Dick Groves
Editor, Cheese Reporter

 

 

 

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Congress: Where Legislation Goes To Die

It’s an election year, and that means members of Congress will in all likelihood be far more interested in getting re-elected than in passing any significant legislation. And that means that bills introduced in 2021 that could potentially impact the dairy industry or the broader food industry have little or no chance of being passed by both the House and Senate and signed into law.

As always during an election year, all 435 members of the US House of Representatives are up for re-election this year (although several members have decided not to run again). Meanwhile, 34 Senate seats are up for grabs this fall.

As is often the case in an election year (and in numerous non-election years, for that matter), there’s at least a decent chance that Congress won’t get around to passing very many bills this year. That could mean that some dairy- and food-related bills likely will die before ever arriving on President Biden’s desk for his signature.

Let’s start with the Dairy Pricing Opportunity Act, which was introduced in the US Senate several weeks ago (for details, please see the front-page story in our Dec. 3, 2021 issue). This bipartisan bill, which was introduced by two Democrats and one Republican, would require the US secretary of agriculture to initiate a national hearing to review federal milk marketing orders within 180 days after enactment of the legislation.

While this bill garnered a fair amount of support from dairy and farm organizations, its chances of making it out of Congress would appear to be slim. That’s due at least in part to the fact that no similar legislation has been introduced in the House. Also, while the bill was introduced by three senators, none of the other 97 senators have signed up as co-sponsors.

One somewhat related bill that has been introduced in the House and is likely to go nowhere this year is the Dairy Pricing and Policy Commission Act, which would direct the US secretary of agriculture to establish a Dairy Pricing and Policy Commission.

Like the Dairy Pricing Opportunity Act, the Dairy Pricing and Policy Commission Act is bipartisan, having been introduced by a Democrat and co-sponsored by a Republican. But it has yet go gain any co-sponsors, nor has any similar legislation been introduced in the Senate.

One piece of legislation that would appear to have a better chance of making it through Congress this year is the DAIRY PRIDE (Defending Against Imitations and Replacements of Yogurt, milk, and cheese to Promote Regular Intake of Dairy Everyday) Act.

This measure’s chances appear better than some other bills for at least two reasons: first, it has been introduced in both the House and the Senate, with sponsorship by both Democrats and Republicans; and two, it has a decent number of co-sponsors (six in the Senate, beyond the two original sponsors, and 40 in the House, beyond the two original sponsors).

But we’re not optimistic about this legislation making it through Congress this year, in part due to the fact that similar legislation was introduced in both the House and Senate back in March of 2019 and didn’t make it through the 116th Congress. We see no reason why this legislation will fare any better in the 117th Congress.

Another bicameral, bipartisan bill introduced in Congress last year was the Food Date Labeling Act, which would establish a food date labeling system under which “BEST If Used By” would communicate to consumers that the quality of the food product may begin to deteriorate after the date and “USE By” would communicate the end of the estimated period of shelf life, after which the product should not be consumed.

This legislation faces at least two problems. First, while it is in fact bipartisan and bicameral, the measure is being sponsored by exactly three members of Congress: one Democrat and one Republican in the House and one Democrat in the Senate. There are zero co-sponsors in either chamber, meaning roughly 532 members of Congress are either unaware of or don’t really care about this bill.

Second, like the DAIRY PRIDE Act, the Food Date Labeling Act has been introduced before; specifically, it was introduced in the House (with the same sponsors as the 2021 bill, and four co-sponsors) in July 2019 and got nowhere; and in the Senate (with the same sponsor as the 2021 bill, with no co-sponsors), and got nowhere.

Arguably the dairy-related legislation that has the best chance of being passed by both houses of Congress and signed into law this year is the Ocean Shipping Reform Act. This measure is already “halfway home,” having been passed by the House last month by a vote of 364 to 60.

There is at least one reason to be optimistic about this legislation’s chances for enactment this year: it enjoys widespread bipartisan support.
In the House, it was opposed by just two Democrats while being supported by 212 Democrats, and opposed by 58 Republicans while being supported by 152 Republicans. In this era of hyper-partisanship, that’s pretty impressive.

