As the global COVID-19 outbreak continues to disrupt life as we know it, the dairy industry knows only one thing for sure: There’s a lot left to learn about the impact the pandemic will have on global markets.
Ted, T3 and Anna phone in for a discussion on dairy markets buffeted by confusion.
But as Ted reminds us, uncertainty is no stranger to dairy. He says the industry is equipped to handle what’s thrown at it.
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Anna: Welcome to the ”Milk Check,” a podcast from TC Jacoby & Company where we share market insights and analysis with dairy farmers in mind.
Ted: Leading into this by now I think everybody’s interested in knowing what effect the coronavirus will have on the dairy industry. And of course, at this point in time, the effect is mostly confusion in that consumers are going into the grocery stores and cleaning out the milk section, buying long-life products including cheese and shying away from going into restaurants and food service establishments. And so we have a migration of milk away from cheese plants serving food service and special kinds of group facilities, restaurants and so on, hotels, towards retail, cut wrap and retail-type packages. In addition to that, we have a shortage of milk at the bottling plant because people are going in and cleaning out the dairy case similar to what they traditionally do just before a hurricane hits down in Florida.
The normal effect of this is to have this surge in production and change, and then a week to ten days later, everybody has a lot of inventory in their refrigerator and sales start to back up and surplus begins to exist. Whether that’s gonna happen this time or not remains to be seen. It could not in that everybody seems to be heading for their home and then planning on staying there for a while. And I think most people are expecting to be there at least a month. So that’s gonna mean that they’re gonna keep an inventory of milk, long shelf life products and so on, and they’re gonna be eating those kinds of products at home as opposed to going out to restaurants.
School lunch business is another issue. I understand that in some areas, the school milk is being delivered by school buses. I’m not quite sure how that works. But most of the milk being consumed now will be consumed at the kitchen table. So that also bodes well for retail milk sales. Does not bode well for people who are looking at school lunch business, school milk. So there is confusion, and how long it will play out remains to be seen. It could go on for a week or two and it could go on for a month or two, maybe longer. So we’ll have to see.
The dairy industry in general can handle whatever is thrown at them. Production was just announced for last month and it’s up some big numbers, roughly one and a half percent depending on who you’re reading. One source says 2%. That’s a very bearish number with regard to milk and milk pricing under the longer term and would indicate that milk pricing, a Class III price somewhere in the $17.00, $17.50 range, pretty attractive to dairyman for them being increased production that much. Our general view of it is that anything over 1% is bearish as far as milk is concerned. And I think the markets right now in addition to the negative effects of the corona issue, I think production is also weighing heavily on the markets. Even though the cheese market went down a little bit today, the futures market went up because I believe basically that the pressure down is overdone and so it’s rebounding somewhat. Ted, would you wanna weigh in on the cheese market?
T3: Sure. Obviously what’s happening in cheese, just like all the rest of the, not just dairy, but the food industry, is you’re seeing everything skewed towards retail demand at the moment. There’s a lot of retail supermarket chains or club stores that are reporting, you know, demand for cheese and other dairy products up as much as two times to three times normal demand. We’ve probably all seen pictures floating around the internet of empty milk cases, empty cheese cases and things like that as people have cleared out stores.
So what does that mean for cheese as a whole because there’s a lot of different kinds of cheeses. For the most part, I would say it is probably bullish cheddar and specifically cheddar blocks and it is bearish mozzarella and certain specialty cheeses. On the mozzarella side of the equation, you know, those mozzarella companies selling to the delivery pizza guys, you know, the Dominoes, the Pizza Hut, the Papa John’s of the world, their sales are going to hold up just fine. My expectation, and I think most people we talk to, their expectation is that the pizza delivery companies are going to, their orders are gonna be the same, if not even a little bit better than usual as people hunker down at home.
