By Lee Mielke
U.S. milk prices are making June Dairy Month a little happier for farmers. The USDA announced the May Federal order Class III benchmark milk price at $18.96 per hundredweight (cwt.), up $1.29 from April, $6.82 above May 2020, and the highest Class III since November 2020. The five month average is at $16.91, up from $15.10 at this time a year ago and $15.05 in 2019.
Late Friday morning Class III futures had the June price at $17.29; July, $17.82; August, $18.33; September, $18.73; October, $18.86; November, $18.75; and December at $18.45.
The May Class IV price is $16.16 per cwt., up 74 cents from April, $5.49 above a year ago, and the highest since February 2020. Its average now stands at $14.54, up from $13.96 a year ago, and compares to $15.81 in 2019.
A jump in the April all milk price helped offset increased feed costs to pause the slide in the U.S. milk feed ratio. The USDA’s latest Ag Prices report shows April at 1.75, same as March, but down from 1.85 in April 2020.
The index is based on the current milk price in relationship to feed prices for a ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk would purchase 1.75 pounds of dairy feed of that blend.
The U.S. all milk price averaged $18.40 per cwt., up $1 from March and $4 above the March 2020 average. California’s all milk price climbed to $16.70, up 90 cents from March and $2.80 above a year ago. Wisconsin’s, at $18.80, was up $1.30 from March and $4 above a year ago.
Unfortunately, the national average corn price hit $5.31 per bushel, up 42 cents per bushel from March and a pricy $2.02 per bushel above April 2020. Soybeans averaged $13.90 per bushel, up 70 cents from March and a whopping $5.55 per bushel above April 2020. Alfalfa hay averaged $187 per ton, up $6 from March and $7 above a year ago.
Looking at the cow side of the ledger; the April cull price for beef and dairy combined averaged $71.10 per cwt., up $4 from March, $7.10 above April 2020, and 50 cents below the 2011 base average of $71.60 per cwt.
Milk cow replacements averaged $1,310 per head in April, down $50 from January but $60 per head above April 2020. Cows averaged $1,400 per head in California, up $50 from January and $100 per head above a year ago. Wisconsin’s average, at $1,490 per head, was up $20 from January and $240 per head above April 2020.
In the week ending May22, 53,500 dairy cows were sent to slaughter, down 1,900 from the previous week and 2,200 or 3.9 percent below that week a year ago.
International dairy values continue to slip. This week’s Global Dairy Trade auction saw the weighted average down 0.9 percent, following a 0.2 percent slip on May 18 and 0.7 percent loss on May 4. While the slippages are small, due to China remaining in the market as well as stepped up trade from other regions, it was the fourth consecutive event to lose ground. Traders brought 50.3 million pounds of product to market, up from 46.6 million in the last event. This was the ﬁrst auction of New Zealand’s new market year.
Dairy exports continue to leave our shores through the Cooperatives Working Together (CWT) program. Member coops accepted 31 offers of export assistance this week to help capture sales of 2.4 million pounds of Cheddar, Gouda and Monterey Jack cheese, 2,205 pounds of anhydrous milkfat, and 762,800 pounds of cream cheese.
The product is going to customers in Asia and South America through September and raised CWT’s 2021 exports to 17.9 million pounds of American-type cheeses, 10.4 million pounds of butter (82 percent milkfat), 7.1 million pounds of anhydrous milkfat, 16.6 million pounds of whole milk powder and 6.9 million pounds of cream cheese. The products are going to 30 countries in six regions. These sales are the equivalent of 766.1 million pounds of milk on a milkfat basis.
We talked about the congestion at U.S. ports and truck shortages within the United States and what they mean to the dairy industry in the June 7 Dairy Radio Now broadcast with Matt Gould, editor of the Dairy and Food Market Analyst.
Gould said that shipping costs from California to the Midwest have surged as have the costs from the middle of the country to Mexico. Securing a ship at west coast ports has also become more difficult in the last six months, he said.
The port congestion started in November last year, according to Gould, where ships had to wait to be unloaded in southern California. That congestion peaked in February but has since slowly improved but the situation isn’t over yet.
He blamed the congestion on “People staying home and spending their money on things, but those things have to be made somewhere, typically overseas, so that demand filled the ships.”
The port improvement is much needed, he said, because “We have booming supplies of cheese and we have booming supplies of milk. At this point we’re very dependent on those export markets because we have to balance our market by shipping products overseas.”
Midwest cheese producers are busy, reports Dairy Market News, and “milk availability is evidence that peak flush season has yet to be achieved. Cool weather continued to put a surplus of milk into cheese vats. DMN said, “It is getting to a point where milk handlers are aggressively seeking out destinations for notable volumes of milk. Contacts are hopeful that heat in the forecast will begin to stanch the current flow of milk.”
Western cheese demand is steady in both retail and food service markets. Milk is readily available, allowing producers to run full schedules however cheese output is, reportedly, outpacing demand. Market tones are unsteady though contacts believe the lower prices should lead to increased interest from international buyers but port congestion and shipping issues are continuing to cause delays.
In politics, the Wisconsin-based American Dairy Coalition (ADC) gave a thumbs up to Sen. Kirsten Gillibrand (D-N.Y.) this week for “continuing to seek solutions and relief for dairy farmers.
As chair of the Senate Agriculture Subcommittee on Dairy, Livestock and Poultry since the beginning of the 117th Congress, Sen. Gillibrand has wasted no time looking into concerns raised about the Class I milk price formula change that has had devastating effects for dairy farmers via income loss, negative Producer Price Differentials (PPDs), and failed performance of risk management tools amid the pandemic,” the ADC stated.
Meanwhile, 16 senators and 12 representatives signed on to a letter authored Sens. Mike Rounds (R-S.D.) and Tina Smith (D-Minn.) calling for “reform of government policies impacting U.S. cattle and beef markets.
“The Congressional signers represent 23 states, including many with stronger consumer-oriented constituencies than traditional cattle-related constituencies,” according to an R-Calf press release. “Together they are calling on U.S. Attorney General Merrick Garland to take action to protect the nation’s cattle farmers and ranchers from going broke due to inexplicably low cattle prices and protect American consumers from paying over-inflated beef prices at grocery stores. The letter identifies several factors the government needs to address but goes beyond traditional antitrust concerns.”