One minor problem with the Ocean Shipping Reform Act: it has yet to be introduced in the Senate. However, it should be noted that the House bill was introduced back on Aug. 10 and overwhelmingly approved roughly four months later, so conceivably this bill could find its way to Biden’s desk in the not-too-distant future. And Biden has endorsed the legislation.

What this all adds up to is that, here in 2022 (and in most other election years as well), Congress will again live up (or down) to the old (and cynical) observation: The opposite of progress is Congress
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A Few Dairy Expectations For 2022

Making predictions in pretty much any business can be a hazardous undertaking, and that’s true for the dairy business as well. But there are a few predictions we feel reasonably comfortable making for the dairy industry heading into 2022.

First of all, we expect discussions about the need to reform federal milk marketing orders to heat up in 2022. Despite widespread dairy producer dissatisfaction with how the new (as of May 2019) Class I formula performed in 2020, and ongoing dissatisfaction with everything from depooling to the continuing use of dry whey in the Class III price formula, nothing on the federal order policy front actually changed in 2021.

There were at least a couple of notable developments on the federal order reform front, however. First, the Senate Agriculture Committee subcommittee with jurisdiction over dairy policy held a hearing in September on the growing need to modernize the federal order system.

And less than two months after that hearing was held, three US senators introduced the Dairy Pricing Opportunity Act of 2021, which would require USDA to initiate national hearings to review federal orders within 180 days after enactment of the legislation.

While we don’t expect that legislation to get much if any traction in the Senate next year, we do expect discussions and debate to heat up over another legislative undertaking: the next farm bill. Many provisions of the 2018 farm bill expire in 2023, so 2022 is certainly not too early to begin shaping the next farm bill.

And from a dairy industry perspective, a farm bill section requiring federal order reforms might be the only way such reforms are accomplished.
There is precedent for this: the 1996 farm bill included a section on the consolidation (to not less than 10 and not more than 14 orders) and reform of federal orders.

The problem with waiting until the 2023 farm bill to start the formal process of reforming federal orders is that such a delay would likely mean that any federal order reforms probably wouldn’t be implemented until around 2026. After all, the consolidation and reform required under the 1996 farm bill didn’t take effect until the beginning of 2000.

In the area of dairy prices, 2022 might see a return to more extreme volatility than was experienced in 2021. There are numerous ways of looking at this, but we’ll mention just a couple.

First, the CME cash market price for 40-pound Cheddar blocks here in 2021 (as of Thursday) has ranged from a low of $1.4575 per pound back on June 9 to a high of $1.9800 a pound on Dec. 30. That, of course, stands in stark contrast to 2020, when the block price ranged from a low of just $1.00 per pound to a high of $3.00 per pound.

Given recent trends in milk production, milk cow numbers and output per cow, not to mention domestic and international demand, we wouldn’t be all that surprised to see the block market rise above $2.00 per pound sometime in 2022. So, if the block price reached, say, $2.30 a pound sometime during 2022, all it would have to do is drop below $1.77 a pound at some point to exhibit more volatility than was the case in 2021.

There is some precedent for something along these lines to occur in 2022.
The last time the block price was above $1.80 per pound at the end of the year (not including 2019, since that was followed by the unprecedented, pandemic-upended 2020) was in 2013, when blocks ended the year at $2.00 per pound. That was followed by an eventful 2014 in which the block price set numerous new record highs, including $2.4225 per pound in early April and $2.4500 per pound in mid-September, before dropping down to $1.4950 in the final week of the year, for an eye-opening price range of 95.5 cents.

Reflecting the relative lack of volatility in cheese prices in 2021, the federal order Class III price during the first 11 months of the year has ranged from a low of $15.75 per hundredweight in February to a high of $18.96 per hundred in May — a range of $3.21 from low to high. By contrast, in 2020, the Class III price ranged from a low of $13.07 per hundred in April to a high of $24.54 per hundred in July, a range of $11.47 per hundred.

