July 10, 2020
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d's Dairy orl In W du e st h r t y g W n i e e v Since 1876 k r e l y S OutShred Your Competition PRECISE, RAPID CHEESE REPORTER SHREDS urschel.com Vol. 145, No. 4 • Friday, July 10, 2020 • Madison, Wisconsin CME Block Cheddar Cheese Price Lawmakers Want USTR, USDA To Sets Another New Record: $2.9150 Pursue Phase Two USDA Cuts 2020 Milk Production Forecast By Meanwhile, in its monthly Deal With Japan To supply-demand estimates released Boost Dairy Access 1.0 Billion Pounds; Most Price Forecasts Hiked today, the US Department of Agricuture (USDA) reduced its Washington—Some 50 House Chicago—The CME cash (spot) to $2.7375 per pound on Wednes- milk production forecast for 2020 members from both parties this market price for 40-pound Ched- day on the sale of four carloads of while raising most of its dairy prod- week asked two Trump adminis- dar blocks reached a new record blocks at that price. uct and milk price forecasts for tration officials to work swiftly on high today of $2.9150 per pound. Then on Thursday, the block both 2020 and 2021. a comprehensive Phase Two trade That broke the previous record price jumped 9.25 cents to a then- USDA’s milk production fore- agreement with Japan. high for the Cheddar block price record $2.8300 per pound, on the cast for 2020 is lowered by 1.0 The letter to US Trade Rep- of $2.8300 per pound, which was sale of one carload at that price. billion pounds from last month, resentative Robert Lighthizer set Thursday. And today, the block price to 221.5 billion pounds, largely and US Secretary of Agriculture Prior to that new record, the shattered that record, jumping on slower growth in milk per Sonny Perdue was led by US Reps. block price record was $2.8100 per 8.50 cents to a record $2.9150 per cow. The new forecast pegs Ron Kind (D-WI), Lloyd Smucker pound, set on June 23. pound on the sale of one carload 2020 milk production at 3.1 bil- (R-PA), Josh Harder (D-CA) ad After reaching that level, at that price. Also during today’s lion pounds higher than 2019’s Roger Marshall (R-KS). the block price fell to $2.5800 cash cheese market trading ses- record output. The US and Japan had reached per pound on June 24 and then sion, five cars of blocks were sold The 2021 milk production a Phase One trade agreement last dropped to $2.5750 a pound on at $2.8500 per pound; and there forecast is raised by 300 million September. Out of the $14.1 billion June 25. were unfilled bids for two cars of pounds from last month’s forecast, in US food and agricultural prod- The block price then started blocks at $2.8800 per pound. to 225.6 billion pounds, on expec- ucts imported by Japan in 2018, to rise again on June 29, reaching While the block Cheddar price tations of dairy herd rebuilding and $5.2 billion were already duty free. $2.6200 per pound that day and was setting new highs this week, a recovery in growth in milk per Under the Phase One agreement, hitting $2.6750 a pound by July the CME cash market price for bar- cow. USDA’s Cattle report, to be Japan will eliminate or reduce tar- 2, the last day of trading last week rels was trending in the opposite released on July 24, will provide a iffs on an additional $7.2 billion of due to the July 4th holiday. direction. After settling at $2.4150 mid-year estimate of the dairy cow US food and agricultural products, This week, the block price per pound last Thursday, the barrel inventory and producer intentions including cheese and whey. continued to increase, reaching price dropped 4.5 cents to $2.3700 regarding retention of heifers for US dairy exports to Japan in $2.7000 per pound Monday on per pound on Monday; increased dairy cow replacement. recent years have ranged from the sale of one carload at that 3.0 cents to $2.4000 per pound on For 2020, USDA’s fat basis $206 million in 2016 to $408.5 price; rising to $2.7100 per pound Wednesday; and then dropped 6.0 import forecast is raised from last million in 2014. Last year, US on Tuesday on the sale of one car- cents today to settle at $2.3400 per dairy exports to Japan were valued load at that price; and increasing pound. • See Block Price Record, p. 16 at $282.1 million, which meant Japan ranked fifth among all US dairy export markets on a value US Dairy Imports Dairy Farmers, Others File basis, trailing only Mexico, Can- ada, China and South Korea. Declined 5% In May; Racketeering Lawsuit Against DFA US cheese exports to Japan last year totaled 134.3 million pounds, Cheese Imports Fell staff, called the lawsuit “ridicu- which meant Japan ranked third DFA Calls Lawsuit lous and without merit.” 