By Lee Mielke
The Agriculture Department announced the December Federal order Class III milk price at $18.36 per hundredweight, up 33 cents from November, $2.64 above December 2020, and the highest Class III since May. That put the year’s average at $17.08, down from $18.16 in 2020, and compares to $16.96 in 2019. Late Friday morning Class III futures portended a January price at $20.29; February, $21.61, and March at $21.18 per cwt.
The December Class IV price is $19.88, up $1.09 from November, $6.52 above a year ago, and the highest Class IV price since October 2014. The 2021 Class IV average is $16.09, up from $13.49 in 2020, and compares to $16.30 in 2019.
Meanwhile, cash cheese and butter started 2022 skyrocketing and saw some expanded trading limits, but then reversed gears as traders absorbed the November Dairy Products report.
Dairy Market News says cheese demand requests have already met contacts’ recent expectations, as customers return to the fold. Midwestern cheesemakers say orders are strengthening but production rates vary from plant to plant as employee numbers range from adequate to short. Spot milk was still priced at holiday level accessibility, and similar to previous week discounts, although a number of contacts expect those discounts to dissipate after this week.
After gaining 36 cents the previous two weeks, CME butter soared to the highest price it has seen since Dec. 9, 2015, closing Friday at $2.7425 per pound, up 29 cents on the week and $1.3625 above a year ago. 26 cars sold on the week. The highest CME price ever was $3.1350 per pound set on Sept. 25, 2015.
Butter churners tell DMN that cream availability has slimmed down and quickly. Multiples have climbed roughly 10 points week to week in some cases, and haulers are tight as well. Butter churning is expected to slow if this trend continues, which is likely while cream cheese producers and other cream end users play catchup and siphon cream from the pool. Bulk butter is very tight, says DMN, and domestic butterfat values are increasing rapidly.
Grade A nonfat dry milk closed Friday at $1.71 per pound, up 5.50 cents on the week and 52 cents above a year ago, with 21 sales reported. CME dry whey closed Friday at 75.75 cents per pound, another new record high, up 0.75 cents on the week and 25.75 cents above a year ago, on 1 sale.
Speaking in the Jan. 10 Dairy Radio Now broadcast, HighGround Dairy’s Lucas Fuess said concern remains among traders regarding weaker milk production here in the U.S. and key areas around the world. He added that, when we see the strength in Class IV products like nonfat dry milk, it lends support to cheese as well. Hopefully, with Class IV prices being as strong as they are, the higher Class III milk prices will find their way to dairy farmer pocketbooks.
The first Global Dairy Trade auction of 2022 inched higher with the weighted average rising 0.3%, after slipping 1.5% on Dec. 21, first decline since August 3. Traders brought 67.6 million pounds of product to market, up from 67 million pounds in the last event.
Cheddar did the heavy lifting, jumping 4.9%, after inching 0.5% higher on Dec. 21, biggest gain since Nov. 2. Buttermilk powder and skim milk powder were both up 1.0%, after skim milk powder inched 0.6% higher last time. Whole milk powder was unchanged, after dropping 3.3%. Butter was up 0.3%, after a 1% gain last time, while anhydrous milkfat was off 0.7% following a gain of 0.9%.
StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.5969 per pound U.S., up just under a penny, and compares to CME butter which closed Friday at $2.7425. GDT Cheddar, at $2.4891 per pound, was up 11.2 cents and compares to Friday’s CME block Cheddar at $1.9950. GDT skim milk powder averaged $1.7114 per pound, up from $1.6986. Whole milk powder averaged $1.7536 per pound, down from $1.7540. CME Grade A nonfat dry milk closed Friday at $1.71 per pound.
StoneX’s Dustin Winston reported that “North Asia (which includes China) buyers continue to seem hesitant, market share increased just slightly from the last event, but dropped a fair amount from last year.”
In other trade news; U.S. dairy exports saw large gains in November. Cheese totaled 73.9 million pounds, up 39.9% from November 2020, strongest November on record, according to HighGround Dairy, driven by cheese moving to a variety of countries, but product to Mexico was especially impressive, up 65%.
A judicial ruling this week has determined that “gruyere” is a generic style of cheese that can come from anywhere. The decision reaffirms that all cheesemakers, not just those in France or Switzerland, can continue to create and market cheese under this common name. The decision drew praise from the Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC), National Milk Producers Federation (NMPF), and others seeking to preserve the use of generic terms.
Senior Judge T. S. Ellis III of the United States District Court for the Eastern District of Virginia upheld the August 5, 2020, precedential decision of the U.S. Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board.
“Not only is this a landmark victory for American dairy farmers and cheese producers who offer gruyere, this win sets a vital precedent in the much larger, ongoing battle over food names in the United States,” said Jaime Castaneda, executive director for CCFN. “The European Union has tried for years to monopolize common names such as gruyere, parmesan, bologna or chateau. This verdict validates that we’re on the right path in our fight on behalf of American food and wine producers to preserve their ability to use long-established generic names.”
In politics, the U.S. prevailed in the first dispute settlement panel proceeding under the U.S. Mexico-Canada trade agreement (USMCA). The panel agreed with the U.S. that Canada is “unfairly restricting access to its market for U.S. dairy products by breaching its USMCA commitments regarding allocation of dairy tariff rate quotas (TRQs),” according to a USDA press release.
Agriculture Secretary Tom Vilsack said; “This ruling is a big step for the U.S. dairy sector towards realizing the full benefits of the USMCA and securing real access to the Canadian market for additional high-quality American dairy products such as milk, cheese and skim milk powder.”
The announcement drew praise from the NMPF and USDEC. NMPF’s Jim Mulhern stated; “The United States and Canada negotiated specific market access terms covering a wide variety of dairy products, but instead of playing by those mutually agreed upon rules, Canada ignored its commitments. As a result, U.S. dairy farmers and exporters have been unable to make full use of USMCA’s benefits. Today’s decision is an important victory for U.S. dairy farmers and the millions of Americans whose jobs are tied to the U.S. dairy industry.”
The International Dairy Foods Association, the International Cheese Council of Canada, the Dairy Companies Association of New Zealand, and Eucolait also applauded the findings, according to a joint press release.