If cheese prices end up being more volatile in 2022, the Class III price would naturally reflect that volatility. Add in the fact that dry whey prices are ending the year above 70 cents per pound, and it’s looking at least somewhat likely that milk prices will be more volatile in 2022 than they have been in 2021.

Speaking of money, the dairy industry can expect money to continue to flow from the federal government to the industry in 2022, thanks to various bills passed in 2021 and 2020. Just two weeks ago, US Ag Secretary Tom Vilsack announced that USDA is providing up to $1.5 billion to states and school districts to buy food, including dairy products. Earlier this month, Vilsack announced that USDA is deploying $100 million under the new Food Supply Chain Guaranteed Loan Program to make available nearly $1 billion in loan guarantees.

Finally, we expect the last two Merriam-Webster Words of the Year — pandemic in 2020 and vaccine in 2021 — to continue to garner headlines and controversy, and continue to impact the dairy and pretty much every other industry in 2022. Those impacts could range from slowdowns in food service sales to more panic buying by consumers.

If nothing else, 2022 could bring about some combination of what the dairy industry experienced in 2020 and/or 2021

Inflation Is Everywhere, Except in the Dairy Case

The folks at Merriam-Webster (which describes itself as “America’s leading provider of language information”) have declared “vaccine” to be their “Word of the Year” for 2021, following up on their declaration of “pandemic” as the word of the year in 2020.

While vaccine no doubt benefitted from generating headlines, and controversy, since the beginning of 2021 (the first COVID-19 vaccine in the US was administered a year ago this month, and vaccines continued to be rolled out throughout 2021), another word seems to be garnering as much if not more attention here in the final weeks and months of the year: inflation.

The recent concerns over inflation stem, at least in part, from the federal government’s monthly Consumer Price Index report. Last month, for example, the US Bureau of Labor Statistics reported that the all items index rose 6.2 percent for the 12 months ending in October 2021, the largest 12-month increase since the period ending November 1990.

And then earlier this month, the BLS reported that the all items index rose 6.8 percent for the 12 months ending in November 2021, the largest 12-month increase since the period ending June 1982.

So these are undoubtedly inflationary times, which is something not everyone is all that familiar with. That’s fairly obvious, since the CPI statistics indicate that inflation hasn’t been this bad in many years.

These CPI figures apply to all items, and in the last couple of months the BLS has noted that the CPI increases were broad-based, with increases in the indexes for energy, shelter, gasoline, used cars and trucks, and new vehicles among the larger contributors.

Oh, and also food. In November, the CPI for all items stood at 277.9 (1982-84=100), up 6.8 percent from November 2020, while the CPI for food was 285.5, up 6.1 percent from November 2020, and the CPI for food at home was 266.4, up 6.4 percent from a year earlier.

Yes indeed, these are inflationary times for the food industry, with the CPI for meats, poultry, fish and eggs up 12.8 percent, to 299.2, for the year ending in November 2021, the index for cereals and bakery products up 4.6 percent, to 295.9, and the index for fruits and vegetables up 4.0 percent, to 318.4.

But there’s a notable exception to this food price inflation: dairy products. In November, the CPI for dairy and related products was 233.2, up just 1.6 percent from November 2020. So not only is the dairy CPI well below other food categories, it’s also increasing at a rate well below other food sectors.

This prompted us to wonder both about the past and about the future, from the perspective of dairy price inflation.

As far as the past is concerned, thanks to statistics provided by USDA’s Economic Research Service, we went back to 1974 and looked at changes in the CPI for all food, food at home and dairy products, among other things.

If nothing else, these figures help illustrate how severe inflation was, particularly in the 1970s and the early 1980s compared to roughly the past 30 years. Just from 1974 through 1981, the CPI for food at home posted increases of 14.9 percent in 1974, 8.2 percent in 1975, 10.5 percent in 1978, 10.8 percent in 1979, 8.1 percent in 1980 and 7.2 percent in 1981.

