up by dairy protein. Fuess says “That is the ray of hope we continue to look out for.” “Chinese consumers are shifting away from pork which is becoming expensive and hopefully moving to dairy products.” “Or, China culling some of their dairy herd to get that protein would also increase imports as they cannot produce the product domestically.” The best end is that the U.S. and China resolve their trade differences so the U.S. can export more of its dairy products to China, he concluded.
The Agriculture Department revised its April fluid milk sales report and while the correction is better news, it still begs for a change of direction. The revision shows 3.8 billion pounds of packaged fluid sales, up from 3.7 billion originally reported but still down 1 percent from a year ago versus a 3.1 percent drop originally reported. Conventional product sales totaled 3.6 billion pounds, down 0.4 percent from a year ago, instead of 2.4 percent. Organic products, at 188 million pounds, were down 11 percent, instead of 16.5 percent and represented about 4.9 percent of total sales for the month.
The July 26 Dairy and Food Market Analyst reports that fluid sales through all channels declined by 0.8 percent in May with conventional sales down 0.8 percent and organic sales down 0.7 percent. It adds that “Retail fluid milk sales fell at an accelerated pace during June and were down 4.2 percent in the four weeks ending June 16, according to IRI data. The activist video showing animal abuse at Fair Oaks Farms was released at the start of the month, which was a contributing factor. Non-dairy milk sales were up 4.2 percent year over year in those four weeks and had 8.1 percent market share,” according to the DFMA.
In politics, the Senate Finance Committee convened a hearing July 30 on the U.S.-Mexico-Canada Agreement. The National Milk Producers Federation President and CEO Jim Mulhern praised testimony given by Tom Vilsack, president and CEO of the U.S. Dairy Export Council. Vilsack stated that “The USMCA delivers key wins for America’s dairy farmers and the exports that drive stronger sales. With USMCA, dairy farmers will see more export opportunities and greater trade certainty. Without USMCA, we lose out on $314 million in additional dairy exports. We also lose the benefit of the new rules this deal puts in place, such as key reforms to Canada’s dairy system and stronger safeguards for our cheese exports to Mexico.”
NMPF’s Mulhern, in a press release “commend the Senate for spotlighting USMCA’s importance and strongly support the testimony offered by USDEC on how the agreement benefits dairy. To usher in USMCA’s improvements for dairy farmers and build momentum for additional trade agreements with key markets like Japan, we urge swift action to resolve any outstanding issues and secure approval of USMCA.”