10
CapitalPress.com
Friday, May 14, 2021
Dairy
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Dairy exports set record in March
By CAROL RYAN DUMAS
Capital Press
U.S. dairy exports January – March 2021
Dairy export numbers
for March were so strong
analysts at the U.S. Dairy
Export Council checked
and rechecked their tallies.
Export volume in March
hit an all-time monthly high
at 215,557 metric tons in
milk solids equivalent, rep-
resenting a 24.2% increase
year over year. It was also
the highest monthly volume
since May 2014 and repre-
sented 18.6% of U.S. milk
production — the second
highest month of all time.
Value of those exports
increased 16.2% year over
year, the highest monthly
values since May 2014.
U.S. dairy exports in
March saw robust growth
in all the major product
categories, according to
USDEC analysts.
Nonfat dry milk/skim
milk powder and whey were
both at all-time monthly
highs, with year-over-year
increases of 38.8% and
28.8%, respectively.
Cheese exports posted
the second-best export
Product
(Metric Tons)
2020
2021
% change
NDM/SMP
186,360
220,985
18.6
Dry whey products
125,304
155,772
24.3
Cheese
92,264
92,327
0.1
Lactose
97,448
87,379
-10.3
WMP
9,524
10,270
7.8
Butterfat
5,405
11,616
114.9
12,578
9,661
-23.2
Infant formula
8,314
7,318
-12.0
Evap/Cond milk
3,052
2,647
-13.2
790
635
-19.6
28,231
32,488
15.1
Total volume* (metric tons)
498,814
554,534
11.2
Total value (million dollars)
1,675.8
1,759.0
5
MPC
Casein
Milk/cream (liters)
*milk solids equivalent
Source: U.S. Dairy Export Council and U.S. Census Bureau
month ever, up 10.7% year
over year. Butterfat and lac-
tose also saw strong gains,
up 147.9% and 10.8%,
respectively, year over year.
Exports rebounded to
Mexico, and strong demand
continued in Southeast Asia
and China, the analysts
reported.
“One of the biggest
questions heading into 2021
was whether Mexico could
bounce back from dual
setbacks of recession and
pandemic that depressed
dairy demand and imports
throughout most of 2020,”
they said.
“We previously fl agged
signs of optimism in the
ongoing reopening of the
nation’s tourist sector,
increased vaccinations and
the coattail of the surging
U.S. economy,” they said.
U.S. exports of nonfat
dry milk/skim milk pow-
der to Mexico grew 29% in
March year over year after
also having seen a year-
over-year increase in Feb-
ruary. While powder ship-
ments to Mexico are still
trailing pre-pandemic vol-
umes, they were up 16% in
the fi rst quarter compared
with 2020.
“It is a very positive sign
after the 13% decline to,
historically, our largest milk
powder market in 2020,”
the analysts said.
In other exports to Mex-
ico, cheese was up 11%
year over year in March.
Whey was up 21%, lactose
was up 3% and whole milk
powder was up 410% off a
small base.
As for Asia, demand con-
tinues to run hot. Exports to
Southeast Asia increased
16% year over year in
March. U.S. milk powder
exports to the region grew
29% in March and whey
exports grew 15%.
Similarly in China, U.S.
whey exports were up 110%
in March, milk powder
shipments were up a hun-
dredfold and lactose had its
best month since 2018.
“This high growth can
partially be attributed to a
‘rubber band’ eff ect where
product was purchased
potentially months ago and
in March was fi nally able to
fi nd its way on a boat,” the
analysts said.
But strong demand is
also driving the purchases,
and the U.S. has been able
to capitalize. The U.S.
has steadily grown mar-
ket share in Southeast Asia
over the past year, overtak-
ing New Zealand and the
European Union.
Ongoing port issues,
however, remain a key
obstacle for continuing the
growth in Southeast Asia
and China. Importers could
grow tired of not being able
to get product when they
need it.
“This has the potential to
limit further growth in the
region if buyers decide that
more consistent timing is
worth paying a premium to
get product from other sup-
pliers,” the analysts said.
Dairy industry looks for improvements in federal orders
By CAROL RYAN DUMAS
Capital Press
The COVID-19 pan-
demic wreaked havoc with
milk markets last year,
revealing fault lines in fed-
eral milk marketing orders.
In the aftermath, the indus-
try is now focused on
how federal orders can be
improved.
“To consider the change
an improvement is a really
diffi cult question, and that
answer depends on your
perspective,” said Al Zolin,
manager of Zolin Interna-
tional, a dairy consulting
fi rm.
Dairy farmers would
consider price enhance-
ment an improvement. But
that higher price might be
problematic for processors
because it could make them
uncompetitive in the mar-
ket place, he said during the
latest “DairyLivestream”
webinar.
“Certainly, changes to
federal orders sometimes
have unintended conse-
quences,” he said.
True improvement in the
federal order system would
be one that increases the
overall total revenue in the
pool that is available to sat-
isfy dairy farmers, he said.
