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Finally some good news for dairy farmers as Class III hits five-year high


The October Federal order Class III benchmark milk price hit a five-year high this week at $18.72 per hundredweight, up 41 cents from September, $3.19 above October 2018, and the highest Class III since November 2014. It equates to about $1.61 per gallon, up from $1.57 in September and $1.34 a year ago.

It is $3.29 above California’s October 2018 4lb cheese milk price. The nation’s largest milk producing state marked the one year anniversary of entering the Federal order Milk Marketing Order system on Nov. 1.

Late Friday morning Class III futures portended a November price at $20.18 before heading to $19.60 in December. The 2020 peak was $18.07 in January.

The 2019 Class III average stands at $16.37, up from $14.72 at this time a year ago and $16.18 in 2017.
The October Class IV price is $16.39, up 4 cents from September and $1.38 above a year ago. The 2019 average stands at $16.23, up from $14.06 a year ago and $15.44 in 2017.

Most cash dairy prices ended October strong. Block Cheddar climbed to $2.1750 per pound the day after Halloween but closed Friday at $2.1550, up 3.25 cents on the week, after gaining 15.5 cents the previous week, and is 69.75 cents above a year ago.

 The Cheddar barrels closed at $2.3250, up 7.5 cents on the week on unfilled bids, after pole vaulting 25 cents the previous week, are 98.5 cents above a year ago, and the highest they have been since Sept. 25, 2014. They’re also an inverted 17 cents above the blocks. 24 cars of block traded hands on the week and 69 on the month, up from 63 in September. No barrel was sold this week but 66 cars sold on the month, down from 80 in September.

Speaking of Halloween, the Oct. 31 Daily Dairy Report states that pizza is a key driver in cheese consumption and a study conducted by Under Armor’s MyFitnessPal indicates that Halloween may surpass Super Bowl as the biggest pizza consumption day of the year. Who would have thought?

Central cheesemakers continue to report steady, somewhat tight milk supplies, according to Dairy Market News. Spot milk markets were quiet early in the week, as prices continue to fall in the $1-over Class area. Cheese production is still slightly slower than this time in recent years. Cheese demand is good for short term needs. Barrel makers continue to report mostly bullish demand and some process cheese manufacturers say they are oversold week to week. Cheese market tones are “bullish,” says DMN, but cheesemakers are concerned about how bullish. They say $2+ cheese is “creating a short-term or necessity-based purchasing environment. Buyers are not looking for anything longer term.”

The CME barrel pricing topping the blocks was a surprise to many, according to DMN, and contacts credit a tightness of barrels. Increased governmental cheese purchases seem to be helping that trend. Demands for the holiday are surfacing “bit by bit,” says DMN, but domestic sales out west were close to the previous week's levels. Export sales have improved slightly. Inventory is sufficient and cheese output is active, prompted by a stable to increasing milk supply.

Grade A nonfat dry milk saw a Friday finish at $1.1825 per pound, 3 cents higher on the week, highest since Feb. 18, 2015, and 28.25 cents above a year ago. 16 cars sold on the week, with 60 for the month, up from 49 in September.

CME dry whey fell to 26.75 cents per pound Tuesday, lowest since March 13, 2018, but it closed Friday at 28.25 cents, unchanged on the week but 16.25 cents below a year ago. Product continues to make its way to Chicago, with 48 loads traded this week and 305 on the month, up from just 50 in September.

President Trump and China’s Xi Jinping were to meet at the November Asia-Pacific Economic Cooperation meeting in Chile but it was canceled due to unrest there. HighGround Dairy’s Lucas Fuess reported in the Nov. 4 “Dairy Radio Now” broadcast that Xi reportedly invited Trump to meet in Macau, China.

Fuess says there is still hope that Phase 1 of the trade agreement between the US and China can be implemented and that agricultural purchases, including dairy products, will be made by the Chinese. China has made several promises of increased agricultural purchases, primarily corn and soybeans, says Fuess, but HighGround hopes they will include dairy products.

“There is nothing yet in writing,” Fuess cautioned, and “China continues to hesitate to commit to exactly how many agricultural products they will purchase.” He adds there was a “good sign” in that President Trump has held off imposing additional tariffs on Chinese imports, as he had previously threated to do.

Fuess also reported on Japan’s September dairy imports, which included record levels of cheese due to Japan’s declining domestic dairy production. He said that a lot of Japan’s dairy imports are from the US however we continue to compete with Europe and New Zealand. “If the price is right and the US can compete, we can ship product away from our shores and fulfill the needs of foreign countries and hopefully have a good impact on our US domestic prices.”

In politics, the National Milk Producers Federation announced its support for the “Farm Workforce Modernization Act,” which they termed “a bipartisan immigration bill that advances agriculture immigration reform.”

Sponsored by Judiciary Immigration Subcommittee Chair Zoe Lofgren (D-CA) and Congressman Dan Newhouse (R-WA), NMPF says “The legislation would provide legal status to current agricultural workers and their families and reform the H2A guest-worker visa program to permit year-round agriculture to participate, a crucial need for dairy. The efforts of Chairman Lofgren and Representative Newhouse, both longtime champions for agricultural labor reform, are greatly appreciated by dairy farmers, who cannot wait any longer for action.”

“America’s dairy farmers are eager to advance and improve this legislation as it moves through the Congress,” said Mike McCloskey, a dairy farmer and chairman of NMPF’s Immigration Taskforce. “As producers of a year-round product, dairy farmers face a unique labor crisis because our jobs are not seasonal or temporary. From our years of work on these issues, we know first-hand just how hard immigration reform is. But we simply cannot and will not stop working to find a solution. Dairy needs workers for our industry to sustain itself. It’s that simple, and it’s that dire.”

Jim Mulhern, NMPF President and CEO, thanked the lawmakers for “putting forward this essential step for agriculture labor reform, saying the bill is a critical first step in the legislative process.” “We have supported numerous efforts to address dairy’s acute labor needs. Passing legislation in the House is a critical step in the process. We urge the Senate to work with us on this important issue so we can get an ag worker bill across the finish line in this Congress,” Mulhern said. “The bipartisan Farm Workforce Modernization Act provides an important starting point for badly needed improvements to agriculture immigration policy.

 

 

11/7/2019