Meanwhile, during that same period, the CPI for dairy products increased 18.6 percent in 1974, 8.1 percent in 1976, 6.8 percent in 1978, 11.6 percent in 1979, 9.8 percent in 1980 and 7.2 percent in 1981.

But after rising 6.5 percent in both 1989 and 1990, the CPI for food at home has posted considerably more modest increases almost every year over the past three decades. Specifically, from 1991 through 2020, the CPI for food at home posted just one increase of more than 5 percent; that was in 2008, when the CPI for food at home jumped 6.4 percent from 2007. And there were just two increases of more than 4 percent during that period: 4.2 percent in 2007 and 4.8 percent in 2011.

The dairy CPI during that 1991-2020 period posted six increases of 5 percent or more, including an 8.0-percent rise in 2008. But the last of those increases was in 2011, when the dairy CPI rose 6.8 percent.

And in the five years prior to last year’s 4.4 percent increase, the dairy CPI fell 1.3 percent in 2015, declined 2.3 percent in 2016, rose just 0.1 percent in 2017, fell 0.5 percent in 2018 and increased 1.0 percent in 2019. Sort of the opposite of “inflationary.”

So what does the future look like for the dairy CPI, and for the CPI for food at home? According to the latest monthly ERS Food Price Outlook report, which was released Tuesday, the CPI for food at home will rise 2.5 to 3.5 percent this year and 1.5 to 2.5 percent next year, while the dairy CPI will increase 1.0 to 2.0 percent this year and then in 2022 will range from a decline of 0.5 percent to an increase of 0.5 percent.

The dairy CPI’s current situation and 2022 prospects contrast sharply with many other food categories, particularly meats, poultry, fish and eggs. As noted earlier, the CPI for that category was 299.2 in November, so it’s already considerably higher than the dairy CPI. And after rising 6.0 to 7.0 percent this year, the CPI for meats, poultry and fish is projected to increase 2.0 to 3.0 percent next year.

Eggs, meanwhile, match dairy’s 2022 forecast range of minus 0.5 percent to plus 0.5 percent, but that’s on top of this year’s increase of 3.5 to 4.5 percent.

Yes, inflation is and will remain rampant, except when it comes to the dairy case
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US Butter Trade Seems Nicely Balanced, At Least For Now

During the first 10 months of 2021, the US exported 83.4 million pounds of butter, up an impressive 122 percent from the first 10 months of 2020.
Also during the first 10 months of 2021, the US imported 81.9 million pounds, up 9 percent from a year earlier.

In other words, the US butter trade right now is pretty well balanced; the US is exporting roughly the same volume of butter as it’s importing.

This prompts several questions. Among them: Has US butter trade always been this balanced?

To answer this question, we looked at butter export and import statistics dating back to 2000. What’s notable over the 2000-2021 period is how the US has gone from running a butter trade deficit to running a trade surplus, then running a trade deficit again, and now being pretty much in balance.

This pattern can be broken down into several periods. Over the 2000-2006 period, the US ran a butter trade deficit, with butter exports ranging from 3.0 million pounds in 2002 to 18.5 million pounds in 2006 and butter imports ranging from 16 million pounds in 2000 to 45.5 million pounds in 2001.

The US butter trade deficit was over 10 million pounds every year over the 2000-2005 period, with the exception of 2003, when it was 8.8 million pounds, but by 2006 it had narrowed to just 1.5 million pounds (imports totaled 20 million pounds, exports totaled 18.5 million pounds). Butter trade was well-balanced in 2006.

The butter trade situation changed dramatically starting in 2007, when the US exported a then-record 72.6 million pounds and imported 17.3 million pounds, for a trade surplus of 55.3 million pounds. From 2007 through 2014, US butter exports only dropped below 50 million pounds once (49.4 million pounds in 2009), topped 100 million pounds four times (in 2008, 2011, 2013 and 2014), and reached a record 178.4 million pounds in 2013.

Meanwhile, butter imports languished during all but the last year of that 2007-14 period, running below 20 million pounds every year from 2007 through 2013, including a low of just 8.1 million pounds in 2010.

