Week two of 2019 became week three of the partial government shutdown, and hope for an end was nowhere in sight. The Agriculture Department’s monthly World Agricultural Supply and Demand Estimates report, scheduled for Jan. 11, was the latest casualty of the shutdown. The report would have included the USDA’s latest estimates on U.S. milk production and milk prices, as well as crop estimates. The last time this happened was October 2013, and the report was eventually canceled.

Monthly U.S. trade data from the Bureau of Census, which was due to be released Jan. 8, was also not published, and the Northeast Dairy Farmers Cooperative’s newsletter editor, Bob Gray, says, “There will be a delay in writing the new rules for the Dairy Margin Coverage program. USDA loans and grants will not be processed, as well.”

Lots of eyes have been on the powder markets, which strengthened in the last three Global Dairy Trade auctions. The Daily Dairy Report’s Sarina Sharp wrote in the Jan. 4 Milk Producers Council newsletter that “lower milk output in parts of the U.S. and Europe is reducing milk powder production and global demand seems to be on firm footing.”

She adds that “China imported 67.9 million pounds of skim milk powder in November, 69 percent more than a year ago and the greatest volume ever for November. Chinese whole milk powder imports reached 87.7 million pounds, up nearly 30 percent from November 2017. Through November, China imported 11 percent more SMP and 6 percent more WMP than it did in the first 11 months of 2017. As China struggles to modernize its dairy industry without forcing contraction, imports are expected to remain robust.”

Sharp also warned that December U.S. milk checks will be “woefully inadequate,” but “subsequent milk checks will be considerably better, especially in those areas with high Class I or Class IV utilization.” She says “the dairy industry has undergone some painful pruning in 2018, but those producers who managed to survive could enjoy a more prosperous new year.”

Not having projections from this month’s WASDE, Class III futures, as of Jan. 10, projected a 2019 Class III average at $15.83 per hundredweight, up from $14.61 in 2018 and compared to $16.17 in 2017.

FCStone dairy broker Dave Kurzawski wrote in his Jan. 9 Early Morning Update that “if co-ops in the country have better returns from NFDM/butter production, that will take some milk away from producing surplus cheese. Overall the past few years, Class IV has continued to maintain discounts to Class III due to the weak NFDM market, but that may be changing after a multi-year bear market cycle.”

He adds that Mexico is back in the market and the past 12 months saw Mexico’s NFDM/SMP imports rise 9.1 percent at 344,820 metric tons. But Mexico re-exported close to 54,000 tons to Venezuela in the form of humanitarian aid, “so most of the increase in SMP exports to Mexico in the past two years has been because of their aid to Venezuela, which is in economic and political turmoil.”

HighGround Dairy’s director of market intelligence, Lucas Fuess, speaking in the Jan. 14 Dairy Radio now broadcast, said “the unthawing” of trade relations with China is good news for U.S. farmers and included the release of the trade data itself, which had been withheld since last April, plus U.S. rice was exported to China for the first time ever.

But while U.S. dairy exports to China are “doing well, considering the economic issues that China has had the past several months,” the big concern is the new competition. The U.S., New Zealand and Europe have traditionally been the biggest suppliers of dairy products to China. Other countries showed up in this latest data, including South America and Belarus, so market share will have to be fought for, he said, and the U.S. will have its work cut out for it to gain back those markets. Fuess concluded: “The U.S. can compete on a very strong level. However, as is apparent with trade around the world, it’s never a sure thing.”

The Wisconsin-based American Dairy Coalition called on President Trump to liquidate surplus cheese in storage. An ADC press release stated that U.S. dairy farmers are “in a crisis” and “we very much appreciate your recent assistance, but we need milk prices to rise. We want to become profitable, but due to the uncertainty created by lingering retaliatory tariffs, we only see a slight, if any, rebound anytime soon.

“Our milk price has dropped nearly 40 percent over the last four years,” the ADC charged. “Cheese exports from the U.S. to Mexico are down more than 10 percent annually and shipments to China have fallen almost 65 percent annually. If this isn’t bad enough, the industry faces onerous and costly dairy regulations, as well as a shortage of workers, making it hard to find a way each day to stay in business.”

The ADC adds that “despite assistance to offset the negative impacts of milk prices due to the implementation of tariffs with Mexico, Canada and China, more action is needed. Currently, 1.4 billion pounds of American, Cheddar and other types of cheese are sitting in cold storage throughout the U.S. With the price of milk at a record low, it is necessary that this surplus be liquidated to jump-start the industry,” the ADC argued.

New data from a national survey commissioned by the National Milk Producers Federation and released Jan. 10 finds that consumers, by a nearly 3-to-1 margin, want the U.S. Food and Drug Administration to enforce existing regulations and prohibit non-dairy beverage companies from using the term “milk” on their product labels. FDA is soliciting public comment regarding front-of-package dairy labeling regulations through Jan. 28.

The national survey conducted by IPSOS, a global market research and consulting firm, found that 61 percent of consumers believe FDA, which currently defines “milk” as the product of an animal but doesn’t enforce that labeling rule, should restrict non-dairy beverage companies from using the term “milk” on their product labels. Only 23 percent said FDA should not limit the term “milk” to dairy products, while 16 percent were uncertain.”