The Agriculture Department announced the April Federal order Class III benchmark milk price at $13.07 per hundredweight (cwt.), down $3.18 from March, $2.89 below April 2019, and the lowest Class III price since May 2016, another victim of the COVID-19 pandemic that has invaded our world.
    The four month Class III average stands at $15.84, up from $14.71 at this time a year ago and $14.02 in 2018, but that average and farm profit margins will slip more as Class III futures late Friday morning portended a May price bottom at $11.26; June, $12.23 and July at $13.53, with a peak at $15.76 in November.
    The Class IV price is $11.40, down $3.47 from March, $4.32 below a year ago, and the lowest Class IV price since September 2009. Its average for the year stands at $14.78, down from $15.69 a year ago and compares to $13.13 in 2018.
    A letter from 23 U.S. dairy cooperatives this week requested USDA call an emergency hearing to amend Federal Milk Market Orders and establish a minimum Class I milk price mover of $15.68 per cwt. for June, July and August.
    Two days later, the answer was no. The USDA stated it “would not be able to complete a rulemaking proceeding that allows all industry stakeholders the opportunity to adequately participate and implement the proposal timely.”
    The proposal drew comment from many in the industry, many of which opposed the plan. The Minnesota Milk Producers Association argued; “While we all want higher milk prices, arbitrarily bumping prices to a made-up number could cause more harm than good,” and warned; “While raising the Class I price would help those in Class I (fluid milk) areas, those farms without most of their milk in Class I would be left behind. While a mandated change in Class I milk price could affect government-related risk management programs, it could also limit hedging on the CME, which would adversely affect market liquidity.”
    Bob Gray, editor of the Northeast Dairy Farmers Cooperatives newsletter, wrote, “A disservice was done to dairy farmers by rejecting this hearing out of hand. You hold the hearing, weigh the facts and make a decision based on the arguments presented. That is the proper way to proceed under the circumstances we find ourselves in today.”
    Meanwhile, the US Small Business Administration resumed accepting loan applications for the Paycheck Protection Program April 27 from approved lenders on behalf of any eligible borrower.
    National Milk says “Dairy farmers are eligible to apply for the PPP, along with a separate initiative, Economic Injury Disaster Loans, for which the application window is also imminent.” But, both initiatives are first-come, first-served, and funds are expected to be depleted quickly after Congress replenished them.
    The Federation called for elimination of the proposed $125,000 cap on federal disaster assistance for dairy, citing a new economic analysis that projects a 58% decline this year in net cash income for US dairy farms due to COVID aftereffects
    NMPF also says work must continue to expand overseas markets “not with an eye on what’s going to happen necessarily in the next week, but what needs to happen over the next year or two to help the industry recover.”
    NMPF and the US Dairy Export Council praised a ruling this week by the US Trade Representative (USTR) rebuking the European Union (EU) for what it termed “protectionist dairy trade policies.”
    The USTR charged that the EU has erected a “complex regime of trade barriers that harm opportunities for US exports to Europe. In addition, the EU has aggressively sought to restrict US exports in global markets by weaponizing geographical indications protections and blocking the ability of US suppliers to use common names to market cheeses like fontina, gorgonzola, asiago and feta.”
    “The USTR has rightly taken Europe to task for their destructive and unfair campaign against American-made dairy exports, and in particular the high-quality cheeses produced by the dedicated men and women of the US dairy industry,” said Tom Vilsack, president and CEO of USDEC.
    Dairy products were flowing to China in March and whole milk powder imports were up 6.9%, strongest for the month in four years, according to HighGround Dairy (HGD). New Zealand represented a 90% market share, says HGD, but that was down from 95% last year. The second largest supplier was Uruguay.
    Butter imports were up 108.1% from a year ago, anhydrous milkfat imports were up 21.4%, and cheese imports were up 53.6%. HGD said combined dairy imports were the strongest to start a calendar year on record and the biggest jump was from the US in the form of whey products. Whey imports from the US jumped 56% in first quarter, but are still well below 2017 and 2018 levels.