Thus, the US ran significant butter trade surpluses during the 2007-14 period. And by “significant” trade surpluses, we mean surpluses of more than 100 million pounds during the aforementioned years in which US butter exports topped 100 million pounds.

The butter trade situation turned again in 2015, with butter exports dropping to 37.3 million pounds, their lowest level since 2006, and imports rising to 42.9 million pounds, their highest level since 2001.

Butter imports continued to rise after 2015, reaching 84.4 million pounds in 2019 before falling to 83.4 million pounds in 2020. Butter exports, meanwhile, only topped the 50-million-pound mark once over the 2015-2020 period, reaching 58.2 million pounds in 2018.

Based on the first 10 months of 2021, the US is on track to run its first butter trade surplus since 2014. And since butter trade balances seem to run in streaks, the US may be entering a new period of butter trade surpluses.

While this analysis has thus far focused on butter trade quantities, what about butter trade values? How has the US fared in this respect in recent years?

The easiest way to answer this question is to simply look at butter trade values during the first 10 months of this year when, as noted earlier, US butter exports exceeded imports by only 1.5 million pounds. On a value basis, however, the US ran a large butter trade deficit: butter exports were valued at $147.8 million, while butter imports were valued at $265 million.

Going back to 2010, there was only one year in which the value of US butter imports was less than $2.00 per pound; that was in 2012, when imports totaled 15.3 million pounds and the value of those imports was $29.3 million. In 2019, when the volume of butter imports reached 84.4 million pounds, the value of those imports hit $256.9 million, or over $3.00 per pound.

Meanwhile, US butter exports were valued at or below $2.00 per pound from 2011 through 2015, above $2.00 per pound from 2016 through 2019, and then $1.82 a pound last year and $1.77 a pound during the first 10 months of this year.

Finally, how does the US trade balance for butter compare to the trade balance for, say, cheese? That’s actually a much simpler answer than was the case for butter.

Over the 2000-2020 period, the US ran a significant cheese trade deficit from 2000 through 2009, and that deficit was more than 300 million pounds in some years; in 2002, for example, when US cheese imports reached a record 474.6 million pounds, cheese exports totaled 118.6 million pounds, for a cheese trade deficit of 356 million pounds.

Starting in 2010, however, the US started running a cheese trade surplus, which has topped 400 million pounds twice (in 2014 and again in 2020), and that surplus will probably approach 500 million pounds this year.

One other interesting point about the cheese trade balance: it turned in pretty dramatic fashion. The US ran a cheese trade deficit of about 118 million pounds in 2009, then ran a cheese trade surplus of about 76 million pounds the following year. Unlike butter, there haven’t been any years in which cheese trade was balanced.

The US butter trade situation is currently pretty well-balanced, with exports and imports roughly equal, but recent history tells us that this situation won’t last long
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The End Of An Era For Kraft

For as long as anyone in the cheese industry can remember, the name “Kraft” has been synonymous with cheese. But Kraft became at least a little less synonymous with cheese in late November when, as reported on our front page last week, the company sold its natural cheese business to Lactalis.

That’s not to say Kraft is no longer involved in the cheese business. While selling brands such as Cracker Barrel, Athenos, Hoffman’s, and Polly-O (Athenos is now owned by Emmi Roth USA, while Polly-O is now owned by BelGioioso Cheese), Kraft Heinz will retain its Kraft Singles, Velveeta processed cheese, and Cheez Whiz processed cheese businesses in the US and Canada and its Kraft, Velveeta, and Cracker Barrel macaroni and cheese, Kraft sauces, and cream cheese, including Philadelphia cream cheese, businesses worldwide.

These are certainly not small “niche” products. Philadelphia cream cheese is the undisputed brand leader in cream cheese, production of which topped 1.0 billion pounds last year. And Velveeta certainly has gone beyond “niche” status, with its 75 or so products ranging from traditional and well-known blocks to slices, shreds and sauces as well as in pasta and shell (macaroni and cheese) products, and Velveeta Skillets.

