This week’s Global Dairy Trade auction saw its weighted average of products offered move higher for the third consecutive session, up 0.5% following a 0.2% rise Oct. 1 and the 2.0% jump on Sept. 17.

Rennet casein led the charge, up 3.6%. Skim milk powder was up 2.4%, after a 2.7% rise, and anhydrous milkfat was up 0.8%.

GDT Cheddar again led the losses, down 2.2%, following a 3.4% dip. Butter inched 0.4% lower after slipping 0.2% last time. Whole milk powder was unchanged after slipping 0.2% last time.

Trade remains a volatile issue with the seemingly never ending dispute with China. President Trump meets with President Xi Jinping in Chile next month but there appears to be an agreement on Phase 1 which has halted additional tariffs.

FC Stone dairy broker Dave Kurzawski reported in the Oct. 21 Dairy Radio Now broadcast there is talk is of a purchase by China of $40-50 billion worth of U.S. agricultural products, and to put that in perspective, China’s 2017 purchases, before the trade dispute began, totaled about $17.7 billion. Last year they were just $7.7 billion so this is a sizable increase, he said, but we do not know yet if the $40-$50 billion is spread over three or four years.

Potentially it’s a really good deal for U.S. agriculture, Kurzawski said, though the U.S. does not export a large amount of dairy products to China. That of course could increase.

The trade agreement with Japan holds hope for the U.S. dairy industry as does the U.S.-Mexico-Canada trade agreement, which replaces the NAFTA.

Mid-October cash dairy prices found themselves strengthening as traders anticipated the September Milk Production and Cold Storage reports issued October 21 and 22 respectively.

Dairy Market News reported that Midwestern cheese producers blame $2-plus cheese for sliding sales, but cheese output is steady. Milk flowing to the Southeast has kept spot milk at a premium, typically around $1 over the past two weeks. Cheesemakers continue to use nonfat dry milk to standardize and fortify. Cheese inventories are balanced to tighter.

The Western market has gone through ups and downs the past few weeks and customers are resistant to current price trends. Production schedules are active. The higher prices are affecting international requests however, under the recent U.S.-Japan trade deal that might take effect by Jan. 1, the U.S. will see the elimination of Japan’s tariffs on cheese, its largest dairy product export to Japan.

The National Milk Producers Federation praised the Trump Administration for including a number of European dairy products, particularly cheeses from major EU exporters such as Italy, on a list of WTO-authorized retaliatory tariffs related to the successful U.S. case against European Airbus subsidies.

“We must reject European efforts to deceive the U.S. about the reality of Trans-Atlantic dairy trade,” wrote NMPF. “To that end, we asked the President to put the needs of U.S. dairy farmers above those of Italian and European farmers by maintaining the retaliatory tariff list against Europe.

“The U.S. is running a $1.5 billion dairy trade deficit with Europe because of unfair EU trade practices that largely block our access to their market while they enjoy broad access to ours. EU policies such as Italian-initiated bans on American-made parmesan, asiago and gorgonzola mean that they can ship us $1 billion in cheese each year while U.S. cheese exports to the EU clock in at $6 million.

“In light of this disparity and the EU’s refusal to meet its WTO commitments regarding illegal Airbus subsidies, American dairy farmers saw the proposed retaliatory tariff list’s strong focus on EU dairy and cheeses as at least temporarily creating a slightly more level playing field for Made in America products that face even higher barriers to entry in the EU market.”

Grade A nonfat dry milk inched a quarter-cent higher Monday and stayed there the rest of the week at $1.1675, highest level since February 18, 2015 and cents above a year ago. car loads traded places on the week.

Checking dairy’s bottom line, “Class III milk futures have climbed mostly higher since the beginning of the month and attractive margins remain in play as feed costs have held relatively steady,” according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC.

The MW stated: “Margins in the fourth quarter are approaching the 95th percentile of historical profitability within the last decade, driven largely by high Class III futures. Margins in the first and second quarter of 2020 are above the 85th percentiles, providing opportunities to protect potentially attractive pricing.”

Looking at dairy demand, HighGround Dairy reports that “While August total cheese disappearance dropped below prior year levels for the first time since January, the prior year comparable value was strong as August 2018 marked the third strongest month of last year for total cheese disappearance.

“Disappearance has not shown strong month to month volatility this year with most months within 5 million pounds of the 1.1- billion-pound mark. Disappearance was pulled lower by lower domestic and export demand in the month. August marked the strongest month of the year to date for domestic disappearance but the weakest month of the year to date for total cheese exports. American-style cheese disappearance was down slightly but marked the strongest disappearance in a single month so far this year,” says HGD.

Nonfat dry milk disappearance dropped after good performances in June and July but domestic demand remained above 2018 for the third consecutive month.

U.S. fluid milk sales fell in August, following a small increase in July. The latest data shows 3.87 billion pounds of packaged fluid sales in August, down 1.9% from August 2018.

Conventional product sales totaled 3.7 billion pounds, down 1.7% from a year ago. Organic products, at 208 million pounds, were down 6.6% and represented 5.4% of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, up 0.8% from a year ago and made up 33.4% of total fluid sales in the month. Sales for the eight month period totaled 10 billion pounds, up 1.1% from a year ago. Skim milk sales, at 274 million pounds, were down 9.7% and made up 7.1% of total milk sales for the month.

Packaged fluid milk sales, January through August totaled 30.4 billion pounds, down 1.8% from a year ago.

Conventional products year-to-date totaled 28.8 billion pounds, down 1.7%. Organic products, at 1.7 billion pounds, were down 3.8% and represented about 5.4% of total fluid milk sales for the period.

Lastly, the NMPF has joined calls for the Environmental Protection Agency to “finish the required scientific review of an influential groundwater study in Washington State.” It called on EPA Administrator Andrew Wheeler to have the EPA conduct a full review of what they’re calling a “flawed” study and joined several other groups calling for EPA action on the Yakima nitrate study, including the American Dairy Coalition, Congressman Dan Newhouse, the Washington State Dairy Federation, Save Family Farming, and others.

“Aside from the apparent flaws in the study, perhaps the most startling issue is the fact that this study has influenced decisions made by EPA without the required full review,” wrote Clay Detlefsen, NMPF’s Senior Vice President and Staff Counsel, in the letter to Administrator Wheeler. “While cursory reviews were conducted, whole sections were left out.”

Detlefsen listed four key areas where the study was flawed and based on errors and inadequate data. At least 15 top scientists have rejected the study, saying the data that was gathered doesn’t support its conclusions.