California Weary from Wildfires
Published: Friday, September 18, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Dairy prices were mixed in the Labor Day holiday shortened week. The CME Cheddar blocks marched to $2.1575 per pound last Wednesday, then slipped back but rallied to a Friday close at $2.1650, up 4 cents on the week but 4 cents below a year ago when they jumped almost 21 cents.
The barrels got to $1.7150 last Tuesday but reversed the next day and finished Friday at $1.5950, down 10.5 cents on the week, 32.50 cents below a year ago, and 57 cents below the blocks, third highest spread ever, at the close of trading. Thirteen cars of block exchanged hands on the week and 19 of barrel.
Lots of eyes are on California, where scorching high temperatures and wild fires have taken their toll on man and beast. Golden State milk output may be impacted, but we will see. Parts of Oregon and Washington State have also seen their share of fires, smoke and devastation. The glorious view of Mt. Baker from my home office was clouded in smoke last week from fires east of the mountains.
Speaking of California, Western United Dairies featured a Hoards Dairyman column from fourth-generation California dairy farmer Tyler Ribeiro, stating: "California is on fire again, and the conversation of prevention is still being swept under the rug. How in the world can you allow your state to go up in flames every year so dramatically that homes are turned to ash, cities are leveled, and lives are lost battling the never-ending blazes and still not face the facts? California is going through a man-made drought that is spewing more greenhouse gases in the air than cows have ever or will ever do. The kicker is that this is all preventable.
"As the state allows itself kingship over all water rights and strips farmers of their rights to farm, California has the audacity to allow water that was once used for agriculture to be pumped into overcrowded cities and into the ocean to help meet the desires of environmental groups. These groups wish to place the importance of a naturally diminishing fish over the lives of humans," wrote Ribeiro.
Meanwhile, Midwestern cheesemakers remain busy, reports Dairy Market News, though spot milk trading was slower again this week, as a number of cheesemakers are not seeking milk outside of what they have internally or coming in via contract. Midwest cheese production has been quite busy for most of the summer, says DMN, and things do not look to change coming into the fall.
Most contacts report cheese loads are "moving out the door," as cheese market tones have benefited from the announcement of continued governmental lunch box programs. The large gap between CME block and barrel prices remains an issue, warned DMN, "but weekly average prices have resoundingly answered back following the precipitous drops in July and August."
Western cheese output is also active. Contacts feel that government purchases have spurred cash pit prices higher and prompted manufacturers to amp up cheese production. Some processors say prices have been favorable for export sales, while others have put cheese into storage due to the difference between cash and futures prices. Manufacturers say demand has been strong for American-type block cheese and they have had no trouble selling supplies. Italian-type cheeses are also in good demand.
DMN adds that "normally, football season pizza sales might be a topic of discussion for this time of year, but with some league competitions postponed, no fans in the stands, and with smaller gatherings encouraged, it may be a more subdued season." Frozen and delivery pizza sales have remained strong, however, and cheese supplies are generally available for both block and barrel.
Butter inched up to $1.50 per pound last Tuesday but closed Friday at $1.48, 1.25 cents lower on the week and 74.25 cents below a year ago, on 42 CME sales.
Cream remained accessible for Midwestern churns following the holiday weekend though some plant managers were hesitant about taking on more cream, says DMN. Bulk butter supplies are plentiful, as well. Cream handlers say demand in general, is lackluster, but some Midwestern butter plants being down for maintenance hadn't helped in finding homes for the cream. Production remains busy as Class IV producers prepare for fall demand. Food service orders have climbed to a more comfortable point. They are notably lower than in previous years but have shown more life in recent weeks. Some butter producers suggest retail orders remain higher than previous years' numbers but butter market tones remain "somewhat delicate of late," says DMN.
Western butter markets were flooded with cream at the beginning of the Labor Day week but processors were prepared, according to DMN. Butter production is active even though cream supplies are almost back to pre-holiday levels. Butter inventories have grown a bit. Domestic sales remain stable. Current lower U.S. prices could stimulate more international sales, but current export demand is unchanged. USDA issued a request to purchase 2.6 million pounds of butter on Sept. 3, with a planned delivery between January and April of next year," but "COVID-19 and its repercussions on consumers' behaviors and lifestyles are keeping the butter market unsettled," DMN concluded.
Grade A nonfat dry milk had a good week, climbing to $1.0425 last Wednesday, though it closed Friday at $1.04, a penny higher on the week but 1.5 cents below a year ago, with 28 carloads exchanging hands on the week at the CME.
CME dry whey saw little change, closing last Friday at 35.50 cents per pound, up 2.25 cents on the week but 4.25 cents below a year ago, on six sales for the week.
U.S. dairy cow slaughter totaled 54,100 in the week ending Aug. 29, down 500 head from the previous week, and 7,600, or 12.3 percent, below that week a year ago.
Return to Top of Page