But it’s probably safe to say that Kraft’s overall presence in the cheese business will never be the same again. That presence, it should be noted, dates back over a century, to when J.L. Kraft started buying cheese in Chicago and reselling it to local merchants. It’s difficult if not impossible to find Kraft’s fingerprints all over the US (and global) cheese industry over the past 110-plus years.

From our perspective, one of the easiest ways to illustrate this point is to simply look at some back issues of this newspaper. And indeed, it’s difficult to page through more than just a few editions without stumbling upon some sort of Kraft-related news.

Before illustrating this point, it should be mentioned that Kraft has been known by several different names over the years, including, among others, Kraft-Phenix Cheese, Kraftco Corporation, Kraft General Foods and, currently, the Kraft Heinz Company.

So, back in our Oct. 26, 1929 issue, we reported that contracts had been awarded by the Kraft-Phenix Cheese Corporation, of Chicago, for the enlargement of their plant in Beaver Dam, WI.

Five weeks earlier, we reported that Kraft-Phenix Cheese had announced that it would increase its cheese plant capacity in Denison, TX, by an enlargement program, which will increase its daily milk consumption from 20,000 pounds to 75,000 pounds. The company was expected to begin an enlargement program in September 1929, it was announced by C.H. Kraft, who recently visited Denison from Chicago. C.H. (Charles Herbert) Kraft was one of J.L. Kraft’s brothers.

Several decades later, Kraft was again in the news, but for less-positive developments. Specifically, Kraft came under considerable criticism for its role in trading at the old National Cheese Exchange.

A University of Wisconsin-Madison study released in March 1996 concluded, among other things, that there was evidence that Kraft (which at that time was owned by Philip Morris Companies, Inc.) chose to sell cheese on the NCE “at a loss when it could have more profitably made the sales elsewhere. Such conduct constitutes trading against interest, the practice of purposely not selling at the profit-maximizing price.”

Two months later, in May of 1996, two subcommittees of the House Agriculture Committee held a hearing on that UW-Madison study. And less than a year later, the NCE closed and the cheese industry’s cash market moved to the CME in Chicago, where it remains today.

In the area of industry trade associations, Kraft has long been involved both on boards of directors as well as serving as officers. For example, Kraft leaders served on the board of the National Cheese Institute, and as presidents of that organization, for many years.

Yet another cheese-related area in which Kraft has had considerable impact is patents. Indeed, Kraft has been receiving patents for cheese-related inventions for more than 100 years, starting with a patent awarded to James Lewis Kraft himself in June 1916 for a process of sterilizing cheese and an improved product produced by such process.
The object of that invention was “to convert cheese of the Cheddar genus into such condition that it may be kept indefinitely without spoiling, under conditions which would ordinarily cause it to spoil, and to accomplish this result without substantially impairing the taste of the cheese.”

In the early decades of Kraft, the company received several other patents related to process cheese, including a patent in 1936 awarded to Norman Kraft, another of J.L. Kraft’s brothers, for an apparatus for heat-treating cheese. In more recent decades, Kraft has received patents for, among many other things, a method for making large sized blocks of cheese, methods for making lowfat cheeses, methods for making cream cheeses, and methods for making various processed cheese-type products.

Finally, and perhaps most importantly, it’s difficult if not impossible to list all of the plants that Kraft has owned or procured cheese from over the years, but the company’s long-time focus on improving cheese quality has benefitted the entire cheese industry.

The Kraft name will live on, both as a brand and as a company. But Kraft’s outsized presence in the cheese industry has been relegated to the history books
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It’s Back To The 1980s, Briefly, For CME Block Market Activity

Last week was quite the week for 40-pound Cheddar block spot (cash) market activity at the CME. To briefly recap the Thanksgiving holiday-shortened week: there was no block market activity whatsoever during the three trading sessions; there were no sales, no unfilled bids and no uncovered offers. Nothing.

