Weekly beef and dairy digest: global dairy outlook from the USDA

US beef export sales posted a marked decline this week as the Biden administration moves to sell its infrastructure deal in rural America.
calendar icon 2 July 2021
clock icon 7 minute read
Jim Wyckoff Commentary -  TheCropSite

US beef export sales slide

US beef net sales of 12,100 metric tonnes (MT) reported for 2021 were down 28% from the previous week and 17% from the prior four-week average. Increases were primarily for Japan (3,300 MT, including decreases of 500 MT), South Korea (2,800 MT, including decreases of 600 MT), China (2,100 MT, including decreases of 100 MT), Taiwan (1,500 MT, including decreases of 200 MT), and Canada (600 MT, including decreases of 200 MT).

Exports of 18,900 MT were up 4% from the previous week and 9% from the prior four-week average. The destinations were primarily to Japan (4,900 MT), South Korea (4,900 MT), China (4,200 MT), Taiwan (1,200 MT), and Mexico (1,100 MT).

USDA secretary cancels trip to Wisconsin as dairy producers wait for next aid payment

Nearly $1 billion in direct payments to US dairy awaits final workings as the plan grinds through the regulatory government process. Last week — before President Biden and the bipartisan Senate group reached their compromise agreement — the White House had announced the president would travel to southwest Wisconsin with USDA Secretary Tom Vilsack to talk about rural economies. After the deal was announced, the visit was revamped to focus on infrastructure and Vilsack was a no show in the state. That’s likely the real reason nothing was announced for dairy producers. Different agenda, different announcement.

Biden was scheduled to visit Cates Family Farm in rural Spring Green with Vilsack to discuss issues facing farmers and boosting rural economies as Wisconsin's small family dairy farms face near extinction. The switching of Biden’s visit from agriculture to infrastructure was disappointing, said Jim Goodman, with the group National Family Farm Coalition. “I was really glad when I saw that the president was going to be here and talk about agriculture, because I thought maybe we could get a little traction on some legislation we’re interested in,” Goodman said. “But now, that’s not a message he’s going to hear from anybody in person…. Farmers need a fair price for what they produce. We can’t look to the world to soak up all our excess production, and it would have been nice if he could have heard that from someone,” he said.

After Biden’s speech, Darin Von Ruden, a dairy farmer from Westby and president of the Wisconsin Farmers Union, got a minute to speak with the president. He told him USDA should consider some type of supply management system for the dairy industry so that farmers could cover their production costs and keep milk supplies in balance with the demand. It was something Vilsack could look into, the president responded. Von Ruden also asked Biden to add agriculture to the administration’s list of antitrust concerns.

International dairy market news

Western European overview

A heat wave in Germany, France, and Netherlands last week likely caused a dip in milk production. Weather is back to seasonally normal, so no lingering impact is expected. Milk production is seasonally trending lower.

Most dairy commodity markets are quiet. Sources say that there is ample storage capacity for manufactured dairy products. Storage volumes are low, but at adequate levels for coming needs.

Eastern European overview

Western European dairy sources attribute cheese production in Poland as helping to meet EU export obligations. It is noted that more Western European EU members trail Poland in dairy production, than lead it.

The dairy market in Oceania

Australia: Milk production is at seasonally low levels. The new season will begin on July 1. Production will begin climbing during July but it will be in the fall before the peak is expected to be reached.

Dairy producers in South Australia are pleased with strong opening prices being quoted by several dairy processors. Competition to secure milk supplies has led to what some people call a bidding war. Some dairy processors have already revised milk process higher only days after initially announcing prices.

New Zealand: The dairy sector in New Zealand is quiet as it rolls through the first month of the new season. At this time of year most dairy producers have dried off most cows.

Milk production will trail along the bottom of the production trough until increases begin to register in July. Even as production resumes the seasonal climb, it will not be until about October that the peak is reached.

South America's dairy industry

As autumn rolls on, cooler climate conditions are lingering through South America, especially in parts of Argentina and Brazil. Lower temperatures in the main regional dairy basins have increased cow comfort/milk output off farms.

