Monday Morning Huddle
21 December 2020
Highlights From Last Week
DC Leaders Reach Agreement on $900 Billion Stimulus Bill
After weeks of negotiation, Congressional leaders reached an agreement on Sunday to pass a massive $900 billion stimulus bill in the coming days, providing relief to struggling individuals and businesses as virus cases continue to climb. A final vote on the bill is expected in both the House and Senate in the coming days once the final bill text is approved. Relief could come quickly to Americans with stimulus checks appearing in bank accounts within days of the bill package, according to Treasury Secretary Mnuchin; the $600 checks are half of what was included in the first stimulus bill in March. An extra $300 per week in unemployment benefits was agreed on, but the extra relief only lasts through Q1.
According to Politico and Senator Stabenow’s office, there are significant food and agricultural provisions in the bill. The year-end package includes $13 billion to bolster food stamp benefits by 15 percent, although it doesn’t expand SNAP eligibility. Farmers and ranchers will also see another $13 billion round of direct payments to help cover pandemic-induced losses, of which $3 billion is allotted to cattle producers, contract growers of livestock and poultry, and dairy farmers. $400 million was approved for food banks through the Emergency Food Assistance Program (TEFAP) with up to 20% ($80 million) for distribution of commodities. $400 million will be available for a Dairy Product Donation Program, modeled after the 2018 Farm Bill pilot milk donation program, to facilitate the donation of dairy products and minimize food waste. There is not any money budgeted for additional rounds of the USDA Farmers to Families Food Box program.
The provisions in the bill lend support to dairy markets but are not expected to be sharply bullish. Stimulus checks and unemployment benefits will lend support to retail dairy demand. Additional funding for SNAP recipients plus assistance for food banks and dairy donations will absorb some product. However, as the $4 billion food box program winds to a close, volatility is expected to slow, especially in cheese markets. This government assistance comes just as milk production is expanding rapidly in the US, limiting price upside throughout the first half of 2021.
Last Week’s Reports & Analysis
November 2020 US Milk Production
Milk output reached the 3% mark in November for the strongest year over year gain in nearly six years. The data was unabashedly bearish and is aligned with HighGround forecasts in recent months that have cautioned about rapid milk supply expansion that will overwhelm processing capacity during the Spring Flush. Farmers are… Full Report
October 2020 US Commercial Disappearance
Total cheese disappearance was DOWN versus prior year following September’s gain and continuing the mixed trend seen so far this year. Disappearance decreased slightly from September, the first… Full Report
Reports This Week
Cold Storage – Tuesday, December 22
USDA Dairy Market News Midpoint Prices – Tuesday, December 22
National Dairy Products Sales Report (NDPSR) – Wednesday, December 23
USDA Livestock Slaughter – Wednesday, December 23
USDA Weekly Dairy Cow Slaughter – Wednesday, December 23