Monday Morning Huddle
16 November 2020

Highlights From Last Week

Cheese Collapse Persisted, Class IV Products Feel the Pressure of Ample Milk

The cheese price collapse persisted last week. The block Cheddar price was unchanged on Monday but declined precipitously throughout the next three days before gaining nearly a nickel on Friday. It was the fourth largest weekly average price decline on record for the commodity; the Friday settlement was down 27.25 cents versus the prior week. Seven loads traded hands as the price fell with Friday‚Äôs strength a potential sign that the market has reached a balanced point for the time being. The barrel price dropped 21 cents on Monday following the record decline last Friday, with the market down an incredible 50 cents in just two trading days. The barrel Cheddar price was steady for the remainder of the week until the slight lift on Friday. It was the second largest weekly average decline on record for barrel cheese. Both markets are at their lowest since August. Butter settled at $1.3450 per pound on Friday, a six-month low, with today’s USDA Cold Storage report expected to remind the market of the ample product availability as the end of the calendar year nears. Nonfat dry milk remains caught in a tight range, losing 0.2% week over week as the market balances a lack of sustained demand from Mexico against stronger skim milk powder needs from Southeast Asia.

Smaller Holiday Gatherings Expected This Week

From the New York Times to CNN, advice on preparing smaller Thanksgiving feasts abounds this year as virus cases surge across the country. The CDC suggests the safest way to celebrate the holiday is by gathering only with family or friends that already share a household. A third of consumers (33%) are planning to get together with fewer people this year, according to research from The Food Industry Association, and 26% said they are planning to avoid long-distance travel, or travelers. In addition, 19% said they are planning virtual Thanksgiving celebrations. Smaller feasts will likely cut into dairy product retail sales, a concerning occurrence just as milk production is climbing steadily and foodservice demand remains weaker versus prior year levels.

Last Week’s Reports & Analysis

US Milk Production (October 2020)
Milk output was strong into October as farmers drove production higher to capitalize on profitable milk prices. Several months of high cheese prices provided price signals encouraging farmers to add cows and increase yields, behavior that has developed… Full Report

Commercial Disappearance (September 2020)
Total cheese disappearance recovered higher versus prior year into September after the slight August decline, but year to date disappearance remains DOWN versus the first three quarters of 2019 driven by the sharp April demand plunge. Both domestic and export demand were… Full Report

Reports This Week

USDA Crop Progress – Monday, November 23
Cold Storage (Oct ’20) – Monday, November 23
USDA Dairy Market News Midpoint Prices – Tuesday, November 24
Weekly EU Dairy Commodity Prices – Wednesday, November 25
National Dairy Products Sales Report (NDPSR) – Wednesday, November 25
Fonterra Pre-GDT Offer Volume Data – Thursday, November 26
*HighGround Pre-GDT Analysis will be published on Monday, November 30
USDA Weekly Dairy Cow Slaughter – Friday, November 27

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