Technical issues delayed reporting of the March 5 Global Dairy Trade auction, but once resolved, the weighted average of products offered moved higher for the seventh consecutive event, jumping 3.3 percent. That followed a 0.9 percent ascent Feb. 19 and 6.7 percent on Feb. 6. Sellers brought 52.8 million pounds of product to the market, down from 55.8 million on Feb. 19.
Gains were led by buttermilk powder, up 11 percent. GDT Cheddar was up 6 percent after it led the gains last time with a 2.9 percent boost. Whole milk powder was also up 6 percent after it inched 0.3 percent higher last time.
Anhydrous milkfat was up 3.9 percent following a 0.7 percent increase, and butter was up 3.7 percent after it gained 1.2 percent in the last event. Lactose rounded up the gains with a 0.6 percent move higher.
The Agriculture Department continues to play catch-up in its delayed reports due to the government shutdown. The latest release was the January Livestock Slaughter report, which showed dairy cow culling took a jump from December and was up from January 2018.
An estimated 298,400 head were slaughtered under federal inspection in January, up 37,200 head from December, indicative of the tough times on the farm and perhaps weather-driven as well. That’s up 8,600 head, or 3 percent, from a year ago.
The March 1 Daily Dairy Report warns of a shrinking supply of youngstock on U.S. dairies, in addition to a shrinking dairy herd. The DDR cited the recent semi-annual Cattle report, where the U.S. Department of Agriculture estimated the inventory of milk cows on Jan. 1 was at 9.35 million head, down 0.8 percent from a year ago.
“There were 4.7 million dairy heifers at the start of the year,” the DDR stated, “nearly 67,000 head fewer than at the beginning of 2018, a decline of 1.4 percent. The agency also revised downward its estimate of last year’s dairy heifer inventory by 0.3 percent, or 12,700 head. For the third straight year, the number of dairy heifers expected to calve and enter the milk cow herd has retreated. USDA projected 3 million dairy heifers will calve in 2019, down 30,700 from Jan. 1, 2018. Since peaking in 2016, the number of dairy heifers expected to calve has fallen by 3.6 percent,” according to the DDR.
In another delayed USDA report, December U.S. dairy export data was a little weaker than expected, reports FCStone, “driven mostly by dry whey and WPC being down 36 and 52 percent from last year, although NFDM was a little weaker than expected, as well.
“It’s hard to disentangle the African Swine Fever from the tariff impact,” explains FCStone, “but U.S. shipments of tariff-affected products were down 59 percent from year-ago levels. Growing exports to other countries were making up for lower shipments to China and Mexico, but shipments of unaffected products were below year-ago levels in November and December, too. If there is anything (mildly) bullish in the aged data, it is cheese exports still holding together pretty well,” says FCStone.
Dairy Market News reports that a number of Midwestern cheesemakers say that orders have been slow since early February. Seasonally, expectations are not particularly high for certain producers. That said, some plant managers have picked up production as milk remains discounted week over week.
Continued winter weather in the Upper Midwest has caused some closures at Class III facilities, pushing extra milk onto the spot market and prices ranged from 50 cents under to $2 under Class III. Cheese market tones are maintaining the ground they have gained recently, says DMN, but cheese inventories are long nationally. Regionally, a number of contacts suggest respective inventories are “in balance.”
Cheese facilities continue to operate at or near full capacity, and processors are happy to push off extra loads of milk into other manufacturing channels, especially as parts of the region enter spring flush. Cheese stocks are plentiful, and cheesemakers want to keep tabs on inventories.
Cooperatives Working Together members accepted 14 offers of export assistance from CWT to help capture sales of 2.158 million pounds of Cheddar, Gouda and Monterey Jack cheese; 524,700 pounds of butter; and 1.543 million pounds of whole milk powder. These products are going to customers in Asia, the Middle East, North Africa and Oceania through August.
CWT’s 2019 exports now total 22.436 million pounds of American-type cheeses, 1.709 million pounds of butter (82 percent milkfat) and 12.641 million pounds of whole milk powder to 21 countries and are the equivalent to 337.8 million pounds of milk on a milkfat basis.
The Consortium for Common Food Names warns that the U.S. dairy industry and the U.S. economy could be hit with $9.5 billion to $20 billion in revenue losses if the European Union is successful in expanding restrictions on the use of generic terms like parmesan, asiago, feta and others.
That’s according to a new study conducted by Informa Agribusiness Consulting, commissioned by the CCFN and the U.S. Dairy Export Council. The study provides timely information in light of U.S.-EU trade negotiations, according to the CCFN, and examines the potential impact the EU’s aggressive geographical indications agenda would have if imposed on a broad variety of U.S. cheeses and markets.
“Seizing the common names that U.S. marketers have used for generations would confuse and alienate both domestic and international consumers, leading to a dramatic drop in demand for U.S. cheese,” the CCFN argued. “Prices could fall 14 percent, and consumption of U.S.-produced cheeses could drop by 306 million to 814 million pounds in the first three years.
“At the same time, EU cheese exports could see a surge of 13 percent, thereby exacerbating the existing $1.4 billion U.S.-EU dairy trade deficit. The impact of GI restrictions would also have grave effects on the broader dairy industry, through plummeting milk prices and shifting demand, as well as on the broader U.S. economy.”
Agriculture Secretary Sonny Perdue got an earful on behalf of hurting U.S. dairy farmers after meeting Feb. 27 with Arden Tewksbury, manager of the Progressive Agriculture organization before the House Agriculture Committee Meeting.
Before the session began, Tewksbury delivered a letter to Perdue, urging him to take immediate action to help dairy farmers because, according to Pro-Ag, the total loss to our dairy farmers for each year for the last four years equals $12 billion and the loss each year to the rural economy is at least $60 billion.
Pro-Ag called for holding national milk hearings for dairy farmers to “give them an opportunity to illustrate how tough it is on our dairy farms.” The group also called for an emergency floor price of $20 per hundredweight be placed under milk used to manufacture dairy products and called for a new pricing formula that considers the dairy farmers’ cost of operation.