23%; Butter Imports among all US cheese export mar- ‘Ridiculous And The lawsuit details three pred- Increased 31% icate acts of extortion, the first of • See Japan Trade Deal, p. 11 Washington—US dairy imports Without Merit’ which is obtaining farmers’ con- during May were valued at $281.6 Albany—A lawsuit was recently sent to settle antitrust claims. Cottage Cheese million, down 5 percent from May filed under the Racketeer-Influ- In June 2014, DFA was facing a 2019, according to figures released jury trial in Vermont on antitrust 40 Production enced and Corrupt Organizations May 2010 – 2020 late last week by USDA’s Foreign (RICO) Act in the US District grounds, the complaint stated. Curd vs Cream Cottage Cheese Millions of pounds Agricultural Service (FAS). Court for the Northern Dis- DFA’s attempt to settle the case During the first five months of trict of New York against Dairy was struck down by the court 2020, United States dairy imports Farmers of America (DFA), the after a number of dairy farmers were valued at $1.3 billion, up 3 nation’s largest dairy cooperative. voiced objection via letter and 35 percent from the first five months Plaintiffs in the case include at the court’s Fairness Hearing. A of 2019. Susan L. Poole, a shareholder of second proposed settlement fared Cheese imports during May Dean Foods Company; several no better. totaled 24.4 million pounds, down dairy farmers; and New York Ani- “When DFA’s leaders arranged 23 percent from May 2019 and mal and Farm, LLC., a dairy sup- a third settlement in 2016, they 30 the lowest monthly cheese import ply business. Defendants include resorted to extortion to ensure volume since February 2014, DFA managers, board members that the dairy farmers would when imports totaled 21.2 million and agents. fall squarely on their side of the pounds. The value of May’s cheese Monica Massey, DFA’s execu- courtroom,” the lawsuit stated. 25 • See Dairy Imports Fall, p. 10 tive vice president and chief of • See Lawsuit Filed, p. 6 2010 2015 2020 Page 2 CHEESE REPORTER July 10, 2020 Past Issues Read this week’s issue EDITORIAL COMMENT or past issues of And there are a couple of note- Cheese Reporter on your mobile phone or worthy things that have hap- tablet by scanning this pened with the Class III price in QR code. DICK GROVES recent months: a very rare, but Cheese Reporter Publishing Co. Inc. ©2020 not unprecedented, decline over a 2810 Crossroads Drive, Suite 3000 period of several months, and an Publisher / Editor Madison, WI 53718-7972 unprecedented jump in a single Cheese Reporter (608) 246-8430 • Fax (608) 246-8431 month. http://www.cheesereporter.com e: [email protected] DICK GROVES tw: @cheesereporter Publisher/Editor e-mail: [email protected] 608-316-3791 MOIRA CROWLEY A Wild Ride For The Class III Price Specialty Cheese Editor e-mail: [email protected] Speaking (as we were just last week Looking back at the almost-60- the biggest one-month jump in the 608-316-3793 in this space) of new dairy industry year history of the Class III price Class III price until last month’s KEVIN THOME price records being set during this and its predecessors, it’s worth increase of $8.90. Advertising & Marketing Director pandemic-impacted year, the fed- noting that movements of $8.00 The year 2004 also saw one of e-mail: [email protected] eral order Class III price has also or more would have been impos- the largest declines in the Class III 608-316-3792 accomplished at least one historic sible prior to 1974, for the simple price over a short period of time. BETTY MERKES reason that, prior to January of that Specifically, after reaching $19.66 Classifieds/Circulation Manager milestone that is worth noting. e-mail: [email protected] This is, as with the cash Cheddar year, the M-W price had never per hundred in April, the Class III 608-316-3790 block market, something the dairy been above $8.00 per hundred (it price increased in June to $20.58 REGULAR CONTRIBUTORS: industry has never seen before and reached $8.10 that month). per hundred (that was the first Jen Pino-Gallagher, Bob Cropp, Brandis may never see again. It is also worth remembering time ever that the Class III price Wasvick, Dan Strongin, John Umhoefer First, some context is needed that there was a dairy price support topped $20.00 per hundred).