U.S. milk prices are making June Dairy Month a little happier for farmers. The Agriculture Department 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% corn, 8% soybeans and 41% 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 $1400 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% below that week a year ago.

This week’s Crop Progress report showed 95% of the U.S. corn crop was planted, as of the week ending May 30, up from 90% the previous week, 3% ahead of a year ago, and 8% ahead of the five year average. 81% is emerged, 5% ahead of a year ago, and 11% ahead of the five year average. 76% is rated good to excellent, 2% ahead of this time a year ago.

        Soybean planting is at 84%, up from 75% the week before, 10% ahead of a year ago, and 17% ahead of the five year average. 62% are emerged, 12% ahead of a year ago and 20% ahead of the five year average.

       Cotton is 64% planted, same as a year ago, but 1% behind the five year average.

        International dairy values continue to slip. This week’s Global Dairy Trade auction saw the weighted average down 0.9%, following a 0.2% slip on May 18 and 0.7% 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 ?rst auction of New Zealand’s new market year.

Buttermilk powder led the losses, down 7.5%, after not trading in the last event. Butter was down 5.4%, after dropping 2.2%. Anhydrous milkfat was off 0.8%, after inching 0.1% lower. Lactose was down 1.6%, following a rise of 1.6% last time. Skim milk powder and whole milk powder were both down 0.5%, after skim powder inched up 0.7% last time and whole milk powder was off 0.2%. GDT Cheddar was up 0.5%, following a 1.0% rise last time.

        StoneX Group says the GDT 80% butterfat butter price equates to $2.0757 per pound U.S., down 10.6 cents, and compares to CME butter, which closed Friday at $1.7750. GDT Cheddar, at $1.9615, was up fractionally, and compares to Friday’s CME block Cheddar at $1.50. GDT skim milk powder averaged $1.5491 per pound, down from $1.5634, and whole milk powder averaged $1.8426 per pound, down from $1.87. CME Grade A nonfat dry milk closed Friday at $1.26.

        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% 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 U.S. 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, says Gould, 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.”

CME block Cheddar closed the Memorial Day holiday shortened week at $1.50 per pound, as traders anticipated the afternoon’s April Dairy Products report. The blocks were down for the fifth week in a row, losing 30 cents in that time period, falling to their lowest level since May 12, 2020, and were $1.0525 below a year ago when they gained 32.25 cents, hitting $2.5525.

The barrels finished at $1.6150, up 4.50 cents on the week, 74.50 cents below a year ago when they shot up 33.75 cents to $2.36, and are an inverted 11.50 cents above the blocks. 33 cars of block were sold on the week and 20 of barrel.

        The lagging NDPSR values were well above current CME values and the dry whey price saw its first decline since Christmas Week 2020.

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 says “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.

Cash butter finished Friday at $1.7750 per pound, down 3.50 cents on the week and 15 cents below a year ago when it gained 26.50 cents and was trading at $1.9250. There 17 carloads that found new homes on the week.

Central butter contacts reported continued strength in food service demand and suggest overall demand has grown closer to pre-COVID levels. There was plenty of cream following the holiday but not as hearty as expected. Some contacts expect tightness in upcoming weeks. Market tones are quiet with some potential bullish undertones, says DMN.

Western cream loosened this week as some processors paused operations over the holiday but limited tanker availability curtailed movement out of the region. Some expect cream to tighten in the coming days, but the current supply is adequate. Butter output is steady to seasonally lower though Southwest plants are growing inventories to meet fall demand. Retail sales are lower but steady. Food service demand is healthy but cautious as customers are placing smaller, more frequent orders. Some contacts report diminished export interest.

StoneX says “While butter does not feel bullish these days the stocks/use ratio for the U.S. is pointing towards $2.00 butter in the near future.”

Grade A nonfat dry milk closed Friday at $1.26 per pound, down 3.25 cents on the week but still 28.25 cents above a year ago. 10 sales were reported.

CME dry whey fell to 60 cents per pound Tuesday, lowest since Mar. 16, 2021, but closed Friday at 60.25, 2 cents lower on the week but 25.75 cents above a year ago, on 2 trades.

Class I demand varies from flat to lower, as schools begin to prep for summer break, says DMN. Cheesemakers were taking extra spot loads at pre-holiday discounts and spot milk prices ranged from $6 to $4.50 under Class III in the upper Midwest.

In politics, the Wisconsin-based American Dairy Coalition (ADC) gave a thumbs up to Senator Kirsten Gillibrand (D-NY) 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, Senator 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.

Referencing her bipartisan letter with 21 co-signers to Ag Secretary Tom Vilsack, Gillibrand had a press conference May 26 saying direct payments to dairy farmers from existing CFAP and Pandemic Assistance for Producers funds are necessary to help them recover from the COVID-19 pandemic. The letter specifically asks USDA to issue payments for the first half of 2021, retroactive to Jan. 1 and Gillibrand called for hearings, an investigation, and potential legislation that would “change how we do dairy pricing in America.”

Meanwhile, 16 senators and 12 representatives signed on to a letter authored by Senator Mike Rounds (R-SD) and U.S. Senator Tina Smith (D-MN) 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.”