MIELKE MARKET
The so-called Liberation Day came and went, a name given by President Donald Trump to implementing reciprocal tariffs that apply to all trading nations and added to recent tariffs on aluminum, steel, cars, plus all goods from China.
Lucas Fuess, Rabobank senior dairy analyst, speaking in the April 7 Dairy Radio Now broadcast, said Trump announced a 10% baseline tariff on all imports to the U.S. and would be in addition to previous tariffs. Custom, higher tariffs were also announced for the worst offenders, according to Fuess, which include about 60 countries, and designed to offset tariffs those countries levy on U.S. imports. They are in addition to actions already taken on countries like China, Canada and Mexico, he said, but we do not know how the countries will respond.
China announced that it would reciprocate with a 34% tariff on U.S. products and banned some American companies from doing business there. Trump’s tariffs have largely been delayed on goods that are compliant under the U.S. Mexico, Canada (USMCA) Free Trade Agreement.
As of Friday morning, Mexico had not announced any retaliatory action but Fuess said the markets are watching this closely. Retaliatory action from countries like Southeast Asia, where we send a significant amount of dairy exports to, could have a big impact the U.S. dairy industry. Exports are critical, he concluded, as 2024 saw the second highest dairy export level ever on a value basis.
“Tariffs can be a useful tool for negotiating fairer terms of trade. To that end, we are glad to see the administration focusing on long-time barriers to trade that the European Union and India have imposed on our exports. The administration has rightly noted both countries’ penchants for restricting sales of American products,” said Gregg Doud, president and CEO of the National Milk Producers Federation. “In fact, 20% reciprocal tariffs are a bargain for the EU considering the highly restrictive tariff and nontariff barriers the EU imposes on our dairy exporters. If Europe retaliates against the U.S., we encourage the Administration to respond strongly by raising tariffs on European cheeses and butter. We also appreciate the President’s recognition of the sizable barriers facing U.S. exports into the Canadian market.”
“Through productive negotiations, this administration can help achieve a level playing field for U.S. dairy producers by tackling the numerous tariff and nontariff trade barriers that bog down our exports.”
Meanwhile, the March Federal order Class III milk price was announced at $18.62 per hundredweight, down $1.56 from February, $2.28 above March 2024, and matches the Dec. 2024 price. The three month average stands at $19.71, up from $15.86 a year ago, and compares to $18.44 in 2023.
Friday’s Class III futures settlements portend an April price at $16.99; May, $16.76; June, $16.71; July, $17.41; and August at $17.86; with a peak at $18.15 in September.
The March Class IV price is $18.21, down $1.69 from February, $1.88 below a year ago, and the lowest Class IV since Dec. 2024. Its three month average is at $19.61, down from $19.78 a year ago, and compares to $19.08 in 2023.
February’s Milk Production report shows output at 17.725 billion pounds, down 2.5% from February 2024, however adjusting for Leap Day, output was up 1.0% from a year ago, and the largest percentage gain in two years. The 24 State production, at 16.985 billion pounds, was up 0.9%.
January output was revised up 70 million pounds in the 50 states, resulting in a 0.5% increase from a year ago, instead of the 0.1% originally reported. Revisions added 72 million pounds in the 24-State data, up 0.6%, instead of 0.2%.
February cow numbers totaled 9.405 million, up 15,000 head from January and 62,000 more than a year ago. The January count was revised up 25,000 head. The 24-State count, at 8.963 million, was up 13,000 from January, and 75,000 above a year ago. The January count was revised up 25,000 head.
February output per cow in the 50 states averaged 1,885 pounds, up 6 pounds or 0.3% from a year ago, and up 2 pounds or 0.1% in the 24 State data.
Adjusting for component increases, milk production was up 3.5% year over year, according to StoneX, which added; “The last time we saw that kind of growth was mid-2021.” It means there’s plenty to make more butter and cheese.
Year-over-year comparisons are skewed because of the Leap Day, but factoring that in, California milk was down 126 million pounds or 3.7% from a year ago, thanks to a 75 pound drop per cow. Cow numbers were up 1,000 head. Bird flu continues to impact the U.S. Number 1 milk producer and slow its recovery.
Wisconsin output was down 4 million pounds or 0.2%, due to 5,000 fewer cows, though output per cow was up 5 pounds.
Idaho was up 8.4%, thanks to 40,000 more cows and a 44 pound gain per cow. Michigan was up 1.9%, Minnesota was off 0.4%, New York was up 1.5%.
