Monday Morning Huddle
9 November 2020

Highlights From Last Week

Block/Barrel Spread Narrows to Normal Level as Spot Cheddar Loses Ground

High block and barrel Cheddar prices have seemingly met their respective resistance levels with the block cheese price declining each day last week and noting especially steep drops on Thursday and Friday as bids disappeared from the spot market. Friday’s settlement was down 44 cents versus the prior week to the lowest value since September 16. The barrel cheese price settled unchanged on Monday but declined over the next four days to lose 21.25 cents throughout the week. The block/barrel spread on Friday was 2.5 cents, a return to normal after months of extreme value between the two price series.

It is likely that cheese demand in the fourth round of the Farmers to Families Food Box program has not materialized like in prior rounds. Expected cheese purchasing will be the smallest of any round in the program to date, and industry chatter suggests that vendors have some product left over from round three when not as many boxes were invoiced as expected. This food box demand was the only fundamental factor keeping cheese values elevated in recent weeks. Production is higher as milk flows begin their seasonal increase, and foodservice demand remains muted due to the pandemic. Cheese prices are expected to continue declining throughout November and will lose considerable value versus where they started the month. USDA noted that cheese buyers are purchasing on a hand to mouth basis in anticipation of imminent price declines for fear of purchasing high-value product. Spot milk is available for processing close to Class III values across the Midwest.

Heidi Heitkamp Considered Top Pick For Biden’s Secretary of Agriculture

From Politico: Former Sen. Heidi Heitkamp is considered to be the top pick for Biden’s Agriculture secretary, the same role that Trump considered tapping her for in 2016. The North Dakota Democrat, who lost her Senate seat in 2018, has strong moderate credentials and has in the past broken from her party on controversial policy issues. Many environmentalists strongly oppose her because of her support for the Keystone XL oil pipeline and because she voted to confirm President Donald Trump’s top two nominees at the Environmental Protection Agency, Scott Pruitt and Andrew Wheeler.

Last Week’s Reports & Analysis

US Dairy Export and Import Volume Analysis (Sep & Q3 2020)
US dairy exports have been above prior year levels for 13 consecutive months with whey shipments to China leading gains during September yet again. Total Q3 volumes were the strongest for the period on record, led by skim milk powder to Southeast Asia, as well as whey moving to China. Full Report

Dairy Products Report (Sep 2020)
After August’s sharp cheese output decline as Mozzarella production collapsed, total production recovered to a year over year gain into September. Cheddar was seasonally lower and marked the lowest monthly output of 2020 to date, but… Full Report

Reports This Week

USDA Crop Progress – Monday, November 9
World Agricultural Supply and Demand Estimates – Tuesday, November 10
USDA Crop Production – Tuesday, November 10
Weekly EU Dairy Commodity Prices – Wednesday, November 11
National Dairy Products Sales Report (NDPSR) – Thursday, November 12
Fonterra Pre-GDT Offer Volume Analysis – Thursday, November 12
USDA Weekly Dairy Cow Slaughter – Thursday, November 12
USDA Dairy Market News Midpoint Prices – Thursday, November 12
Commercial Disappearance – Friday, November 13

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