How Is Conventional Animal Agriculture Impacting Our World?
(May 1, 2008) Conventional farm animal practices received some criticism in a study on the impacts to humans, animals, and the environment of intensive food animal production. The study began in 2006 by the Pew Commission on Industrial Farm Animal Production but the group’s recommendations were “fairly tame compared to what they might have been,” according to National Milk’s Chris Galen.

Speaking in Thursday’s DairyLine, Galen called it a “fairly high level group of some prominent people,” including the former governor of Kansas, former Agriculture Secretary Dan Glickman and others, many who are critics of conventional food production so there was apprehension about the findings.

The group made some recommendations which NMPF considers “rather harsh and off base,” he said, but they supported the need for a national animal identification system to facilitate food traceability, something the Federation supports, and they recommended more funding for animal research, something that NMPF would also agree with.

They also suggest that consumers need to be more aware of where and how food is produced and Galen believes that would help dairy farmers because, “If you look at a lot of the issues we’re dealing with today, it’s consumer misperception about what goes into food, what’s in or not in dairy, and “If we could educate consumers that our farms are not factories, are not cow prisons, in fact produce a safe product on a daily basis that actually would help us all.”

While the study was not backed by an animal rights or vegetarian agenda per se, several of the members have that orientation, according to Galen, and a lot of the people in the audience of the meeting where the findings were presented, were animal rights supporters who have been waiting for this “with baited breath.”

A lot of people in the livestock industry were apprehensive about this, Galen said, and he predicted there’ll be some criticism of the findings by other sectors of agriculture but, from NMPF’s standpoint, Galen said “There are a few things that are off base. There are a few things that are on target and, most importantly now, we have to find common cause for things that we agree need to be changed or can be changed in the future.”

Related Links:
http://www.reuters.com/article/domesticNews/idUSN2930966720080429?sp=true

http://www.chron.com/disp/story.mpl/ap/fn/5738971.html

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080429/NEWS/80429006/-1/SPORTS09

Milk Feed Price Ratio Continues Decline
(April 30, 2008) The April Milk-Feed Price Ratio is 1.90, down from March's revised estimate of 2.07, according to USDA’s “Ag Prices” report issued this afternoon. That's seven consecutive months the ratio has decreased.  That compares to 2.51 in April of 2007. 
 
The All Milk Price was estimated at $18.00 per hundredweight, down a dime from last month's estimate, and compares to $16.60 a year ago. Corn averaged $5.13 per bushel, up 43 cents from March, and $1.74 above April 2007. The soybean price, at $11.80 per bushel, was up 30 cents from March, and $4.92 above a year ago. Text | PDF

Block Cheese is Tight, Barrel is Plentiful
(April 30, 2008) Downes-O’Neill dairy broker, Dave Kurzawski, also pointed to exports as a big player in the cheese market in Wednesday’s DairyLine. I likened the cheese price to a fighter in the ring that keeps getting back up after being knocked down. He said the cash market isn’t giving up much ground, at least the block market isn’t, and indications are that block cheese is very tight right now and that’s been the case all year, with short lived periods of product being available.

Barrel cheese appears plentiful, according to Kurzawski, and the difference is exports. “We don’t export barrel cheese,” he said, “But either way futures are still keeping a pretty good premium to the spot price.”

When asked what this means for a dairy producer’s hedge management strategy, Kurzawski said “It means you have a premium in a market that had been carrying a pretty good discount for the past year.” He recommends that producers take advantage of that and lock up at least a floor price at a profitable level because “They’re giving you that opportunity right now.”

Kurzawski went on to preview the Downes-O’Neill/E-Dairy annual Dairy Outlook Conference, June 18 and 19 in Chicago . Topics to be covered include world currencies, weather and climate, grains, edible oils, Latin America ’s agricultural economy, as well as several technical aspects of the futures markets. He said it’s going to be a great opportunity for people to learn a lot in a short period of time. For complete information and to register, log on to www.dairy.nu. And click on the Outlook 2008 icon.

In 2006, the Pew Commission on Industrial Farm Animal Production began a study on the impact to humans, animals, and the environment of intensive food animal production. Those findings and the resulting recommendations were to be presented at a meeting in Washington Tuesday. National Milk's Chris Galen was there and will report the highlights on tomorrow's DairyLine broadcast and Select Sires has its weekly "Reproductive Moment" in our second half.