On the flip side, if you’re a mozzarella company and your customers are the mom and pop pizzerias where you dine in, their sales are being hurt and being hurt, you know, quite severely by what’s going on. You know, some of the pizzeria companies service both markets, so they’re seeing maybe a little bit of a shift from one to another. But I know there’s also certain mozzarella companies that tend to focus on one kind of customer versus the other.
The other kinds of cheeses that are being affected negatively are specialty cheeses like feta, blue cheese and Swiss cheese which have a pretty disproportional amount of their sales skewed towards dine-in restaurants. You know, think of the, whether it’s the high end gourmet restaurants or steak houses or even the middle tier dine-in restaurants. You know, that’s tends to be where you get your salads with feta cheese on them or blue cheese on them and things like that. And so those specialty cheese companies are also being hurt.
Processed cheese sales right now are up mostly because IWS slices at the retail store are up quite a bit. Well, that demand will probably be above normal as long as the crisis is happening, I think that the initial surge is happening right now and most everything will kind of calm down a little bit in the coming weeks. They’ll continue to stay a little bit above normal. What’s gonna happen in the next couple of weeks is you’re gonna have to refill the pipeline. The amount of demand at the supermarket level was so strong. Not only did they empty the shelves, but they emptied the distribution pipeline too. So you’ll probably see cheese prices stay up for some time as that pipeline refilling continues.
Eventually though, and my guess is you’re talking about three weeks from now, though the time is anybody’s guess. And I should also mention that today is Thursday, March 18th, just so everybody understands kind of where we are in the calendar as we’re talking. It’s gonna be three weeks, maybe four weeks from now, sometime around Easter when my guess is that the declines in food service demand start to catch up to the overall market and then you’ll start to see things flip back the other way and maybe see some pressure on cheese prices to the downside.
What’s interesting is I suspect that the one cheese that is probably gonna benefit in a positive way by all of this is cheddar. Cheddar sales at the retail level, especially if you include processed cheese, which is made from cheddar barrels, tends to be a lot higher than cheddar cheese at the supermarket, or excuse me, at the restaurant level. And so if there’s one cheese that may be benefiting by what’s going on, it’s probably cheddar. Whereas I think as a whole mozzarella and the specialty cheeses for the most part are probably being hurt. That’s gonna cause this market to kind of hang up here for a little while as cheddar demand continues to be strong. And cheddar demand is it’s cheddar that we trade on the CME and that’s what tends to price all cheeses.
And so you’re probably gonna have a very interesting market going on for a while where you may see milk being pushed away from some specialty cheese and mozzarella plants. You’re gonna see those cheeses maybe be discounted a bit while cheddar demand continues to be strong and that will hold the cheese price up and also the milk price up. But it’ll make the bases suffer a little bit.
On the flip side, when we talk about Class IV, that would be butter and non-fat dry milk and powder, I think you’re gonna have to be a little bit less optimistic. For the last five weeks or so, non-fat dry milk sales have really struggled and we have not seen it pick back up yet. I think one important comment to make about non-fat dry milk sales is we knew that a lot of the international markets, a lot of the international buyers of non-fat had already started building up their inventories before this crisis hit. And so they had inventories to work off of while this was all going on.
International shipments really dropped off. A lot of international sales were canceled as containers became difficult to find because things were not shipping back out of China. And the result was that we just couldn’t get the product into a container and to a customer internationally. But keep in mind that this crisis is hitting Europe even worse than it is the United States, or at least so far it has. That means that the demand destruction going on in Europe is just as bad, if not worse than the demand destruction going on in the U.S. Kind of even more to the point, Italy, which has been a major flare up center for COVID-19, the region of Italy that crisis is happening happens to be the dairy region of Italy.
So you’re seeing some pretty serious dislocation from a dairy perspective in Europe too. So when the international market… and where I’m going with this is when the international market starts buying again, I don’t think we can count on exports to be a huge savior for us because Europe’s gonna be trying to figure out where to move product just as much as we are. You’ve got inventories being built in Europe as well as in the U.S. and both in the skim milk powder, non-fat dry milk, part a of the dairy industry. I think you’re gonna continue to see major issues with pricing well into the summer and into the fall as both major global milk sheds are gonna have surplus product that they’re gonna try to move.
