meta Wintry weather takes a toll on US dairy industry :: The Bullvine - The Dairy Information You Want To Know When You Need It

Wintry weather takes a toll on US dairy industry


The U.S. Department of Agriculture issued its latest World Agricultural Supply and Demand Estimates report on Feb. 8. The report was not issued in January due to the government shutdown. The 2018 milk production estimate was lowered based on available data through December. The 2019 forecast was reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow.

Cash cheese prices continued to strengthen in the Valentine’s Day week as traders anticipated the Feb. 19 Global Dairy Trade auction and the shortened President’s Day holiday week. The week will include Milk Production reports for December and January and December Cold Storage data.

Cheddar blocks climbed to $1.5925 per pound Feb. 13, the highest CME price since mid-October 2018, but closed Feb. 15 at $1.58, up 5.25 cents on the week and 4 cents above a year ago. Barrels finished at $1.4350, up 6.25 cents on the week, the highest since Sept. 13, 2018, but 4.5 cents below a year ago when they jumped 12 cents, and are at an unsustainable 14.5 cents below blocks. Sales for the week included six cars of block and 20 of barrel.

 

The West received its own version of arctic weather last week, with cold and snow causing more than the usual challenges. More than 1,800 dairy cows died in the Yakima Valley of eastern Washington, according to the Yakima Valley Dairy Farmers Association, where low temperatures and high winds took a huge toll.

The Feb. 12 Daily Dairy Report points out that “the increase in U.S. cheese prices has been augmented by the dollar, which continues to gain ground against the Euro, New Zealand dollar and Mexican peso. The strong dollar makes U.S. cheese more expensive when the price is converted to importers’ currency. Tariffs put U.S. cheese at a further disadvantage in Mexico and China,” according to the DDR.

Winter weather remains the topic of discussion among Midwest cheesemakers, according to Dairy Market News. Cheese production remains slower as plant managers work on inventories and weather-related production stoppages have slowed or stopped production in some cases. Contacts suggest cold weather and snow in the upper Midwest were affecting both milk and cheese deliveries.

Western cheesemakers stated that new business deals are harder to come by and demand for American-style blocks and barrels is slow: “Buyer interest seemingly ebbs and flows as the market price for cheese rises and falls. Cheese is moving steadily through regular contracts, but contacts say there does not seem to be anything right now that will give a boost to sales.”

As to the strength in cheese prices, some contacts suggest that fourth-quarter consumption was better than expected and the industry is seeing a bit of a refill from the winter holidays and Super Bowl. Others say marketers are getting prepared for upcoming export tenders, while others believe more cheese is moving into aging programs. They agree that inventories are long and “demand does not seem to be at levels hoped for.”

Some say the absence of market production and stock number reports due to the government shutdown made it difficult to get a picture of supply and demand. Manufacturers say cheese output is running mostly seven days per week, but winter storms slowed cheese output in some regions due to challenges transporting milk and the need to refill the pipeline following the storms.

Interestingly, California cheese output is likely starting to slow, according to the Daily Dairy Report’s Sarina Sharp. Writing in the Feb. 8 Milk Producers Council newsletter, Sharp says “cheese processors in the nation’s largest dairy state are now paying more for milk using the Federal Milk Marketing Order formula than they would have under the previous rules.

“Dairy Market News reports many manufacturers are running full schedules at their cheese facilities, but some contacts suggest a few processors are starting to ease back on cheese production and diverting milk intakes toward Class IV uses. That’s excellent news for California dairy producers, in particular, and for dairy product prices, in general,” according to Sharp.

“The shift in the product mix will mean a greater share of California dairy producers’ milk checks is based on the much higher Class IV price. Incrementally lower cheese output will slowly lift cheese prices relative to where they would have been had California stuck with its previous milk pricing formulas. Of course, the reverse is true for milk powder pricing,” Sharp concludes.

Cash butter saw its Feb. 15 price at $2.25 per pound, down 4.5 cents on the week but still 15 cents above a year ago. Twenty-four cars exchanged hands on the week. Grade A nonfat dry milk saw the week’s closing at 98.75 cents per pound, down three-quarters cent but 28.25 cents above a year ago. Thirty cars exchanged hands on the week, 23 on Feb. 14 alone, the highest single-day total since April 25, 2018.

Dry whey closed Feb. 15 at 35.25 cents per pound, down 1.25 cents, with 42 cars finding new homes on the week, a single-day record 15 on Feb. 13.

Plummeted dry whey shipments to China have pulled whey prices lower. FCStone reports that African swine fever has reduced soy meal demand in China and some estimates say meal feeding is off 20 percent. African swine fever has also been detected in Japan.

FCStone warns: “This issue will get worse before it gets better. How much damage will be done to China’s 700 million-plus hog herd and how long will it take it to recover is still unknown. Some analysts think it could take six to seven years for China’s hog herd to fully recover.”

The Dairy and Food Market Analyst says dry whey shipments to China have fallen 20 million pounds, or 40 percent. Total exports of whey products have decreased 18 percent and exports of milk powder were down 13 percent.

The Trump administration released its proposal to update the Waters of the U.S. Rule water quality regulation on Valentine’s Day. There will be a 60-day public comment period on how the Environment Protection Agency and the Army Corps of Engineers will regulate waterways under the Clean Water Act.

Bob Gray, editor of the Northeast Dairy Farmers Cooperative’s newsletter, reported that the update would “replace the rule that was promulgated in 2015, which proved to be confusing and vague in its provisions for compliance by the agriculture community.” EPA will also hold a public hearing on the new rule.

 

Source: Leader-Telegram


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