Market Analysis with Robert Cropp
(April 29, 2008) The cheese price roller coaster started the last week of April on an up note, with blocks jumping a penny and a half, to $1.94 per pound. Barrel was unchanged at $1.88, while butter moved a half-cent higher.

University of Wisconsin Emeritus Professor, Dr. Robert Cropp, reported in Tuesday’s DairyLine that the cream supply is “very ample,” production is up, and stocks are still ample but demand has been pretty strong and some anticipate that butter could get tighter this summer as more cream goes into ice cream, something that has already started. Retail sales have been good as well, he said.

“The cheese market continues to surprise us,” Cropp said, and “It’s a pretty strong market when you get over $1.90. Cheese production continues to run below a year ago by 2-2 1/2 percent, but he expects that to change as there is plant capacity available, and this is particularly Cheddar cheese which is traded on the Chicago Mercantile Exchange.

The high prices result in reluctance to carry a lot of extra inventory, according to Cropp, so “it keeps it pretty tight.” Sales have been “half way decent,” he said, but he expects that to weaken as we move into May.

He adds that exports have been strong, up about 66 percent from a year ago for the first two months of 2008, and “That adds to the tightness a little,” and butter exports have been good, running about 14 percent of U.S. production.

Cash Grade A and Extra Grade nonfat dry milk was bid 2 1/2-cents higher Monday, to $1.3750 per pound. Cropp reported that we have a lot of powder in storage, although not as much as a few years ago, and we’ve produced quite a bit, with a lot of the increase in Western milk production going into powder but he believes the export market will pick up.

New Zealand reports its 2007 production was down about 4 percent, Cropp said, and that should strengthen domestic prices, not to $2.00 but likely $1.40 and possibly $1.50 by the second half of 2008.

The Agriculture Department’s annual Dairy Product and Milk Disposition summaries issued Friday shows “favorable” sales distribution in 2007, according to Cropp. American cheese output is not as strong as other types, he said, but “We’ve kept that American cheese supply tighter so it was a pretty good year,” but he warned that “It’s crucial that we have as strong a distribution this year,” said that exports will play a key role, particularly on nonfat dry milk and dry whey.

“With high retail prices and the economy there’s a concern if we’ll maintain the same growth in 2008 that we had in 2007,” he concluded.

DMI Update
(April 28, 2008) The export market is a shining star in the dairy industry these days and Joe O’Donnell, Executive Director of the California Dairy Research Foundation, said in Monday’s “DMI Update” that America has always been the greatest producer of agricultural products in the world and that includes dairy.

He adds that “the opportunities around the world are coming to our shores.” He reported that these are people with improving economies and “the first thing they want is eat better and the way they can meet that need, the most easily and most efficiently is to take in dairy products.”

The U.S. can ship dairy products anywhere in the world, O’Donnell said, and “What these dairy products are doing for these people is to add to their regular diet, and raise the nutritional status of the entire population.” “They have a healthier population, a better fed population, and dairy products have the ability to do that and we are in a position to market those products to those people and raise the standards of the world.”

The future holds more of the same, according to O’Donnell, and the dairy check off is helping in that effort, by enabling us to “better understand the advantages that we have with our products and how we can use our ingredients to formulate foods that are appreciated by other cultures.” Understanding what those consumers want, not only in terms of nutrition but in terms of palatability, is very important to maintaining and expanding those markets, he concluded.

Dairy Markets Weekly Review
(April 25, 2008) Block cheese closed the week of April 21st at $1.9250 per pound, up 2 cents on the week and 37 1/2-cents above that week a year ago. Barrel closed at $1.88, up 4 cents on the week and 38 1/2-cents above a year ago. Five cars of block traded hands on the week and none of barrel. The U.S. NASS average block price hit $1.8306, up 3.4 cents. Barrel averaged $1.7748, down 0.4 cent.

Butter closed Friday at $1.4125, up 2 cents on the week and a half-cent above a year ago. Only three cars traded hands on the week. Cash Grade A and Extra Grade nonfat dry milk jumped a nickel on one bid of each and both closed Friday at $1.35 per pound.

NASS butter averaged $1.3483, up 0.3 cent. NASS nonfat dry milk averaged $1.2574, up 1.5 cents. Dry whey averaged 25.82 cents, up 0.8 cent.

