China was the proverbial “bull in the china shop” when it came to the latest import data. Reminiscent of its buying in 2014, data was released this week for both January and February, which was the case last year, but HighGround Dairy (HGD) said January marked the highest volumes on record for any month.

Whole milk powder imports in the two months totaled 530.4 million pounds, up 7.4 percent from 2020. Skim milk powder totaled 192.5 million pounds, up 35.9 percent. Butter, at 46.2 million pounds, was down 18.8 percent, but cheese totaled 67.7 million pounds, up 33.7 percent, year to date. Whey product imports amounted to 277.1 million pounds, up 49.2 percent from the same period a year ago.

The biggest leap was in whole milk powder from New Zealand, according to HGD, and fluid milk and cream from the EU-27. China frontloaded both whole and skim milk powder in January, as they typically do, said HGD, “but it came at an even stronger pace than usual given global shipping uncertainty.”

New Zealand, Germany and Poland recorded fresh highs to start a calendar year, according to HGD, and while imports from the United States were also strong, whey demand was slightly below that of 2018. China brought in more product from Belarus, EU and Turkey, said HGD, blaming shipping issues for the decline.

HGD said that remembering why food prices are inflated in China helps to project upcoming demand and points to “food shortages due to disease and weather, alongside rising needs and a growing middle class. China does not have enough productive farmland, keeping food imports critical. If a pandemic could not stop China from recording record dairy imports in 2020, consumption trends throughout this year will be strong as well. The country is turning to protein of any sort, including dairy, driving global values higher in recent weeks where they will stay until Chinese buyers are satisfied with inventory levels,” HGD said.

Back in the USA, February butter stocks climbed to 352.7 million pounds, up 20.8 million pounds or 6.3 percent from the January level, which was revised 3.5 million pounds higher than what was reported a month ago. Butter stocks are a whopping 50.9 million pounds or 16.8 percent above February 2020.

February was the 20th consecutive month that butter stocks topped those a year ago however the build was smaller than many expected. That is a positive but butter output remains strong and we’ll get more details in the February Dairy Products report issued April 1.

American type cheese stocks hit 816 million pounds, up 6.9 million pounds or 0.9 percent from January, which was revised up 8.3 million pounds, and is 37.7 million or 4.8 percent above a year ago. The “other” cheese category jumped to 597.5 million pounds, up 19.6 million pounds or 3.4 percent from January and 37.8 million or 6.8 percent above a year ago.

The total cheese inventory stood at 1.44 billion pounds, up 27.8 million pounds or 2.0 percent from January and 74.1 million pounds or 5.4 percent above a year ago.

February was the fourth month in a row that total cheese stocks grew. Revisions for January amounted to 10 million pounds, which HGD said is “a report-to-report build of 38 million pounds, a more bearish number than the initial February data would suggest.” And, with the spring flush upon us, cheese output will no doubt rise and that could push cheese stocks to new record highs.

“Are we dealing with a lack of demand or really strong production?” asked StoneX. “We side with stronger cheese production. Demand was on solid footing back in February and it likely got better in March thanks to improving foodservice sales. But supply of milk is also very good and with programs like Food Box continuing through April (at least), we presume that manufacturers have begun to shift away from constrained production practices of last year. Additionally, we expect some export cheese was sitting in coolers stateside unable to find passage to its final destination.” The stuck cargo ship in the Suez Canal was not helping matters.

Speaking of the Food Box program, the much awaited 12-hour USDA call to help determine the program’s fate took place March 22. Speakers were given three minutes to address the call and StoneX said, “The key takeaway seems to be resounding support to establish a permanent food box program. Beyond that, participants want the USDA to consider more than the lowest price bids, verify what is in the boxes, lighten the weight of the boxes (probably by removing the half-gallon of milk), give longer lead time between awards and delivery, and build out long-term contracts to allow better planning. The takeaway for the markets is that a better organized and executed Food Box program is better handled by participants and less shocking to market prices.”

National Milk called for federal officials to “effectively allocate dairy products as a source of high-quality, cost-effective nutrition” in any successor program.

Meanwhile, USDA Secretary Tom Vilsack said the agency is establishing new programs and efforts to bring financial assistance to farmers, ranchers and producers who felt the impact of COVID-19 market disruptions.

“The new initiative, USDA Pandemic Assistance for Producers, will reach a broader set of producers than in previous COVID-19 aid programs,” according to a USDA press release. “USDA is dedicating at least $6 billion toward the new programs. The department will also develop rules for new programs that will put a greater emphasis on outreach to small and socially disadvantaged producers, specialty crop and organic producers, timber harvesters, as well as provide support for the food supply chain and producers of renewable fuel, among others. Existing programs like the Coronavirus Food Assistance Program (CFAP) will fall within the new initiative and, where statutory authority allows, will be refined to better address the needs of producers.”

Cheese prices continued to weaken in the first part of the last full week of March but then rallied. The Cheddar blocks fell to $1.67 per pound on Wednesday, lowest since Mar. 3. They closed Friday at $1.72, down 7 cents on the week but 13 cents above a year ago when the COBID factor began hitting the markets. The blocks tumbled 24.75 cents that week and the barrels were down 9 cents.

The barrels slumped to $1.4375 on Monday but finished Friday at $1.4625, up a penny on the week, 12.25 cents above a year ago, but 25.75 cents below the blocks. Sales for the week included 4 cars of block and 3 of barrel.

Dairy Market News reported that some Midwestern cheese producers are and have been running full schedules while others are picking up. Food service cheese demand is not at pre-pandemic levels but has picked up quite a bit in the late winter/early spring season. Cheese availability reports were similar to those of production and vary plant to plant. Some producers are moving cheese out the door while others have available loads here and there. Market tones are mixed.

Food service demand for Western cheese continues to rise with the loosening of COVID restrictions while retail demand has held steady. Export demand is strong despite the ongoing issues at the ports and tightness of shipping supplies.