7 minute read
Market demand
from 2022-Early Spring
by MilkProducer
CDC PROJECTING UP TO FOUR PER CENT INCREASE IN TOTAL DEMAND FOR 2022
This could translate into a P5 quota increase of 2.1 per cent
By Constantin Urtilescu GOVERNMENT RELATIONS SPECIALIST
The Canadian Dairy Commission has stated the growth in demand registered nationally for 2021 is expected to be around 3.8 per cent, which would translate into a quota increase at the P5 level of 2.6 per cent. This growth is being experienced over the recent year even if a significant increase of imports is observed.
As discussed last month, when looking at butterfat, 13 million kilograms of butterfat came in from all the trade agreements at the end of the dairy year in 2021. It is expected this number could go up to close to 34 million kg by 2025-26. Four million kg of butterfat is equivalent to one per cent of national demand, so when looking at the 34 million kg, that’s more than eight per cent of the market nationally that could be filled by imports, says Patrice Dubé, Dairy Farmers of Ontario’s chief economics and policy development officer.
In December 2021, butter stocks reached close to 23,037 tonnes, down from November when stocks were at 24,057 tonnes. December butter stock levels are almost in line with what the industry has seen in the past and is within the range of what was expected for the end of the calendar year. Cheese stocks are the lowest they have been in the past three to four years.
For the 52-weeks ending December 2021, sales for fluid milk, fluid cream, yogurt, ice cream, cheese and butter increased/decreased by -3.1, 0.8, 1.5, -4.3, -0.5 and -4.6 per cent, respectively, compared with the 52-weeks ending in December 2020.
P10 UTILIZATION BY CLASS*
For November 2021 (kg of butterfat/kg of solids non-fat) % Butterfat % Solids non-fat % Revenue
1a1 1b 2a 2b4 2b5 3a1 3a2 3b2 3c1 3c2 3c4 3c6 3d 4a 4d 5a 5b 5c
12.83%
2.95% 2.76% 6.21%
0.80% 0.10%
3.74% 1.50
1.11% 1.18%
4.13% 5.42%
0.63% 0.84% 2.12% 2.47%
6.65%
0.41% 0.36%
3.46% 5.09% 9.94%
-1.26%
4.25% 3.16% 3.54% 1.67% 1.53% 0.44% 8.90% 15.31%
13.72% 12.01%
19.31% 15.63% 27.10% *29.03% *8.85% *4.83% *2.21% *0.77% *1.24% *4.98% *13.09% *0.65% *2.49% *8.45% *0.35% *3.52% *14.35% *-0.40% *2.06% *2.93% *0.60%
Class 1a1 (includes Classes 1a2, 1a3, 1c and 1d
for confidentiality reasons) Fluid milk and beverages Class 1b Fluid creams Class 2a Yogurt, yogurt beverages, kefir and lassi
Class 2b4 (includes Classes 2b1, 2b2 and 2b3
for confidentiality reasons) Fresh dairy desserts, sour cream, milkshakes and sports nutrition drinks Class 2b5 Ice cream and frozen yogurt Class 3a1 Specialty cheese Class 3a2 Cheese curds and fresh cheeses
Class 3b2 (includes Class 3b1 for confidentiality
reasons) Cheddar cheese and aged cheddar Class 3c1 Feta Class 3c2 Asiago, Gouda, Havarti, Parmesan and Swiss
Class 3c4 (includes Classes 3c3 and 3c5 for
confidentiality reasons) Brick, Colby, farmer’s, jack, Monterey jack, muenster, pizza cheese, pizza mozzarella and mozzarella other than what falls within 3d. Class 3c6 Paneer Class 3d Mozzarella used strictly on fresh pizzas by establishments registered with the Canadian Dairy Commission Class 4a Butter and powders
Class 4d (includes Classes 4b1, 4b2, 4c and 4m
for confidentiality reasons) Concentrated milk for retail, losses and animal feed Class 5a Cheese for further processing Class 5b Non-cheese products for further processing Class 5c Confectionery products
IMPORTANT NOTICE
Markets section to be provided as a new standalone publication
Dairy Farmers of Ontario (DFO) is eagerly looking forward to relaunching a brand new magazine in April. The change means we’ve made a strategic decision to create a new standalone publication that will now house all markets information in one easy-toreference document. Beginning March 2022, the markets section will no longer be available in Milk Producer magazine.