This lack of activity brought back some memories of cheese cash market activity during at least some years back in the 1980s. And a check of recent years indicates that this year’s Thanksgiving Week trading more closely resembled the 1980s than the 2010s.

At first glance, such a comparison seems preposterous. After all, the cheese industry’s cash market back in the 1980s was the National Cheese Exchange, which met only once a week, on Friday mornings in Green Bay, WI, while the cash market these days is the CME, and trading takes place daily.

Not only that, but with daily trading, there are sometimes (often?) more changes in the CME block price in a single week than there were during an entire year of trading at the old NCE.

While that might seem impossible, or at least highly unlikely, it’s actually true: in 1981, 1982 and 1983, there were exactly four changes each year in the NCE block price, while the CME block price, just in the month of November, actually changed five times during the week of Nov. 8-12, and also changed five times during the week of Nov. 15-19.

And this pattern of daily block price changes occurred at least one week in almost every month prior to November. The one month this year in which there were no weeks with five changes in the block price was September, which actually only had two weeks with five days of CME spot market trading (the first and last week of September had three and four days of trading, respectively, and the first full week of that month had no trading on Monday due to the Labor Day holiday).

And both of those full five-day weeks in September saw four changes in the block price, tying 1981, 1982 and 1983’s annual number of changes.

Back to Thanksgiving Week, and trading activity during the 1980s compared to the past several years. At the NCE, trading during Thanksgiving Week took place on Wednesdays, rather than on the traditional Fridays.

So, in 1980, there was no block market activity at all at the NCE (although, notably, 20 cars of barrels were sold that day, all at $1.3100 per pound, which left the barrel price unchanged, just like the block price).

A year later, one car of blocks was sold at $1.3525, which lowered the price by 1.75 cents. So in 1981, one of the four block price changes actually took place during Thanksgiving Week (for what it’s worth, the other three block price changes that year took place in January, July and October).

NCE block trading returned to Thanksgiving Week “normal” in 1982, with no activity at all on blocks and the price holding steady at $1.3725 per pound. Of the four block price changes that year, one occurred in September, one in October and two in December.

And in 1983, there was again no block market activity during Thanksgiving Week, with the block price being unchanged at $1.3650 per pound. Of the four block price changes that year, one occurred in January, one in September and two in December.

Price changes became more frequent at the NCE starting in 1984 (although that’s not really saying much, given what transpired, or didn’t transpire, in the previous four years), but Thanksgiving Week remained quiet, for the most part. In 1984, there was no block market activity at all (although, reminiscent of 1980, 17 cars of barrels were sold, all at $1.3075 per pound, which left the price unchanged).

The block price was also unchanged at the NCE during Thanksgiving Week trading every year through 1990, although there was some activity during some of those years. On Wednesday, Nov., 26, 1986, for example, five cars of blocks were sold at $1.3050 per pound, which left the price unchanged at that level. But in other years, such as in 1988, there was no block market activity at all.

By contrast, in recent years, at the CME and with daily spot market trading, price changes during Thanksgiving Week have been the rule, rather than the exception.

Over the 2015-2020 period, the three CME trading sessions held during the week of Thanksgiving saw the following block market price changes: 2020, two price increases and one day of no change; 2019, three price increases; 2018, two price declines and one price increase; 2017, one price decline and two price increases; 2016, one price increase, one price decline and one day with no change; and 2015, two price increases and one price decline.

Based on that somewhat limited comparison, it’s safe to conclude that Thanksgiving Week 2021 block market activity at the CME more closely resembled Thanksgiving Week in the 1980s than Thanksgiving Week in the 2010s.

It may be recalled that the cheese industry’s cash market moved from the NCE in Green Bay to the CME in the spring of 1997, and shifted from weekly trading to daily trading in September 1998. That means that in 1997, there was one cheese trading session at the CME during Thanksgiving Week.

So what happened on Wednesday, Nov. 26, 1997? A total of 24 cars of blocks were sold (along with 23 cars of barrels), and the block price increased three-quarters of a cent, to $1.4325. So even when CME spot trading was weekly, it was more active than last week
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