Milk production is expected to grow in the coming months. Market participants note corn harvests
are showing shorter crop supplies. In Argentina, market participants note the agroindustry is widely improving and several customers are investing for future returns. In the Parana River, low water levels caused a bulk carrier to run aground. Reports note shipments will be fulfilled. Currency exchange rates continue to be in discussions.

USDA’s glance at the US dairy market in latest week

Cheese highlights

Milk remains plentiful for cheese producers nationwide. Spot milk prices were reported from $6 to $4 under Class III. There is a notable difference when compared to spot milk prices last year during week 25: $.50 to $2.50 over Class.

Cheese production, due in part to the remaining surpluses of milk, is active. To prevent cheese inventory build-ups, Western cheese contacts say producers are inclined to move spot loads quickly. They also report renewed/strengthened interest from Asian customers due to the value of domestic cheese prices.

On cheese market tones, some contacts pass on a sense of relief that block and barrel prices have converged, following consecutive weeks of an "inverted" price gap, in which barrel prices were above block prices. Still, markets have yet to gain their footing.

Butter highlights

Butter makers are working though ample milk and cream supplies and reporting that little has changed from week to week. Production is steady. Inventories are largely available for spot and contract needs.

Retail sales are soft, and many grocers are featuring butter promotions. Food service orders are leveling off in the East as outlets have refilled pipelines, but demand is steady to strong throughout the Central and Western regions. Across the country, bulk butter overages range from 1.5 to 8.0 cents above market this week.

Fluid milk

Across the country, milk output is steady to lower seasonally, due to the rising summer temperatures, although milk is far from scarce in any region for any/all production usages.

Class I demand has slowed down, however, some orders picked up after the summer break declines in previous weeks. Class II sales are slightly higher. Balancing operations are receiving heavy milk supplies, keeping production schedules active. Suppliers are offering condensed skim volumes at lower prices.

Cream remains steadily available. Eastern cream cheese manufacturers are actively clearing extra spot loads. Throughout the country, reports of driver shortages to heat-related hurdles have been concerning, particularly for milk and cream handlers. Cream multiples this week are 1.28-1.38 in the
East, 1.23-1.35 in the Midwest, and 1.05-1.25 in the West.

Dry products

Low/medium heat non-fat dry milk (NDM) prices are lower in the Central, East and West regions this week. Export shipping delays/port congestions are impacting the dairy industry. Low/medium heat NDM market tones are steady to softened.

High heat NDM prices have mostly dipped lower. The bottom of the West high heat NDM price range shifted up one cent. High heat NDM markets are fluctuating. Dry buttermilk prices are mixed. Limited supplies and moderate buying demands are holding dry buttermilk market undertones firm. Dry whole milk prices are steady to a bit higher.

Dry whole milk markets are currently steady, although uncertainty with export interest looms in the background. Dry whey prices are mixed on relatively lower spot pricing in the United States. Some buyers/traders are not purchasing additional spot loads at this time. The market tone is unsettled.

Whey protein concentrate 34% prices are steady to higher. Market participants note buying demands have slightly loosened for WPC34% that is interchangeable with other dairy proteins. Lactose prices are steady to a bit higher. Shipping logistics are still a challenge for lactose shipments. Pricing for both acid casein and rennet casein strengthened. Some buyers are sourcing to find available loads in a tight market.

US dairy national retail report

At the summer solstice, conventional ice cream in 48 to 64-ounce containers is the most advertised dairy item this week. The national weighted average advertised price is $3.06, up $0.10 from last week. There are no ads for organic 48 to 64-ounce ice cream.

The national weighted average price for conventional 1-pound butter is $2.71, down $0.59 from last week. The national weighted average price for organic 1- pound butter is $5.29, up $0.12 from last week. Total conventional dairy advertisements are unchanged, while total organic dairy ads decreased 58% from the previous week.

June retail milk prices (FMMO):

US simple average prices are: $3.68 per gallon for conventional whole milk, $3.64 per gallon for conventional reduced fat 2% milk, $4.11 per half gallon organic whole milk, and $4.11 per half gallon organic reduced fat 2% milk.

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