Ted: Let me weigh in a little bit on the Class IV issue. If you look at the synthetic pricing with the EU versus the U.S. and also if you wanna put New Zealand in there and Australia, the U.S. pricing over the last several months has adjusted to where it now is lower than the other options in the international markets. It doesn’t mean necessarily that we’re gonna just arbitrarily unload a lot of products because of all the disruption right now is certainly gonna put a little bit of a lid on demand, but our pricing is lower. And I think…
T3: Dad, I’m not sure that’s still true. So for example, Global Dairy Trade…
Ted: It was true as of last Friday.
T3: Well, Global Dairy Trade on Tuesday of this week, New Zealand skim milk powder prices are now at a $1.15. So yes, that’s a few cents above where we are in the U.S. today. Well…
Ted: We’re actually under a dollar.
T3: We’re at $0.9650 on the CME market. Keep in mind that most of the powder that is sold on the CME market right now tends to be older product because it can be up to six months old and it also tends to come from a manufacturer or two that are not necessarily the most desirable manufacturers. And basically, what I’m saying is this, if you’re one of the powder producers that everybody wants, you’re gonna get a premium for your product over what the CME price is. And so you rarely sell your powder on the CME.
And so right now the U.S. price and let’s call it $1.00 and yes, you’re $1.15 coming out of Fontera. $0.15, yes, we’re lower. Usually there’s about a $0.10 difference. It can vary quite a bit, but $0.10 is usually the normal difference. And a lot of that is logistics. So yes, we are a tad lower right now. I don’t think Europe…
Ted: Our butter also, our butter pricing is lower. And of course, we’re importing quite a bit of Kerrygold butter at the moment, and we have for a while. But our butter price is lower, which would indicate that if someone wants AMF or something, they’re gonna get it in the United States as opposed to going to New Zealand for it. The point I’m trying to make is that when we look at the futures market and we see that the Class III markets for the next several months are down in the $15.00s, in some cases the low $15.00s, and the Class IV markets are down in the high $13.00s, you know, a lot of that effect is due to the confusion of the corona issue, coronavirus issue, and not necessarily due to actual pricing disparities.
So my tendency to believe is that as people get used to this whole conundrum, that these prices are gonna come into some equivalency and that will mean that our futures prices will probably tend up not down. Because right now they’re lower than they need to be. In order for our prices to go lower, we’re gonna need an actual decline in cheese and powder prices. And we may get one. But frankly under the current situation, I doubt if there’s a lot of downside exposure over where we are right now. If everybody’s eating at home, I think our cheese sales and milk sales are actually gonna go up not down.
T3: I think it’s very product-specific. You’re gonna see some go up and you’re gonna see some go down. Fluid milk sales, I think it’s very likely the Class I sales benefit from what’s going on and that’s a good thing. We’ve needed that. Likewise, I think yogurt sales will benefit from what’s going on because yogurt demand is very skewed to the retail side. Any dairy product that is skewed towards retail is gonna benefit. But not all dairy is skewed towards retail. You know, we talked about with cheese, there are certain cheeses that are gonna be hurt.
I think butter and non-fat their demand is gonna be hurt and it’s gonna be hurt on a global basis. And so you’re gonna have a bit of, you know, if you will have and have nots across the spectrum of dairy products . And it’s gonna be very interesting to see how that all plays out because it’s gonna be, I don’t know if you can call it demand destruction as much as demand dislocation. But often what happens is demand dislocation ultimately leads to lower levels of demand simply because people can’t get what they want. And I think that will play a role. I’m also very concerned just in terms of the economy as a whole if we’re gonna have a strong enough economy, let’s say Q2, Q3 and into Q4, you know, to see demand really start to come back, especially at the food service level.
