Friday, June 26, 2020
CapitalPress.com 9
Dairy
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Lee
Mielke
Will cheese
price hit $3?
By LEE MIELKE
For the Capital Press
C
ME Cheddar block
cheese started the
third week of June
Dairy Month losing 2 cents
and stayed there until Friday,
when it rocketed up 15 cents
on 3 unfilled bids to a record
high of $2.65 per pound, up
13 cents on the week and
82.50 cents above a year ago.
But wait, there’s more.
The blocks shimmied up
another 5.25 cents on Mon-
day, setting another record
high, then pole vaulted
10.75 cents Tuesday, as trad-
ers weighed Monday’s May
Cold Storage report, and set
another block record of $2.81
per pound.
Do I hear $3?
The barrels finished Fri-
day at $2.2850 per pound,
down 4.75 cents on the week
but 54.75 cents above a year
ago. Trading activity saw
only 7 cars of block sold last
week at the CME and 6 of
barrel.
The barrels gained 3.75
cents Monday and jumped
4.75 cents Tuesday, hitting
$2.37, the highest CME price
since June 9, 2020, but that’s
a whopping 44 cents below
the blocks, exceeding the pre-
vious record spread of 43.25
cents on Sept. 23, 2019.
Most Midwestern
cheesemakers continue to
report six- and seven-day
workweeks and mid-week
spot milk prices were at least
50 cents over Class, accord-
ing to Dairy Market News.
Pizza cheese producers report
gains in customer activity
as more pizza shops report
stronger sales numbers.
Some western contacts
say they are running more
milk through cheese vats than
ever before. Retail demand
has remained strong. Food-
service accounts are still
below seasonal purchase lev-
els, but buyers are trying hard
to refill the pipeline. That,
plus the surge of government
purchases, keeps production
at full capacity, with some at
over 125%. The down side is
that U.S. cheese prices have
risen to a point where they
are not as competitive as the
EU, so exports are slowing.
Cash butter fell to $1.80
per pound last Wednesday
but closed Friday at $1.85, 2
cents lower on the week and
54 cents below a year ago on
25 sales.
Monday’s butter lost 1.75
cents and it dropped 2 cents
Tuesday to $1.8125.
Central butter makers tell
DMN that cream remains
out of their fiscal reach. Bulk
butter offers are quiet and
butter availability is a con-
cern, in general. A growing
number of butter marketers
are concerned about invento-
ries coming into the fall.
Retail butter sales are
solid in the West. Export
interests have declined as
U.S. butter does not have
a competitive advantage.
Butter sales in foodservice
are steady to still sluggish
depending on the area. Some
restaurant owners have no
interest in reopening, says
DMN, despite the easing of
restrictions.
Grade A nonfat dry milk
climbed to a Friday close of
$1.0325 per pound, up 2.75
cents on the week but 1.25
cents below a year ago; 33
cars sold on the week.
Traders left the pow-
der unchanged Monday
but inched it down 0.25
cent Tuesday, to $1.03 per
pound.
Dry whey closed Friday
at 32.75 cents per pound,
1.5 cents higher on the
week but 1.5 cents below a
year ago, as the increased
cheese production results in
increased whey output; 25
cars exchanged hands last
week at the CME.
Monday’s whey was
down 1.25 cents, and it lost
0.75 cents Tuesday, dropping
to 30.75 cents per pound.
Dairy markets rally, but uncertainty looms
By CAROL RYAN DUMAS
Capital Press
Price outlook for U.S. milk
The global outlook for
dairy markets isn’t nearly as
dire as it was at the height of
the COVID-19 crisis. And
while markets have rallied,
it might be best to wait until
the dust settles to assess their
true strength, Rabobank ana-
lysts said in their latest quar-
terly report.
“We’re more optimistic
about the market than we
were” when everything shut
down, Ben Laine, Rabobank
analyst, told Capital Press.
But the industry is not out
of the woods yet, he said.
“Volatility has got two
parts to it — it’s got the val-
leys, and it’s got the peaks,”
he said.
First markets crashed,
then cheese prices went
to record highs. But that
doesn’t mean markets are
back where they should be;
it could just be a peak, he
said.
Item
(Dollars per hundredweight)
Q4’19
Q1’20
Q2’20*
Q3’20*
Q4’20*
Q1’21*
Q2’21*
Q3’21*
Class III milk $19.51
16.70
15.37
18.37
16.62
14.76
15.16
16.00
Class IV milk
15.91
11.90
14.06
13.43
12.78
13.56
14.06
16.56
*Estimated or forecast
Source: USDA, Rabobank
That said, there are a
lot of positive factors right
now. Foodservice is starting
to come back and pipelines
are filling. Stronger retail
demand is more sustainable
than what might have been
expected, and people are
returning to foodservice out-
lets, he said.
