Search Site   
Current News Stories
Solar eclipse, new moon coming April 8
Mystery illness affecting dairy cattle in Texas Panhandle
Teach others to live sustainably
Gun safety begins early
Hard-cooked eggs recipes great for Easter, anytime
Michigan carrot producers to vote on program continuation
Suggestions to celebrate 50th wedding anniversary
USDA finalizes new ‘Product of the USA’ labeling rule 
U.S. weather outlooks currently favoring early planting season
Weaver Popcorn Hybrids expanding and moving to new facility
Role of women in agriculture changing Hoosier dairy farmer says
   
News Articles
Search News  
   
Uncertainty follows announcement of Food Box program Round 5

 
By Lee Mielke
 
The USDA named the approved contractors for Round 5 of the Farmers to Families Food Box program, which was announced on Jan. 4. The USDA will purchase up to $1.5 billion worth of food for delivery through the end of April. However, HighGround Dairy (HGD) says the total spend is vastly below the $1.5 billion committed, though reports indicate that this announcement is only for the first four weeks of the program and vendors will reportedly receive additional awards for March and April delivery.
The USDA announced changes to foods allowed in The Emergency Food Assistance Program (TEFAP),” HGD said. “The COVID-19 stimulus bill allocated $322.5 million for food purchases via this program throughout 2021, but initially, dairy products were not included in the allowed foods list. Via the Federal Register, milk (UHT and refrigerated) and cheese (American and Cheddar) will now be available for distribution using this funding,” HGD said.
“By not announcing the approved contractors for the entirety of the round, USDA took a different approach than in the past,” HGD said. “This small announcement was overwhelmingly bearish. A key question will be how President Biden and Secretary-elect Vilsack choose to spend the remaining money budgeted for this round, and HGD warned; “The uncertainty created will create vendor hesitation when procuring dairy products. This hesitation, and the lower than expected purchases early in the program, will pressure dairy prices in the near term.”
Meanwhile, the global dairy economy appears strong, if the second Global Dairy Trade auction of 2021 is any indication. Tuesday’s overall weighted average was up for the fifth consecutive event, jumping 4.8 percent, biggest gain since Aug. 7, 2020, and followed the 3.9 percent jump on Jan. 5.
Gains were led by anhydrous milkfat, up 17.2 percent, following a 5.5 percent rise last time. Skim milk powder followed, up 7.0 percent, after a 4.1 percent boost. Butter was up 4.6 percent, after jumping 7.2 percent, and whole milk powder was up 2.2 percent, following a 3.1 percent rise. GDT Cheddar was down 0.3 percent, after a 5.0 percent gain on Jan. 5.
StoneX Dairy Group equated the GDT 80 percent butterfat butter price to $2.0952 per pound U.S., up 9.2 cents from the last event, which saw a 13.5 cent gain. CME butter closed Friday at a bargain basement $1.4025. GDT Cheddar cheese equated to $1.8518 per pound and compares to Friday’s CME block Cheddar at $1.61. GDT skim milk powder averaged $1.4709 per pound, up from $1.3805, a 9 cent jump. Whole milk powder averaged $1.5333, up from $1.4996. CME Grade A nonfat dry milk closed Friday at $1.1725 per pound.
China’s December dairy import data showed combined whole milk and skim milk powder imports at 169.5 million pounds, down 17.6 percent from December 2019. Whey imports, at 128.4 million, were up 33.8 percent, and the 11th consecutive month they topped a year ago, as China continues to rebuild its hog population. The United States again was the biggest supplier.
Butter imports totaled 14.4 million pounds, up 58.0 percent, and cheese hit 25.6 million pounds, up 23.7 percent from a year ago. HGD reported that December marked the strongest month for fluid milk and cream imports on record.
Of the top ten suppliers of key dairy commodities to China, the United States was the only country to report losses from a year ago, according to HGD, primarily in the form of lactose and skim milk powder. China looked to Turkey and Australia instead for additional skim milk powder and to the EU for lactose, HGD said.
U.S. exports continue under the Cooperatives Working Together program. Member cooperatives accepted 11 offers of assistance on sales of 608,476 pounds of cheese, 1.144 million pounds of butter, 123,459 pounds of whole milk powder and 74,957 pounds of cream cheese. The product will go to customers in Asia, Europe, the Middle East and North Africa through April.
Unfortunately, a shortage of shipping containers is wreaking havoc on U.S. exports of agricultural products, including dairy, according to the Jan. 20 Daily Dairy Report. The issue has been top of mind for exporters for months, said the DDR, “but the situation intensified in the weeks leading up to the holidays and still persists today.”
The February Federal order Class I base milk price was announced this week at $15.54 per hundredweight, up 40 cents from January, $2.01 below February 2020, and equates to about $1.34 per gallon, down from $1.51 a year ago.
Speaking of Class I milk; November fluid sales took a dive, according to USDA’s latest data. The report shows 3.8 billion pounds of packaged fluid products were sold, down 4.4 percent from November 2019, largest drop since August.
Conventional product sales totaled 3.6 billion pounds, down 5.0 percent from a year ago. Organic products, at 235 million pounds, were up 6.1 percent and represented 6.1 percent of total sales for the month.
Whole milk sales totaled 1.25 billion pounds, down 4.4 percent from a year ago. Sales for the 11-month period totaled 14.2 billion pounds, up 2.8 percent from 2019, and made up 32.7 percent of total milk sales for November and 33.6 percent thus far for the year.
Skim milk sales, at 224 million pounds, were down 17.8 percent from a year ago and down 14.9 percent year to date.
Total packaged fluid milk sales, January through November, amountedato 42.2 billion pounds, down 0.3 percent from 2019. Conventional product sales so far, totaled 39.6 billion pounds, down 0.9 percent. Organic products, at 2.6 billion pounds, were up 10.6 percent and represented 6.2 percent of total fluid milk sales so far for the year.
The figures represent consumption in Federal milk marketing order areas, which account for approximately 92 percent of total fluid milk sales in the United States.
Dairy farm margins were largely flat over the first half of January, although significant volatility has been noted recently in milk prices, according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC.
“Initial excitement over the announcement of a fifth round of the Farmers to Families Food Box Program has since dissipated with further clarity on what contents will qualify for the new boxes,” according to the MW. “USDA has emphasized that a variety of hard, semi-firm, or semi-soft cheese is acceptable in addition to Cheddar and other cheeses in the solicitation, which likely will not lead to the same level of support for block and barrel prices as compared to previous rounds,” the MW charged.
“Export demand is also starting to cool as November dairy product shipments fell below prior-year levels for the first time since mid-2019. November exports dropped 5.5 percent in value from 2019 to $500.6 million, reflecting lower shipments across the complex, excepting whey which continues to experience strong demand from China.
“November cheese exports fell 15.8 percent year-over-year to 52.8 million pounds, led by a sharp drop in shipments to South Korea. November shipments were also virtually unchanged from October on a daily average basis as the sharp rise in cheese prices during October likely discouraged forward buying,” the MW stated.
The Cheddar blocks tumbled daily as disappointment over Food Box program particulars were considered. They closed Friday at $1.61 per pound, down 22 cents on the week, lowest since Dec. 24, and 38.50 cents below a year ago.
The barrels rolled to $1.39 per pound Thursday but closed Friday at $1.3925, 18 cents lower on the week, 21.75 cents below a year ago, and 21.75 cents below the blocks. Thirteen cars of block exchanged hands on the week and 28 of barrel.
1/25/2021