Oregon was up 1.0% on a 13 pound gain per cow. Cow numbers were unchanged. Pennsylvania was up 1.0%, and Texas was up 6.0%. Washington State was down 2.8%, on a 9 pound drop per cow and 6,000 fewer cows
Western United Dairies reports that, as of March 26, 274 California dairy herds were still under quarantine for bird flu, according to Dr. Michael Payne, UC Davis School of Veterinary Medicine. “A larger number, 493 dairies, have been released. No human cases have been reported since January, and our poultry farms are increasingly repopulating their flocks. Using FEMA’s terminology, we are starting to move past responding to the emergency to recovering from it.”
U.S. farmers say they will plant 95.3 million acres of corn this spring, according to USDA’s annual Prospective Plantings report. That would be an increase of 4.7 million acres or 5% from 2024 if they do. Planted acreage is expected to be up or unchanged in 40 of the 48 estimating States, according to the report.
Soybean plantings were at 83.5 million acres, down 4%. Planted acreage is down or unchanged in 23 of the 29 States. Wheat acreage would be down 2% and cotton acreage down 12%. Weather, politics, tariffs, input costs, and crop prices could change farmer’s intentions before seed is put in the ground.
A sharp rise in corn, a higher soybean price, and a lower All Milk Price pulled the February milk feed price lower. The USDA’s latest Ag Prices report shows the ratio at 2.68, down from 2.82 in January, and compares to 2.13 in Feb. 2024.
The All Milk Price averaged $23.60 per cwt. with a 4.43% butterfat test, down 50 cents from January which had a 4.46 test, and compares to $20.60 in February 2024, with a 4.30% test.
The national corn price averaged $4.58 per bushel, up 29 cents from January and 22 cents above a year ago. Soybeans averaged $10.20 per bushel, up 20 cents from January, but $1.70 below a year ago. Alfalfa hay averaged $159 per ton, down $2 from January, and $42 below a year ago.
Looking at the cow side of the ledger; the February average cull price for beef and dairy combined was at $135 per cwt., up $9 from January, $26 above Feb. 2023, and $63.40 above the 2011 base average.
“Milk production margins moved lower for the second time in the past three months but remained at historically high levels and were 75 cents per cwt. below January,” says dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Missouri. “Income over feed costs in February were above the $8 per cwt. level needed for steady to higher milk production for the 16th month in a row,” says Brooks. “Input prices were mostly higher with two of the three input commodities inside of the top-10 for February all-time. Feed costs were the ninth highest ever for the month of February and increased 25 cents from January.”
“Milk income over feed costs for 2025, using March 31 CME settling futures prices for milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay, are expected to be $13.24 per cwt., a loss of 21 cents per cwt. versus 2024.
It would also be above the level needed to maintain or grow milk production, and unchanged from last month’s estimate,” Brooks concludes.
CME Cheddar block cheese climbed to $1.6650 per pound Wednesday, highest since March 14, but closed the first Friday of April at $1.64, up a half-cent on the week and 12.50 cents above a year ago, as traders awaited the afternoon’s February Dairy Products report.
The barrels hit $1.6975 Wednesday, highest since March 13, but finished Friday at $1.66, 2.50 cents higher, and 13 cents above a year ago. There was 47 sales of block on the week and 16 of barrel.
Midwest cheesemakers say buying activity remains quiet, according to Dairy Market News, while others say ordering the past two weeks underwent a bullish change, particularly compared to the first two months of the year. Inventories continue to build. Milk availability grew noticeably this week with mid-week prices as low as $4.50-under Class. Cheese markets have found stability in the $1.60s, says DMN, but that concerns cheesemakers who are paying for relatively pricey milk and experiencing quieted cheese demand.
Seasonally strengthening milk output in the West is providing plenty for cheese manufacturers and output is seasonally stronger. Availability of varietal cheese is mixed, with certain varieties heavily allocated to meet contractual obligations through second quarter. Retail demand is steady to stronger. Food service is weaker and export demand is mixed, though domestic prices are competitive with international levels, says DMN.
Cash butter closed Friday at $2.2950 per pound, down 5.50 cents, and 64.50 cents below a year ago, on 28 sales on the week.
Central butter manufacturers say demand is still somewhat stable even as holiday needs have generally been met. The focus now is on fall holiday demand. Cream availability is still ample, according to DMN.
Western cream also remains readily available however, certain parts of the region report that it has become a little less available, and “loads too inexpensive to pass up are no longer around,” says DMN. For the most part, churns continue to run at-or-near full capacity. Retail butter demand is steady to strong. Food service is weaker. Export are steady to strong, thanks to competitive U.S. prices.
Grade A nonfat dry milk saw its Friday close at $1.1575 per pound, down a nickel on the week, but still 2.50 cents above a year ago on 12 sales for the week.
Dry whey closed the week at 49 cents per pound, down a penny on the week but a dime above a year ago, with 6 CME sales put on the board for the week.
-- Lee Mielke is a syndicated broadcast journalist who writes his monthly column Mielke Market that appears in the Lynden Tribune in Country Life.