Mielke Market Weekly

By Lee Mielke

 

As expected, the game of chicken continued on Capitol Hill. This the third-longest shut down in history, surpassed by those in 1995 and 2018-2019. There was no September Milk Production or Cold Storage report issued this week, which leaves industry players guessing and much uncertainty in the market.

The National Milk Producers Federation says, “With the government shutdown giving dairy producers only about two weeks to submit Emergency Livestock Relief program applications with a fully operational USDA, NMPF asked USDA for an application extension when the government reopens. USDA has agreed.”

Approximately 2,100 FSA offices actually reopened Thursday but only had two employees each to provide services like farm loan processing, disaster relief payments, and Agriculture Risk Coverage and Price Loss Coverage payments.

Fluid milk sales were down again in August. The USDA’s latest data showed packaged sales totaled 3.48 billion pounds, down 4.0 percent from August 2024, and follows a 1.2 percent dip in July. Conventional product sales totaled 3.2 billion pounds, down 3.6 percent from a year ago. Organic sales, at 236 million, were down 9.4 percent from a year ago, and represented 6.8 percent of total milk sales in the month, down from a typical 7.2 percent.

Whole milk sales totaled 1.3 billion pounds, down 2.6 percent from a year ago, but up 0.1 percent year to date. Whole milk represented 36.3 percent of total sales for the month, down 2 percent from July’s percentage. Skim milk sales totaled 171 million pounds, up 7.0 percent from a year ago, and up 0.3 percent year to date.

Packaged fluid sales in the eight-month period totaled 27.9 billion pounds, down 1.5 percent from 2024. Conventional product sales amounted to 25.9 billion, down 1.5 percent from a year ago. Organic products, at 1.99 billion pounds, were down 1.4 percent, and represented 7.1 percent of total milk sales in the eight months. The figures represent consumption in Federal market orders, which account for about 92 percent of total fluid sales in the U.S.

Speaking of fluid milk; the November Federal order Class I base price was announced by the USDA at $16.75 per hundredweight, down $1.29 from October, $5.78 below November 2024, and the lowest Class I price since August 2023. It equates to $1.44 per gallon, down from $1.94 a year ago. The 11 month Class I average stands at $19.01, down from $20.25 at this time a year ago, and compares to $23.76 in 2022.

China Customs Statistics shows Chinese butter imports soared to 23.7 million pounds or 10.76 metric tons (MT) in September, up 23.7 percent from September 2024, and the first time ever to surpass 10,000MT, according to HighGround Dairy’s Cara Murphy in the Oct. 27 Dairy Radio Now broadcast.

Sailings from New Zealand were up 86 percent, she said, and increased its market share to 84 percent. Additional shipments came from Argentina, United Kingdom, and Denmark, with little from the U.S., despite U.S. prices at a significant discount to the rest of the world. U.S. shipments totaled just 11MT, down 58 percent from 2024.

Whey imports, at 117.4 million pounds, were down 3.1 percent, following two consecutive months of growth. Murphy said shipments from the U.S. were only off 0.5 percent. The overall decline was primarily driven by lower sailings from Ireland, Netherlands and France. Chinese pork prices have fallen to multi-year lows, and Murphy said the government is urging hog farmers to reduce supplies, as it reduces subsidies for producers. “We really want to pay attention to this market,” she concluded, “As it’s a big one for whey and as the hog population in China starts to come down, we might see those whey shipments decline as well.”

Cheese imports totaled 31.5 million pounds, up 13.5 percent, with New Zealand remaining the primary origination country. China has a trade agreement with New Zealand, says Murphy, and shipments were up 18.0 percent year-to-date. New Zealand cheese sailings were down 60MT or 0.74 percent, as China bought more product from Australia, Denmark and France, Murphy said. European cheese prices have fallen below the U.S. on the European Energy Exchange so this will change things in the global marketplace, she said. New Zealand has the highest in price now.

Whole milk powder imports, at 32.3 million pounds, were up 41.2 percent, while skim milk powder imports totaled just 18.5 million, down 12.5 percent.

The government shut down and ramifications of the tariff wars have loaded a lot on the pesident’s plate, all while he tries to keep his peace treaty intact in the Middle East. There’s been discussion of aid to U.S. farmers over lost soybean sales to China. The latest idea is an attempt to address high beef prices by importing beef from Argentina. That drew opposition from U.S. livestock producers who are enjoying the much needed higher prices, as are dairy producers.

Agriculture Secretary Brooke Rollins, Secretary of the Interior Doug Burgum, Secretary of Health and Human Services Robert Kennedy Jr., and Small Business Administrator Kelly Loeffler announced actions this week to “strengthen the American beef industry, reinforcing and prioritizing the American rancher’s critical role in the national security of the U.S.,” stated a USDA press release.

“Since 2017, the United States has lost over 17 percent of family farms, more than 100,000 operations over the last decade. The national herd is at a 75-year low while consumer demand for beef has grown 9 percent over the past decade. 

Because increasing the size of the domestic herd takes time, the USDA is investing now to make these markets less volatile for ranchers over the long term and more affordable for consumers.

“USDA will immediately expedite deregulatory reforms, boost processing capacity, including getting more locally raised beef into schools, and working across the government to fix longstanding common-sense barriers for ranchers like outdated grazing restrictions.” There was no mention of increasing imports.

Back in Chicago, Cheddar block cheese climbed to $1.7950 per pound Monday, highest since Aug. 28, but it headed south from there, falling to $1.7250 Thursday, after closing Friday at $1.7750. The barrels made it to $1.7750 Tuesday, highest since Sept. 3, but closed Thursday morning at $1.7550, after finishing Friday at $1.77.

Several Central region plants were down for maintenance this week, according to Dairy Market News. Cheese production was steady to lighter, but milk remains available in the region. Some plants were moving milk to Class I production, while others were selling loads to nearby cheese plants. Demand for cheese is steady domestically. Contacts reported strong interest for mozzarella and cheese barrels. Export demand is mixed. Some contacts noted interest from purchasers in Mexico is picking up, but demand is lighter from other countries. Spot loads of cheese are available, but inventories of cheese barrels are tightening, says DMN.

Milk production is sufficiently covering cheese producer needs in the West. Spot demand from cheese producers varies from moderate to steady. Many cheese manufacturers report contractual volumes are adequate. Cheese production is generally steady. Manufacturer availability of cheese is mixed. Traders report steady or somewhat tight cheese availability depending on variety. Domestic demand is flat. Export demand is somewhat lighter to steady as U.S. cheese prices are losing some competitive steam against international prices, says DMN.