It also has to keep pro-
cessors whole and allow
them to be competitive in
the market place, and it
needs to be fl exible enough
to ensure the high-quality
and innovative dairy prod-
ucts consumers want and
need, he said.
“I don’t know if that
type of improvement exists,
and I know it certainly
cannot be made by small
tweaks to the system. But if
we keep that major idea as
a goal, one day I think we
will achieve a system that is
considered an improvement
by all participants,” he said.
There are several issues
that have to be part of the
overall change matrix to
make things work, and
they’re all interlinked, he
said.
“That’s one thing about
federal orders, make one
change and it changes
something else. So you
really, really have to think
about the whole ball of
wax,” he said.
Areas to focus on
include the Class I pricing
system and advanced pric-
ing, which is problematic
when it comes to depooling
milk and negative producer
price diff erentials, he said.
“There really is no easy
answer to solve all these
problems. But if you look
at them in totality and try to
address them as a total solu-
tion, I do believe improve-
ments can come about,” he
said.
Another area to pay
attention to is end-product
pricing, which only works
if the components of the
pricing are updated on a
regular basis. Tweaks can
be made to the formula, but
a better solution would be
to go back to a competitive
price formula, he said.
When proposing a
change, it’s important to
have an approach that’s bal-
ancing consumers, produc-
ers and processors, said Ed
Gallagher, president of risk
management for the Dairy
Farmers of America.
When thinking about
changing the pricing struc-
ture, it’s important to keep
the interface with dairy
farmers simpler rather than
more complicated, he said.
And it’s important to
make sure any changes in
pricing are congruous with
using milk price risk man-
agement, he said.
“Despite what we do
with federal order pricing
provisions … we are going
to be subject to so much
price volatility forever that
we need these tools to be
able to help dairy farmers
manage those programs,”
he said.
S219917-1
Dairy
Markets
Lee Mielke
Benchmark
price leaps
by $1.52
By LEE MIELKE
For the Capital Press
T
he Agriculture Depart-
ment announced the
April Federal order
Class III milk price at $17.67
per hundredweight, up $1.52
from March, $4.60 above
March 2020, and the high-
est Class III since Novem-
ber 2020.
That put the four-month
average at $16.40, up from
$15.84 a year ago and $14.71
in 2019.
Monday’s Class III futures
settlements portended a May
price at $18.86; June, $18.82;
July, $19.20; August, $19.36;
with the peak at $19.42 in
September.
The Class IV price is
$15.42, up $1.24 from
March, $4.02 above a year
ago, and the highest Class IV
since February 2020. Its four-
month average is $14.14,
down from $14.78 in 2020
and $15.69 in 2019.
Cheese falls
Cash cheese prices
started May heading lower.
The Cheddar blocks crept
to $1.8025 per pound last
Wednesday but closed Friday
at $1.7475, down 5.25 cents
on the week, though 44.25
cents above a year ago.
The barrels got to $1.8450
Wednesday, highest since
Nov. 12, 2020, but fi nished
Friday at $1.7275, 10.75
cents lower on the week,
45.75 cents above a year ago,
and at a more typical 2 cents
below the blocks; 19 cars of
block were sold last week at
the CME and 12 of barrel.
Monday’s trading took the
blocks up 2 cents and they
gained 0.25 cents Tuesday,
hitting $1.77, with 3 cars
exchanging hands Monday
and 5 on Tuesday.
The barrels dropped 3.25
cents Monday and were
down 0.50 cents Tuesday, to
$1.69, on 6 trades Monday
and 5 on Tuesday.
Midwest cheesemak-
ers tell Dairy Market News
that spot milk off ers were
lighter last week but mid-
week prices were mostly
at sub-Class levels. Cheese
output is busy as fl ush sea-
son is near its peak and chee-
semakers are taking advan-
tage of available spot milk
discounts before milk yields
begin to decline with warm-
ing weather. Generally,
orders are steady. Food ser-
vice acquisitions are begin-
ning to level off but pizza
cheese and process produc-
ers continue to say loads are
moving.
Western retail cheese
demand was slightly lighter
last week and food service
demand has been leveling.
Inventories of cheese remain
mixed; blocks are available
but barrels are noted as some-
what fi rm though some con-
tacts suggest not as tight as
recent weeks.
Cheese production con-
tinues strong, refl ecting the
abundance of milk in the
region. Cheese producers
report market prices are in a
“somewhat healthy position,”
says DMN. An increase in
interest from Chinese import-
ers aided in some contacts
viewing the market tones
with a little more bullishness.
Nate Donnay, StoneX
director of Dairy Market
Insight, reminds us in his
May 6 “Udder Intelligence”
that “the Food Box program
wraps up this month and the
amount of U.S. milk mov-
ing through government pro-
grams will likely drop from
1.7% in May to 0.5% in
June.” Those purchases will
have to be made elsewhere.
Butter fell to $1.7350 per
pound last Wednesday, low-
est since March 24, 2021,
but rallied to close Friday at
$1.77, up 1.75 cents on the
week and 48 cents above a
year ago; 16 carloads found
new homes on the week.