Monday Morning Huddle
2 November 2020

Highlights From Last Week

Cheese Prices Break Fresh Records, Class IV Products Move Lower

With cheddar cheese block prices already at historic highs, the USDA’s announcement of yet another round of the Farmers to Families Food Box program largely maintained the strong values instead of pushing prices sharply higher like in previous announcements of additional program rounds. The October monthly block average was $2.7103 per pound, the highest on record. While the block price was largely steady, the barrel price saw further support last week to hit a new record high on Friday, surpassing the prior $2.4900 per pound record set in September 2014. Conversely, butter hit six-month lows last week as nonfat dry milk also experienced weakness as milk production remains ample in key Class IV producing states, including California.

Another Round of the Farmers to Families Food Box Program Announced

USDA announced box vendors late on Friday for the fourth round of the Farmers to Families Food Box program, with 31 vendors awarded nearly 12.5 million boxes at a total cost of $485.6 million. This equates to $38.89 per box, which is $6.34 (-14%) below the cost of the Round 3 box ($45.23) that had 18.9 million boxes committed at a total cost of $856.6 million (50 vendors in Round 3). As a result, this means there will be less product in boxes in this round as commodity prices have increased. In addition, only 12.6 million boxes were invoiced for Round 3 which is just 2/3 of the initial expected volume. There was no extension announced so it is HighGround’s impression that only the new volume for Round 4 is committed at this point. Overall, there will still be significant fluid milk and cheese/dairy volume delivered under the Round 4 program within a nine week window, but it is far less than in any other round to date.

Last Week’s Reports & Analysis

China Dairy Import Volume Analysis (Sep & Q3 2020)
It was another month of record market share from the EU-27+UK, which jumped to 50% in September (versus the prior record in August at 48%). While New Zealand maintained the number one spot, Germany continues to… Full Report

New Zealand Dairy Export Volume Analysis (Sep & Q3 2020)
New Zealand fat and whole milk powder (WMP) values were globally competitive in July and August, driving favorable export volumes on both products in September. While volumes were up on the year, financial losses during the month were… Full Report

Reports This Week

USDA Crop Progress – Monday, November 2
US Presidential Election Day – Tuesday, November 3
GDT Auction – Tuesday, November 3 (Begins at 6AM CST, Daylight Savings ends)
US Dairy Export/Import Data (Sep ’20) – Wednesday, November 4
Weekly EU Dairy Commodity Prices – Wednesday, November 4
National Dairy Products Sales Report (NDPSR) – Wednesday, November 4
Announcement of Class and Component Prices – Wednesday, November 4
USDA Dairy Products (Sep ’20) – Thursday, November 5
USDA Biweekly International Prices – Thursday, November 5
USDA Weekly Dairy Cow Slaughter – Thursday, November 5
USDA Dairy Market News Midpoint Prices – Thursday, November 5

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