Although milk and dairy products saw dramatic consumer increases during the peak of the COVID-19 pandemic this spring through summer, 2020 will be firmly cemented as an unprecedented rollercoaster for the dairy industry.
That assessment of global and U.S. dairy markets from Dairy Management Inc. was echoed by two strategists during a webinar hosted by the I-29 Moo University Consortium Aug. 25.
Increased consumption of milk, cheese, ice cream, butter and other dairy products produced welcome growth for the American dairy market especially in spring. However, because of the ongoing pandemic, researchers are forecasting “heightened volatility and uncertainty” for the rest of 2020 as they navigate the path to a new normal.
One webinar speaker said through July year-to-date, Texas, Idaho, California and Colorado led milk production growth, followed by South Dakota, with the fifth largest increase of 150 million pounds, as processing capacity has expanded there.
“Year-over-year production gains are expected through the first half of 2021, with COVID having a positive impact on dairy’s image,” said Mary Ledman, who serves as Rabobank’s global dairy strategist at their Chicago office.
Dairy sales were up dramatically during March and April when COVID hit the U.S. Then dairy product volume dropped over the summer from its initial COVID peak.
Overall however, dairy product growth is strong compared to last year, according to statistics released in early September from Dairy Management Inc.
Butter and butter blends were up 38.9% over the same period a year ago. Dairy cream was up 31.2% from last summer.
Sour cream sales were up 23.6% during the pandemic compared a year ago. Natural and processed cheese rose 22.3%. Other comfort foods such as ice cream and sherbet were up 13.6%. Half and half sales were 12.2% higher.
Cottage cheese was up 7.9% from a year ago. Milk sales were up 6.7% and yogurt increased 4.9%.
In 2019, U.S. milk prices rose to levels not experienced in other countries. So, when COVID hit, U.S. prices fell further and faster than European milk prices.
“This past June, we saw our prices fall to $1 a pound, then prices jumped to $3 a pound,” Ledman said. “The recent uptick in European prices are driven in part by the change in the exchange rate and that the U.S. dollar has fallen recently. European prices have gotten more expensive.”
There were strong cheese exports. When prices crashed in the beginning of lockdowns, it strengthened exports to Mexico. South Korea and China were hit early on with COVID, but now those places have leveled off.
For the second half of 2020, Ledman noted that milk prices picked up since April.
It’s a welcome turnaround after May and June saw both highs and lows in the coronavirus-impacted dairy industry. Dairy products, considered “comfort foods” and also known as the “basics” saw a tremendous surge in online buying during the pandemic.
“During this time where families are supporting each other at home with meals and more time together, there is something so comforting about the nutrition and goodness dairy provides,” said Samantha Carter, spokeswoman for Midwest Dairy.
Government aid has played an important role in the most recent price rebounds. The U.S. heightened government purchases and made direct payments to farmers.
Looking forward to the remaining months of 2020 and into 2021, Ben Laine of Rabobank expects things to settle down.
“I don’t think you’ll see the magnitude nor volatility that we’ve seen the last few months,” said Laine, vice president of dairy research for Rabobank.
Ledman recapped the year so far: “As consumers went back to the basics, dairy benefitted.”