Ted: Well, we don’t know. And a lot depends on how this whole scenario plays out. If the coronavirus goes for four months, five months, if that issue isn’t under control by then where people are out moving around, yeah, the economy’s gonna take a major hit and that’s obviously gonna affect our markets. If it’s under control within 30 to 60 days, I think our markets have a chance to rebound tremendously because that’ll be right about the summertime when they normally start to rebound anyway. So we should see a doubling effect. I guess we’re gonna find out whether eating at home causes more dairy products to be consumed or not. And that’ll be an interesting discussion to have a few months from now.
T3: It will be, it—yeah, I think it will be a good learning experience. You were talking about whether we’re gonna have a V-shaped recovery as they’re starting to refer to it or a more prolonged recession. I’m hopeful that we have a V-shaped recovery. And if the COVID-19 cases in the U.S. follow the same pattern as it has in China, I think we will have a V-shaped recovery where we hit bottom and bounce off that bottom very hard and the economy, comes roaring right back.
I’m pessimistic that that’s what we’re gonna get. The reason I’m pessimistic is as a democracy suppressing freedom, in this case, the freedom of the ability to move around you know, to different locations or even different cities, it’s a very undemocratic thing to do. And I think it’s unlikely that the U.S. will shut down travel to the extent that they did in China, or even more importantly, impose the level of draconian quarantines that they did in the Wuhan region of China to make sure that those people who were infected were not infecting others. And so my gut is, knock on wood, I really hope I’m wrong, but my gut is that we’re not gonna see the same plateauing of infected cases that you saw in China over the last few weeks.
Ted: Well, we’re gonna find that out. Frankly, I think we’re buttoned down pretty good right now. No one’s flying anywhere and no one is taking vacations. A lot of people are staying and working from home. I don’t think it will totally eliminate new cases, but it certainly should help flatten out the curve. You know, they talk about April 6, April 10 something like that is everybody getting back to work. I don’t think that’s gonna happen. I think we’re looking at 60 days minimum, but who knows. I don’t think we have any treatments or vaccines out there that are gonna make a big difference. So it’s everybody, the only way to get over this problem is for everybody to stay home until the disease runs its course. And that I think will be quite a bit of time.
T3: Well, you’re probably talking to a different set of people than I am because I have teenagers that are in college and high school and they have friends who are still on spring break right now in Florida, in Cancun, in places like that. And they’re still traveling. And I think that’s one of the issues we’re gonna have is that there are still people who are and it’s a lot of it is going to be our 20 somethings and our teenagers who you just aren’t going to take this quite as seriously as, you know, my generation and your generation is. And that’s what I’m concerned about because they’re the ones who yes, they can still get sick. But more than likely, they’re carriers who will transfer the disease to others and that can become a serious problem.
Ted: Well, I agree. I’ve seen the TV pictures too. But hopefully they are small enough segment of the population where they don’t do a great deal of damage.
Anna: At least our experience has been, our kids have, you know, friends that were actually originally left for breaks and then came home, you know, canceled things before they got to their final destination, turned around and came back. But a lot of movement’s still happening. I think one of the things that I’m most curious about, well, we haven’t been doing a lot of testing and I think it’ll be curious to see what the impact is if that changes and the numbers are drastically changing, what that does to everyone psychologically in terms of buying patterns and, you know, hunkering down and everything else.
T3: Anna, I think you’re making a really good point. We’ve been reading a lot lately that you’re gonna start seeing an exponential growth in cases over the next week as much because we’re finally getting testing to the right places as because, you know, the infected people, the number of people infected is continuing to grow. So it’s gonna almost feel like it’s worse than it is probably for the next week or so.
Anna: I think it’s going to feel as worse as it actually already is. Right now, I don’t think it feels as bad as reality because we just can’t see it.
T3: Mm-hmm. We’ll see.
Anna: On the ”Milk Check” podcast, we tackle questions and share ideas that move dairy forward. Now, we’re making it easier for you to get answers to your lingering questions. Do it with one click, submit your questions online at jacoby.com/askted.