    Fluid milk imports were also the highest on record for first quarter, with New Zealand the number one supplier. HGD says China was actually promoting dairy consumption as a way to build immunity against Covid-19, which presumably increased demand for fluid milk this year.
    March imports of skim milk powder by Japan were down 16.0% from a year ago. Butter was up 31.5%, cheese was down 15.4%, and whey was off 3.5%.
    HGD points out that market share shifted dramatically into March. Volumes from the EU were down 48% versus last March, shifting market share from 34% to 21%, but “It was the US that capitalized on much of that volume shift with SMP received from the country up 130% year over year, moving market share from 14% in March 2019 to 37% last month. New Zealand showed the steepest volume decline of any country YoY with volumes received down 62%.”
    Meanwhile, the April 29 Daily Dairy Report warned that dairy exports to Mexico may be in jeopardy. The DDR says Mexico entered a mild recession in 2019 but “The seriousness of the situation did not truly become apparent until March when the Mexican peso crashed, losing nearly 20% of its value over the course of the month. The crisis deepened further in recent weeks as global crude oil markets collapsed,” the DDR stated, plus the COVID pandemic has added even more woes for our neighbor to the south.
    Most cash dairy prices strengthened going into May. The Cheddar blocks closed Friday May 1 at $1.2050 per pound, up 13.5 cents on the week but 47 cents below a year ago. The barrels finished at $1.19, 14 cents higher, but 47.25 cents below a year ago. 3 cars of block were sold on the week and 13 of barrel.
    Midwest cheese producers continue to find milk at discounted prices and output has increased at some of the plants that recently cut back. Food service demand is more positive but sales are not where they were last year but are trending higher according to multiple producers. Cheese storage remains a concern.
    Western cheese sales were unchanged to a bit higher. Retail demand remains stronger than normal and food service requests continue to revive but are still lower than usual as increase takeout orders is helping restaurants keep cheese orders coming. Cheese output is active but inventories are ramping up as sales are still below output. Most manufacturers have enough cheese storage but are concerned they may run out if the quarantine persists for a longer time.
    Butter got to $1.1975 Thursday but closed Friday at $1.1875, up 4.25 cents on the week, ending 7 weeks of loss, but $1.0850 below a year ago, with 14 sales.
    Butter plants are actively churning and cream remains widely available. That said, a number of contacts do not expect the easily accessible cream stores to remain as they are. Cream prices are trending higher and plant managers say domestic retail business is busy as customers take advantage the low prices.
    Plentiful cream is keeping western butter output heavy. Demand from retail has slowed from the panic buying a few weeks ago. Some contacts report a slight increase in restaurant purchases due to drive-thru and takeout meals but butter usage is typically very light for takeout items. Educational institutions and much of their food service activities are shut down though some schools are providing meals, but again, butter usage is light and not close to normal volumes. Some parts are planning to reopen restaurants in the next month but it may take time for the food service segment to get back up to normal levels, says DMN.
    Grade A nonfat dry milk closed Friday at 79.25 cents per pound, 1.75 cents lower on the week and 26 cents below a year ago. 3 sales were reported on the week.
    Whey saw a Friday finish at 39.50 cents per pound, up a penny on the week and 4.75 cents above a year ago, with 7 sales reported for the week.
    The Agriculture Department issued its 2019 annual Dairy Products Summary which showed cheese output totaled 13.1 billion pounds, up 0.8% from 2018. Wisconsin remained the leading cheese producer, with 25.6% of the total.
    Italian cheese amounted to 5.67 billion pounds, up 1.8%, and made up 43.2% of total cheese output in 2019. Mozzarella accounted to 79.3% of the Italian total, followed by Parmesan with 7.3%, and Provolone at 6.8%. Wisconsin was the leading producer of Italian cheese at 30%.