The publication will continue to be published monthly and made available in both English and French. It will also combine information on retail markets data from the monthly market report that is currently mailed with the monthly milk cheque statement.
The new publication will be sent by email and mailed to select producers, and will be posted on DFO’s website, behind the producer password.
Look out for more detailed information on these changes in DFO’s regular communication vehicles.
Editor’s note: This message was previously announced in the October 2019, August 2020, April 2021 and July 2021 issues of Milk Producer.
Matching P5 milk production with variable markets has been an increasing challenge in recent years. Some producers are accumulating underproduction credits, which create milk shortages, and then use those credits when there is already enough milk in the system. This explains, in part, quota increases and decreases, as well as the credit limitation policy observed in recent years. As such, farm underproduction credits have become a significant issue when trying to fill provincial or P5 markets.
P5 boards reviewed the overproduction and underproduction credits permitted and approved an adjustment, which will take effect by Aug. 1, 2022. Currently, all P5 producers are permitted to borrow a maximum of 10 overproduction credit days (10 x daily quota) and can accumulate a maximum of 30 underproduction credit days (30 x daily quota). This policy is in place to help producers manage their quota during milk production variations, while providing enough milk to meet yearly P5 demand. Current overproduction and underproduction credits permitted have been harmonized across P5 provinces since 2009. • As of Aug. 1, 2022, the maximum number of underproduction credits permitted will change from -30 days to -15 days; • Overproduction credits permitted will remain at +10 days, for 25 total credit days instead of 40.
Producers are reminded of the changes and are free to adjust their credit day position at their own pace, as long as they are within the revised underproduction credit limit by the effective date.
Any underproduction credits below the revised limit by the effective date of Aug. 1, 2022, will be lost.
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MONTHLY QUOTA PRICES ($/kg)
JANUARY PRICES
PROVINCE
Alberta Saskatchewan British Columbia Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island
PRICE/kg
$24,000
AMOUNT WANTED/kg
AMOUNT FOR SALE/kg AMOUNT PURCHASED/kg
1.00 1.00
*Newfoundland does not operate a monthly quota exchange. Quota is traded between producers.
**Quota cap price of $24,000 in effect in Prince Edward Island, New Brunswick, Ontario, Nova Scotia and Quebec.
ONTARIO DEDUCTIONS, PER HL
For December 2021
Within quota Overquota
DFO administration $0.625 $0.625 DFO research $0.050 $0.050 CanWest DHI $0.060 $0.060 Transportation $2.760 $2.760 Market expansion $1.400 $1.400
Total deductions $4.895 $4.895 Average total net $78.659 -4.895
*These figures are based on Ontario’s average composition for December 2021 of 4.26 kg butterfat, 3.28 kg protein and 5.92 kg other solids, rounded to the nearest cent. A total 3,313 producers sold milk to DFO in December compared with 3,343 a year earlier.
U.S. CLASS PRICES
The December 2021 Class III Price, US$18.36 per hundredweight, is equivalent to C$53.03 per hectolitre. This equivalent is based on the exchange rate US$1 = C$1.27251 the exchange rate when the USDA announced the Class III Price.
The Class III Price is in $ US per hundredweight at 3.5 per cent butterfat. One hundredweight equals 0.44 hectolitres. Canadian Class 5a and Class 5b prices track U.S. prices set by the U.S. Department of Agriculture.
ONTARIO MONTHLY PRODUCER AVERAGE GROSS BLEND PRICE
$85
$80
$75
$70
Jan. 2021 2021 Fe b. r. 2021 Ma r. 2021 Ap Ma y 2021 June 2021 July 2021 Aug 2021 Sept. 2021 Oct. 2021 No v. 2021 1 De c. 202 $83.55
P5 AND WESTERN MILK POOL BLEND PRICES*
The graph below shows the 12-month blend price for the P5 provinces and Western Milk Pool (WMP).
*There is a three-month lag reporting these figures.
82
B lend price in $/hL 80
78
76
74
72
P5 blend price WMP blend price
WMP $79.40
P5 $77.99
