Welcome to 2021. One would think, or at least hope, that things won’t get any worse than what we experienced in 2020. As American taxpayers examine the millions of their hard-earned dollars going overseas to benefit other countries and the many “non-essential” items funded here at home by the so-called COVID-Relief bill, they can try and decide what bills their $600 “benefit” will go toward. 

With a national debt now over $27 trillion, it is unconscionable that House and Senate lawmakers would spend anything more than absolutely necessary but rather work on helping their constituents endure. How sad that President Trump caved in and signed the measure. 

Specifically to dairy, StoneX Dairy broker Dave Kurzawski looked back in the January 4 ‘Dairy Radio Now’ broadcast, stating that 2020 “redefined what we thought could happen in the dairy market and what is normal.” He quickly added that “We are still in the pandemic as we walk into 2021 and just because we’re changing the year, I don’t think the world is going to be a whole lot different, not at least early in 2021.”

Volatility will remain in the market, according to Kurzawski, and “While rising U.S. milk production takes a back seat to other things like the government buy programs, there’s going to be a lot of forces at play in the first part of the year and probably throughout much of 2021. I think that will keep markets quite volatile as we go forward,” he concluded, “but the world still needs food.”

He wrote in his December 31 ‘Early Morning Update;’ “The key issue on the table is the growing availability of fresh cheese in the country right now. Ultimately, we expect the government to fire up their buying programs, which will likely be supportive to cheese. In the interim, however, fresh cheese supplies are growing and we expect this could put some pressure on futures as we roll into next year.”

Writing in a special edition of California’s Milk Producers Council newsletter, the Daily Dairy Report’s Sarina Sharp reported that “Congress allocated more money for the Supplemental Nutrition Assistance Program (SNAP) and other food aid programs, which will presumably allow those who are struggling financially to put a bit more dairy in their grocery carts.”

“The bill provided $400 million for The Emergency Food Assistance Program (TEFAP), a small, unspecified portion of which USDA will spend procuring American-style cheeses and low-fat ultra-high temperature milk.” 

USDA also received $400 million for the Dairy Donation Program to reimburse dairy processors for donations to food banks and $1.5 billion to buy commodities, including seafood, fresh produce, dairy, and meat products, and donate them to food banks,” according to Sharp.

“The total for dairy is likely to be noticeably less than the massive government expenditures this year,” she said, “but it is still significant,” and “There is no word yet on when USDA will begin to spend this money, which makes it difficult to assess the repercussions for the dairy markets.”

Meanwhile, the Federal order benchmark Class III milk price ended 2020 sharply lower and well below a year ago. The Agriculture Department announced the December Class III at $15.72 per hundredweight, down $7.62 from November, $3.65 below a year ago, and the lowest Class III price since May. That put the 2020 average at $18.16, up from $16.96 in 2019 and $14.61 in 2018.

The December Class IV price is $13.36, up 6 cents from November, $3.34 below a year ago, and the lowest December Class IV price since 2008. Its 2020 average is $13.49, down from $16.30 in 2019 and $14.23 in 2018. The USDA is projecting a 2021 Class IV average of $13.60. The 2020 Class IV low was $10.67 in May and a high of $$16.65 in January. 

Cash dairy prices ended 2020 below where they were a year ago but what a roller coaster ride they had. The 40-pound Cheddar block cheese saw a COVID-pandemic-driven bottom of $1.00 per pound on April 15, then soared to a $3.00 peak on July 13, and closed New Year’s Eve at $1.65, up 5.25 cents on the New Year’s holiday shortened week but 24 cents below a year ago.

The 500-pound Cheddar barrels bottomed out April 9 at $1.00 per pound, peaked at $2.53 on October 30, and closed December 31 at $1.5425, up 7.75 cents on the week, 10 cents below a year ago, and 10.75 cents below the blocks. 33 cars of block traded hands on the week at the CME and 19 of barrel.

Dairy Market News says the markets have begun to show some stability, at least in the near term. Some Midwestern cheese plants are running full schedules while others are allotting days off but “there is ample milk available.” 

CME butter, which hadn’t seen anything below $2.00 per pound since late November 2019, saw a far different scenario in 2020. The butter hit bottom at $1.10 on April 23, saw a one day price high of $2.0150 on June 4, and closed the year at $1.42, lowest since December 1, down 10.5 cents on the week and 53 cents below a year ago. There was only 1 sale on the week.

Grade A nonfat dry milk saw its peak at $1.2975 per pound on January 22, but saw a low point of 79.25 cents per pound on May 1. The powder finished the year at $1.1425 per pound, down a half-cent on the week and 9 cents below a year ago, on 12 reported sales for the week. StoneX says “End-user buying seems to have dried up a bit.”

CME dry whey saw its 2020 low at 28.75 cents per pound on July 7. It peaked at 47 cents on December 10, and closed December 31 at 46.25 cents per pound, down a half-cent on the week but 14.75 cents above a year ago, with 1 sale for the week.

Another jump in the U.S. All Milk price offset sharply higher corn and soybean prices to push the November milk feed price ratio higher. The USDA’s latest Ag Prices report shows the ratio at 2.58, up from 2.50 in October and the highest since July, but was down from 2.65 in November 2019.

The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk could purchase 2.58 pounds of dairy feed of that blend in November.

In global news, November marked another monthly record for imports to China, due to fluid milk, cream, and whey demand, reports HighGround Dairy (HGD). 

Fluid milk and cream imports were slightly lower than the October all-time high, says HGD, but the volume imported from New Zealand reached a fresh high at 67.5 million pounds, up 13.6 million from a year ago. HGD adds that Germany has remained the top supplier since March and saw its market share reach 33 percent versus 29 percent in 2019.

Dry whey imports continue strong, as China continues to rebuild its hog population, and totaled 134.4 million pounds, up 47.9 percent from a year ago, with most coming from the USA, followed by Belarus. HGD points out there are now 56 Belarusian dairy processing companies accredited to ship product to China.

The National Milk Producers Federation praised the USDA and Health and Human Services this week for the release of the 2020-2025 Dietary Guidelines for Americans (DGA) which ”reaffirmed dairy’s central role in diet as a provider of essential nutrients that are often under-consumed in American diets.”

NMPF pledged to “continue efforts to broaden consideration of the latest science on dairy fats in the next examination of the federal guidelines, which are released twice each decade.” 

“USDA and HHS deserve praise for once again recognizing just how vital dairy is to the nation’s health and well-being,” said Jim Mulhern, NMPF president and CEO. “We encourage them to affirm that role even more clearly in the next iteration of the Dietary Guidelines, to reflect the positive contribution of dairy fats in diets that’s increasingly recognized in a growing body of evidence.”