    American cheese output totaled 5.23 billion pounds, down 0.4% from 2018 and accounted for 39.8% of total cheese output. Wisconsin again was the leading American producer at 19.2%.
    Butter output hit 1.99 billion pounds, up 1.3% from 2018. California was the Number 1 butter producer, with a 29.8% share.
    Nonfat dry milk powder totaled 1.85 billion pounds, up 4.1% from 2018, and skim milk powder, at 573 million pounds, was up 2.2% from 2018. Dry whey totaled 978 million pounds, down 2.2% from 2018.
    Reports warn that the US food supply chain is breaking as primarily meat packing plants are being idled due to employee COVID sickness. The President issued an Executive Order to keep such facilities operating yet protect their employees.
    FC Stone’s April 28 Early Morning Update stated; “It looks like the average animal processing plant, excluding poultry, has more than twice as many production line and handling employees as the average dairy plant.”
    “The averages probably hide a very skewed distribution of plant sizes though,” says FC Stone. “Tyson’s Waterloo Iowa hog plant is their largest and has 2,800 employees while their Logansport Indiana plant has 2,200 employees. The JBS cattle plant in Greely Colorado has 6,000 employees. Not all of these would be production line material handling, but a large percentage would be.”
    FC Stone adds that “The new cheese plant in St. Johns Michigan will be one of the biggest in the country but will only have about 290 employees at the plant. In 2011 the Hilmar Dalhart, Texas cheese plant had about 250 employees operating a very large plant.”
    “We’re not saying dairy plants are immune or we won’t see some shutdowns due to an outbreak, but the slaughter plants look a lot more vulnerable than the dairy plants,” FC Stone concludes.
    A lower All Milk price could not be offset by lower feed costs so the March milk feed price ratio fell for the fourth month in a row and is at the lowest level since July 2019. The USDA’s latest Ag Prices report put the ratio at 2.23, down from 2.34 in February but compares to 2.14 in March 2019.
    The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. In other words, one pound of milk purchased 2.23 pounds of dairy feed containing that blend in March.
    The All-Milk price averaged $18.00 per cwt., down 90 cents from February but was 40 cents above March 2019. California’s All Milk price slipped to $17.60, down $1 from February but 30 cents above a year ago. Wisconsin’s, at $18.10, was also down $1 from February but is 80 cents above a year ago.
    The national average corn price averaged $3.68 per bushel, down a dime per bushel from February but 7 cents per bushel above March 2019. Soybeans averaged $8.46 per bushel, down 13 cents from February and 6 cents per bushel above a year ago. Alfalfa hay averaged $175 per ton, up $4 per ton from February but $11 per ton below a year ago.
    Looking at the cow side of the ledger; the March cull price for beef and dairy combined averaged $67.50 per cwt., up $1.70 from February, $4.70 above March 2019, but is $4.10 below the 2011 base average of $71.60 per cwt.
    The USDA’s latest Crop Progress report shows that, as of the week ending April 26, 27% of the US corn crop has been planted, up from 7% the previous week, 15% ahead of a year ago, and 7% ahead of the five-year average.  
    8% of the soybeans are in the ground, up from 2% a year ago, and 4% ahead of the five year average. 13% of US cotton has been planted, up from 11% the previous week, 3% ahead of a year ago, and 2% ahead of the five year average.
    Cooperatives Working Together (CWT) member cooperatives accepted seven offers of export assistance from CWT that helped them capture sales contracts for 191,802 pounds of Cheddar, 83,776 pounds of butter, and 2.094 million pounds of whole milk powder.
    The product is going to customers in Asia, Central and South America, and North Africa through August and raised CWT’s 2020 exports to 16.076 million pounds of American-type cheeses, 4.268 million pounds of butter (82% milkfat), 1.960 million pounds of anhydrous milkfat, 2.439 million pounds of cream cheese and 16.338 million pounds of whole milk powder. The product is going to 24 countries and are the equivalent of 436 million pounds of milk on a milkfat basis.