T3: One thing I will comment on is, when I talk to our customers on the west coast in California, Oregon, Washington, I feel like they’re ten days to two weeks ahead of us in terms of how they’re reacting. Like they’ve already been bunkered down for a couple of weeks and here in the Midwest, we’re just starting to bunker down this week. And we’re starting to see—two weeks ago we were seeing surges in demand for cheese on the west coast. And that is starting to tail off now out west. And currently in the Midwest, we’re seeing some surges in demand and I have to believe in a couple of weeks we’re gonna start seeing that tail off as well.
And so I think we’re really gonna start to feel the effects of, we’re gonna start getting to know where we really are on demand for dairy as a whole in about two weeks. But right around the first week in April, I think is where we’re really gonna have a feel for what this is gonna be like. And then it’s just gonna be a matter of how long are we going to be practicing social distancing?
Anna: How long does it take? You know, you said we empty out stores and we’ve seen that around here. They’ve emptied out warehousing and everything else. That pipeline has been disrupted. How long does it take to get that back in stores? And even if we get it, if people are more concerned, especially if we see higher numbers, will they leave to go shopping even if they need to? I mean, you know, I was looking around our house and going, “well, we probably could eat Ramen for a while if we really have to, although I don’t want to.” I mean, will people leave to go buy more cheese, buy more milk, even if we can get the stores stocked back up again.
Ted: I think they will. I think they’re going to have to eat. Now, they could also have it delivered if they want to.
Anna: I think that’s pretty difficult right now. Most delivery services or pickup services are canceling all their orders right now.
Ted: I guess we’re gonna find out. We’re really in uncharted waters here and it’s hard to speculate. But if people start, if their refrigerators start to run bare, they’re gonna go out and load up again until they see the end in sight. That’s the way I would look at it.
T3: Mm-hmm. In terms of the timeline, Anna, that you were talking about, kind of back of the envelope math would be if this week the supermarkets—there’s a run on the supermarkets and they run out of cheese, then end of this weekend and the next week they’ll reorder at much higher levels than they usually do. The week after that is when the converters need to reorder or the distributors and the converters need to reorder. And then the week after that is when the manufacturers of the cheese receive the higher levels. So there’s about a three to four-week timeline. That’s about the length of the pipeline between when the cheese hits the supermarket and when the cheese plant takes the milk and makes cheese.
And so you’re probably in week two, at least in the upper Midwest, in week two of that four-week period of kind of restocking the pipeline where first things sell out and then they need to be restocked. So this week and next week are probably gonna be two weeks of high demand that you’ll feel at the wholesale level and at the manufacturer level and then probably the week after next is when you start to see things tailback off and… I’m not gonna say they’re going back to normal, it may be a little while before that happens, but they’ll be a little bit less bubbly than they are right now.
Toby: What are the farmers doing in all of this? Or are they just staying focused on, “my cows are still giving milk so I still need to milk the cows, and come what may I have a job to do?”
Anna: My perspective is I think that they have a job to do and they’re just going about it and getting it done. But especially for large farms, a lot of them are concerned about what’s gonna happen to their workforce if somebody comes in sick. So that’s, I think it’s a worry, but I don’t think it’s changing how they’re going about their daily business in terms of, you know, just expecting that of course the cows have to get milk, they need to be fed and everything needs to kind of happen as business as usual. I think there’s more cleaning, there’s more safety, you know, concern and greater attention paid although at least all the farms we deal with, I feel like they’re all really good about that to begin with. So I don’t know that it’s changed a ton about their daily operations. They’re worried, I’m sure too though.
Ted: And I agree with Anna that they’re worried. However, most of these dairies… first of all, it’s large commercial dairies that produce 70% of the milk. That means they are not located in downtown New York or Chicago or San Francisco or Seattle. They’re located out in the desert or in a corn and bean farm country, 50 or 100 miles away from an urban development. They’re not as prone to have incidences occur. Sure, they can occur, but the incidence is much more rare around a large dairy than it would be say in an urban area.
