6 January 2023

5 minute read

By: Jim Wyckoff

USDA’s Vilsack to announce new funding for expanding US meat processing capacity

Vilsack announced the $9.6 million investment across the country to help farmers, ranchers, processors and rural businesses diversify the nation’s meat supply. States receiving investments: California, Illinois, Iowa, Kansas, Kentucky, Maine, Montana, Nebraska, New York, Ohio, Oklahoma, South Carolina, Texas, Virginia, Washington and Wisconsin. USDA says the funding is to make “agricultural markets more accessible, fair, competitive, and resilient for American farmers and ranchers.”

China’s sow herd continues to grow

China’s sow herd increased 0.2% in November from the month before to 43.88 million head, according to the country’s ag ministry. The sow herd was 2.1% larger than November 2021.

Weekly USDA dairy report

CME GROUP CASH MARKETS (12/30) BUTTER: Grade AA closed at $2.3800. The weekly average for Grade AA is $2.3800 (-0.1490). CHEESE: Barrels closed at $1.8575 and 40# blocks at $2.1350. The weekly average for barrels is $1.8588 (+0.1298) and blocks, $2.1513 (+0.1068). NONFAT DRY MILK: Grade A closed at $1.3350. The weekly average for Grade A is $1.3344 (-0.0086). DRY WHEY: Extra grade dry whey closed at $0.4150. The weekly average for dry whey is $0.4038 (+0.0203).

BUTTER HIGHLIGHTS: Cream is available throughout the country and butter makers in the West say they are utilizing volumes internally, rather than selling amid softening cream multiples. Some contacts in the East say lower prices for cream are causing them to find additional room for cream. Butter makers in the East and West are operating busy production schedules. In the Central region, extreme winter weather last week put some churning in flux. Demand for butter has softened, in all regions. Market prices for butter have been declining recently. Some purchasers in the West are waiting to see if butter prices fall further, before booking loads to ship past Q1 of 2023. Spot loads of butter are available for purchasing in the West. Bulk butter overages range from 5 to 15 cents above market, across all regions.

CHEESE HIGHLIGHTS: Milk remains available for cheesemakers across the country. Some contacts in the Midwest and West report taking in loads at below Class prices. Cheesemakers are using available milk in the Northeast and West, to run busy production schedules. Some plant operators in the Midwest offered time off to employees last week and even more operators are anticipating having some down time in the coming week. Some Midwestern cheese plants were shut down due to winter storms and are getting back online. Domestic demand for cheese is steady in the Northeast, though contacts in the Midwest and West say cheese sales have been softer ahead of the New Year. Contacts in the Northeast say lower prices for internationally produced loads of cheese are contributing to softening demand. Meanwhile in the West, export demand is steady. In the Northeast and West, loads of cheese are available for spot purchasing.

FLUID MILK: With a few exceptions, milk production volumes are steady to higher. Milk supplies are readily available throughout most the country, with stakeholders indicating no shortages of milk. Winter storms affected processing and distribution across the country. Bottling milk supplies were short for southern plants from the snowstorms effecting distribution. Cold and snowy weather in the Northwest hindered production. Arizona saw cooler weather strengthening milk production. Some stakeholders in the upper Midwest indicate not being caught up from the transportation backups and delays. Bad weather and limited tanker availability caused some spot loads to sell for under Class prices. Class I demand is steady to higher, with some educational institutions getting ready for students returning after winter breaks. Demand for all other classes is mostly unchanged. Spot milk loads in the Midwest region ranged from $10 to $3 under Class III. Cream volumes are readily available, and demand is softening. Butter churning is active. Condensed skim contract and spot sales are steady to lighter, with volumes outpacing producers’ demands. Cream multiplies for all Classes are 1.00 – 1.15 in the East, .80 – 1.10 in the Midwest, and .90 – 1.26 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices are steady to lower this week. High heat nonfat dry milk prices moved lower on the bottom of the range for all regions. Winter storms caused hauling delays and backups. Export demand for low/medium heat nonfat dry milk is softening. Dry buttermilk prices were mostly unchanged. Contacts indicated two Eastern drying plants had problems due to blizzard conditions impacting operations. Dry whole milk prices moved lower on both ends. Whole milk drying is expected to remain at the usual tempo. Dry whey prices were steady to lower this week. Cheese makers are actively working through ample milk supplies, leaving an abundance of liquid whey to run steady drying operation schedules. Whey protein concentrate 34% prices had little change, with some manufacturers indicating spot sales at the top end of the mostly price series. Lactose and casein prices were unchanged this week. Demand for infant formula lactose is steady. Casein processing in New Zealand is seeing increases.

ORGANIC DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reported October 2022 estimated fluid product sales. The U.S. sales of total organic milk products was 237 million pounds, up 2.0 percent from October 2021, but down 0.9 percent year-to-date. Organic whole milk sales, 116 million pounds, were up 7.2 percent compared to a year earlier and up 3.1 percent year -to-date. Reduced fat milk (2%) sales were 79 million pounds, up 4.7 percent from the previous year, but down 2.4 percent year-to-date. Organic flavored whole milk sales, 1 million pounds, decreased 70.9 percent from the previous year and decreased 8 percent year-to-date. Meanwhile, the December 2022 in-store retail surveys of selected supermarkets in twenty-nine U.S. cities show the retail prices of organic whole milk in the half gallon container. The prices ranged from $3.94 in, Houston, TX, to $6.49 in Pittsburgh, PA. The December 2022 simple average price increased to $4.76 from $4.74 the previous month. Regionally, the percentage of organic dairy retail advertisement in the Southeast grew by 122 percent, compared to the previous survey period. No retail grocers in Hawaii, Alaska, nor the Midwest region promoted organic dairy products listed in the survey this period.

NATIONAL RETAIL REPORT: Conventional dairy ads decreased by 9 percent, while total organic dairy ads decreased by 15 percent this week. Conventional ice cream in 48 to 64-ounce containers continues to be the most advertised dairy product, with a weighted average advertised price of $3.72, up 8 cents from last week. Conventional butter in one-pound packs appeared in 63 percent fewer ads this week, perhaps marking the end of holiday baking season, while holding a weighted average advertised price of $4.30, up 35 cents from last week.