China Ups Purchases of U.S. Whey
Published: Friday, October 16, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
In August U.S. dairy exports continued strong. USDA data shows cheese exports at 68.4 million pounds, up 16.8 percent from August 2019 and up 2.3 percent year to date. Butter, at 3.7 million pounds, was up 7.8 percent from a year ago and up 3.7 percent YTD.
Nonfat and skim milk powder exports totaled 151.7 million pounds, up 34.7 percent from a year ago and 28.4 percent YTD, with dry whey exports totaling 46.9 million pounds, up 54.4 percent from a year ago and up 28.5 percent YTD.
HighGround Dairy says the U.S. shipped record volumes of dry whey to China, (over half the whey total) as it rebuilds its pig population from African swine fever. However, "the large numbers mask a less productive herd. Even though numerically the sow herd is growing it's growing in a low quality way," said HGD.
Markets took a jolt on news that President Trump contracted the COVID virus, but fears soon eased by videos, texts and an appearance by the president to supporters gathered at Walter Reed Medical Center where he was being treated. The president's announcement that negotiations with Democrats on an additional stimulus package would be postponed until after the election caused another jolt, while the focus turned to the new Supreme Court nominee.
Cash block Cheddar cheese marched to $2.65 per pound last Tuesday, highest since July 21, but eased back last Thursday, and closed Friday at $2.6475, up 3.75 cents on the week and 54.75 cents above a year ago.
The barrels closed at $2.0550, highest since July 31, 10 cents higher on the week, after jumping 29.50 cents the previous week, 3.25 cents above a year ago, but a still too high 59.25 cents below the blocks. Seven cars of each traded hands on the week at the CME.
Midwest cheese demand reports are mostly positive, according to Dairy Market News. Customers are hesitant, in light of current prices, but producers are confident customers will open the coffers soon, as supplies get low.
Western cheese makers report lingering effects of selling forward into export markets last spring. Manufacturers are getting requests from buyers, looking for available cheese. Some are trying to fill commitments to government buying but "processors don't have much wiggle room to supply extra loads of cheese." Demand from export buyers has cooled due to the higher U.S. prices but that has not freed up cheese needed by all shoppers. Some say this may change as government purchases slow and supplies increase, resulting in downward prices. Cheese production is active in the West, with most plants at full capacity.
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