T3: Just to add to that conversation, I’ve had a number of conversations this week with a lot of our cheese manufacturers and cheese converters about what steps they are taking and how they would react if someone on their workforce became infected with COVID-19. I’ve actually been really impressed with a lot of these operations and how they’ve already prepared and thought it through. A lot of cheese manufacturers, a lot of cheese converters are already having people take their temperature as they arrive at the facility. And anybody who’s running even a slight fever has to immediately go home. They already have procedures in place in case somebody does get infected, how they would react to it so they wouldn’t need to shut down, for example.
The concern would be those facilities where there’s a lot of people working in the same place and in the same room. And I tend to think of cheese converters as the most likely place for there to be a pretty big problem because it’s much more labor-intensive than let’s say a cheese plant or a butter powder plant, a lot more hands on and a lot more people in one place.
I’ve heard of plants who are staggering their workforce. So in other words, where it used to be the next shift would come in maybe 15 minutes to a half an hour before the previous shift leaves, they’re now staggering it. So there’s a half an hour gap between the two so that the different shifts don’t actually come into contact with each other so that they’ll minimize that kind of contamination if it happens. They’re also, you know, obviously taking much more stringent procedures in place to wipe down surfaces and to make sure everybody is, you know, practicing the same thing they’re telling us with hand sanitizer and things like that.
So there’s a lot of these plants have done a good job of thinking through what the contingency plans are, thinking through of what their preventative measures are to make sure that they don’t end up in a situation where you shut down because someone on their workforce has become infected. I mean, could you just imagine how bad it would be for dairy if one of our largest cheese plants had to shut down for a week or two, because someone was infected by COVID-19? You wouldn’t be able to move the milk fast enough to keep from dumping it. So these operators know this and they’re taking the steps necessary to make sure that it doesn’t happen. And I gotta say I’m thankful for that and impressed.
Anna: I’m impressed with how quickly people have moved. I’m concerned about the preventative that we have when our main screening tool is temperature. And, you know, what they’re starting to see, especially out of like Singapore and some of the other places where they’ve been, you know, watching community transmission, the average is about 50% of community transmission is from people who are showing no symptoms. So I do find that still a little intimidating in terms of whether or not you can have where, you know, even with that process in place, you may still have someone who comes in who is ill and has no idea.
T3: Absolutely. And they can only do, they can only control what they know and they can only take the steps that, you know, they’re able to take. But at least from what I can tell, most people are being as proactive as they can.
Anna: And I think they are. And I think people have acted very quickly, which has been impressive to see. I mean, there’s really not a whole lot more you can do, right? I mean, you know, tell people to stay home when they’re sick. Check and make sure that any symptoms that you can identify, you send them home if needed.
Ted: I think in general, one of the lessons from this whole thing, you know people are going into the stores and they’re cleaning out certain items, food, toilet paper, paper towels, you name it. I’m not sure what they’re thinking. I don’t think our food supply is threatened by this at all. You know, for the reasons that you have described and the fact that the industry has already thought it through. Even if an employee of a large dairy turns out to be infected, say he’s a milker or he’s running a feed wagon or something, is that gonna have any effect on the milk? No.
First of all, it’s raw milk, it’s gotta be pasteurized, but even if it was raw, you’re drunk raw, which it’s not, he doesn’t touch it and he’s not even close to it. I don’t see any threat to the food supply at all. And I particularly don’t see any threats for the milk supply. I think as far as milk is concerned, our threat is the other side too much. Too much production. And this change in the dichotomy of consumption is gonna be something that we will need to watch and learn from.
Anna: Do you know if anyone is tracking the retail behavior? It was funny because someone had a post up about, you know, Trader Joe’s should be doing their homework, watching what gets cleared out and what no one touches, what stays on the shelves. And I knew when we made our last trip to the grocery store, all the whole milk gone, Class— 2 percent, I think that was all wiped out. Skim was still there, a little bit of 1% and that was it. I mean everything else was cleaned out. Is anyone actually kind of watching what people are taking out of the stores first?