But there are limitations
to getting back to normal due
to foodservice restrictions
and cautious consumers.
“It’s going to take some
time. But we’re moving in
the right direction,” he said.
Just when markets will
get back to normal is hard to
say. There’s a lot of uncer-
tainty, he said.
“A lot is going to depend
on how the economy looks
and how consumers feel
about the economy, he said.
“Technically we’re enter-
ing a recession, and it’s hard
to know what that will look
like. It’s just adding to the
volatility,” he said.
There’s also the risk of
an increase in coronavirus
infections or a second wave.
If there’s not a second wave,
consumption should get
back to at least approaching
more normal levels moving
into 2021, he said.
But consumers have
adapted well and even if the
balance between foodser-
vice and retail isn’t normal,
demand is not that far off
due to sustained retail pur-
chases, he said.
People have gotten back
to the comfort of basic dairy
products and also treating
themselves with premium
dairy products while stuck at
home, he said.
“I think that will be sus-
tained for some time,” he
said.
Government purchases
have also helped, playing
a major part in the rally the
market is seeing now, he
said.
Going forward, those
purchases are the wildcard.
But it is an election year,
and there’s a potential to see
more generous aid at a mag-
nitude not seen in a while, he
said.
Government purchases
and direct payments to farm-
ers have also helped bridge
the gap for dairy farmers.
Rabobank is expecting U.S.
milk production to stay pos-
itive year over year for the
remainder of 2020, with
modest growth less than 1%,
he said.
Projected milk prices
are certainly not as bad as
had been anticipated. But
he thinks the scare when
things collapsed probably
had some producers thinking
they didn’t have enough risk
protection. That presents the
potential for more interest in
risk-management programs,
he said.
It served as a reminder
that something major and
unforeseen can happen, and
that’s what risk-manage-
ment is — protecting against
things no one sees coming,
he said.
Dairy industry wants fat flexibility in dietary guidelines
By CAROL RYAN DUMAS
Capital Press
With the 2020 Dietary
Guidelines for Americans
under review, the dairy
industry is hoping the advi-
sory committee will con-
sider new scientific find-
ings showing dairy foods
are beneficial regardless of
the level of fat they contain.
The current guidelines
recommend three servings
of fat-free or low-fat dairy
foods a day.
The industry maintains
there is enough scientific
evidence to include whole-
fat dairy products in the rec-
ommendations but is also
concerned the advisory
committee has not included
that evidence in its review.
The National Milk Pro-
ducers Federation and Inter-
national Dairy Foods Asso-
ciation sent a letter to the
secretaries of Agriculture
and Health and Human Ser-
vices on Monday voicing
their concerns.
“We would like to reiter-
ate, as explained more fully
in previous comments to
the (advisory committee),
that a body of science in
recent years has found that
dairy foods, regardless of
fat level, appear to have
either neutral or beneficial
effects on chronic disease
risks,” they stated.
The groups are con-
cerned the committee will
conclude its work without
coming to any conclusion
on the benefits of dairy at
each fat level. Instead they
worry the committee will
simply default to a recom-
mendation for low-fat and
fat-free dairy because of
general concern about sat-
urated fats.
If that happens, “this
will represent a lost oppor-
tunity to share newer sci-
ence with consumers,
health professionals and
policy makers and contrib-
ute to ongoing confusion
about the healthfulness of
dairy,” they said.
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The Dietary Guidelines
for Americans are under
review, and the dairy in-
dustry wants the adviso-
ry committee to consider
new research findings.
The dietary guidelines
are something the National
Dairy Council watches
closely, said Greg Miller,
the council’s global chief
science officer.
“Being a science-based
organization, we hope the
process will work like it
should” with science taking
the lead, he said.
The evidence says dairy
foods reduce the risk of
chronic diseases, such as
cardiovascular disease and
type 2 diabetes, regardless
of the fat level, he said.
“The science has only
gotten better since the last
round of dietary guide-
lines,” he said.
The council is hoping
the newest guidelines offer
flexibility when it comes to
fat in dairy foods and that
whole-fat dairy foods can
be one of the recommended
choices for a healthy diet,
he said.
The obstacle has been
that saturated fats can
increase low density lipo-
proteins (LDL) cholesterol.
Elevated levels of LDL cho-
lesterol have implications
for heart disease, he said.
But the structure of food
impacts the body’s response
to saturated fat, and the
dairy food matrix seems to
change the response asso-
ciated with blood levels of
cholesterol and risk of heart
disease. Studies have shown
the saturated fat in dairy
foods doesn’t change blood
cholesterol as would be pre-
dicted, he said.
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