Ted: I’m sure the stores know. That’s their business and I’m sure they’d track it rather closely.
Anna: I would think but…
Ted: But I was talking to someone at noon and he went to Costco last weekend and it was shoulder to shoulder in there. And they were doing exactly what you’re describing. They were cleaning out everything as much as they could jam in those oversized golf carts that they use. He went in again yesterday and he says it was almost empty.
Anna: Yeah. I don’t know that people were panic buying so much that they thought, you know, “I won’t be able to get to this later.” I think they were just trying to get it so they could go home and not have to leave again.
T3: Which means we’re gonna have three or four weeks of suppressed demand because everybody bought four weeks..
Anna: Now, everybody is home. Mm-hmm.
T3: Right.
T3: Pretty hard to last three or four weeks, maybe a week, maybe two weeks at the outside.
T3: I think it depends on the product, Dad. Toilet paper can last a few years, so toilet paper use. That’s probably why there was a run on toilet paper. Cheese can…
Anna: I think most people are pretty well-stocked on toilet paper.
T3: Well, but think about it. Let’s just stick to dairy for a second. You know, cheese has a much longer shelf life and lasts longer than, let’s say, fresh milk. So you can see people stack up on cheese and cheese demand may take a bigger hit than milk because, you know, they could buy two months worth of cheese and not have to go back to the store and get cheese, but they’re not gonna be able to have, you know, depending on the milk, some of the UHT milks may have 60, 90 day shelf life. But you see where I’m going with that. You’re just not, you’re gonna have to go back to the store and buy milk way before you’re gonna have to go to the store and buy cheese if you stocked up on cheese.
Anna: Yeah. I can tell you what the expiration on my milk is without looking because I already know when I would have to go back to the store.
Ted: Yeah, that’s a good point.
T3: So it’s gonna be interesting. I think the next four to six weeks I think we’re going to learn a lot of new things about demand, about how people react in an environment like this. And it’ll probably help us understand some different patterns in terms of dairy that maybe we weren’t able to recognize before because an event like this will help us, you know, understand what people stock up on. And, you know, if they’re gonna bunker down for a month, you know, what are the at least from a dairy industry perspective for this conversation, you know, what are the things that people wanna make sure that they have in the refrigerator if they’re gonna bunker down for a month versus what are those things that don’t really matter?
Anna: Well, that’s why I thought it was interesting that you talked about butter demand being lower because I mean we definitely made sure we had plenty of butter in the house.
T3: So butter demand right now is up at the retail level, but so, but here’s the, you know, one of the comments that I heard the other day was Easter has been canceled and it was being referenced in respect to butter demand. If you’re not gonna get together in a, you know, extended family group for Easter, the reality is, you know, the groups are gonna be smaller. Maybe you’re not baking as much as you used to bake. And so butter demand over Easter is gonna be down.
Anna: Very true.
T3: Combine that with the fact that your people going to steak houses where there’s bread and butter on the table and nice restaurants and things like that. Butter demand’s gonna be down there too. And butter like cheese, it has a pretty good shelf life on it. You can put butter in your, and I don’t know about you guys but I tend to buy butter and put it in my refrigerator and it’s usually there for three months before I get to it a lot of times. So butter is easily one of those where I think, you know, you may have a surge in demand right now, but, you know, let’s say from April 1st until June 1st, you’re probably gonna see demand be much, much, much lower.
Anna: I could see that.
T3: All right. I think we’ve at least talked about as much as we know today. But stay tuned, we’ll probably have another podcast in the next few weeks as this very interesting time we live in, continues to evolve.
Anna: We welcome your participation in the Milk Check. If you have comments to share or questions you want answered, send an email to podcast@jacobi.com. Our theme music is composed and performed by Phil Kagy. The ”Milk Check” is a production of T.C Jacoby & Company.
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