Farm Bill Update
(April 25, 2008) The question repeated itself this week; will we see a new farm bill by week’s end. You’ll recall that a deadlock in negotiations forced another extension of the 2002 Farm Bill last week, and while the House-Senate Conference Committee met this week, the chance of an agreement before the April 25 deadline remained unlikely, according to Dairy Profit Weekly editor Dave Natzke.

Much of the current debate relates to the total cost of the 2007 Farm Bill, and how it will be paid for, he said, and the Bush administration, which reluctantly agreed to the one-week extension last week, said tax provisions of the legislation had not progressed enough, and that proposed spending levels exceeded the $10 billion increase agreed to by congressional leaders and the administration.

If negotiations aren't wrapped up by Friday, President Bush said he would seek a one-year extension of the 2002 Farm Bill, Natzke reported. With planting season getting underway in many parts of the country, Bush said farmers needed the extension to make planting and business decisions but House and Senate leaders were expected to ask for another short-term extension, perhaps a week or two, to try to iron out a final bill, according to Natzke.

Turning our attention to the grocery store, latest USDA figures and the Labor Department indicate food inflation is the worst in 17 years. Through February, the Consumer Price Index for all food was up nearly 5 percent compared to a year ago. Dairy product prices were up even more, increasing about 13 percent.

There was better news for consumers in March, according to Natzke. The Bureau of Labor Statistics said retail dairy product prices declined about 1 percent during the month, but remain about 13 percent more than a year earlier. March retail fluid milk prices dropped 2 percent and butter prices were down due to Easter sales specials. Cheese prices also declined slightly, he said.

Compared to food prices, increasing energy costs continue to hit consumers and farmers. Retail gasoline prices rose 7.5 percent in March, and are 26 percent higher than a year ago.

South Korea has been a top ten market for U.S. dairy products the past few years, according to Galen, and U.S. dairy exports to Asia and other countries have “really taken off the past two years so, if the FTA can be passed, we will further the opportunity for U.S. dairy farmers to capture those markets in South Korea which is a large and growing economy.”

While the U.S. does export a fair amount of dairy products to South Korea without a FTA, it still faces tariff and market access challenges, according to Galen, and this would allow additional cheese and whey powder to be sold there.

South Korea was the U.S. eighth largest export market in 2006, Galen said, but NMPF believes there’s growth opportunity there and hopes Congress will look on this more favorably than it did a couple weeks ago on a FTA with Columbia, which reached an impasse.

(April 23, 2008) DairyLine’s “New Product Watch” on Wednesday examined a new calf starter technology called AMPLI-Calf. Produced by Land O’ Lakes-Purina Feeds, the product was introduced last year at World Dairy Expo in Madison and Regional Calf and Heifer Specialist, Gary Geisler, said it leads to calves eating more feed and growing bigger.

The launch has been very successful, he said, because “Dairymen have really been looking for something new in calf feed and the improvement in starter consumption is very visible.” He called it a “win-win,” because the calf wins and the dairyman wins.

The palatability enhancer attracts calves to start eating it sooner and more of it, he explained, which leads to better rumen development and calves transition from milk to dry feed a lot better.

Field studies show that calves really take off after weaning, according to Geisler, and, if feeding recommendations are followed, there is no post weaning lag. He reported that he’s not aware of anyone who has tried AMPLI-Calf technology that has gone back to what they were using before.

The benefit to the producer, he said, is that it builds better dairy replacement heifers. The calves are bigger and that leads to an earlier age of first calving, more milk in first lactation, and more lifetime milk overall.

Several university research studies show that improving the nutrition in young calves leads to more milk in first lactation, Geisler concluded. “Studies show 1,000-3,000 pounds more milk in first lactation just by what’s done for those calves in the first few months of their life.”

South Korea will resume importation of U.S. beef and that should clear the way for passage of a Free Trade Agreement with that country, according to National Milk's Chris Galen. We'll talk about it on tomorrow's DairyLine broadcast and Select Sires has its weekly "Reproductive Moment" in our second half.

Market Analysis with Bill Brooks
(April 22, 2008) Monday’s cash dairy markets yawned at the latest milk production data because it “came in fairly close to expectations and continues a pattern we’ve had for the last four to six months,” according to Downes-O’Neill dairy broker Bill Brooks in Tuesday’s DairyLine.

The growth is in the form of additional cows, he said, and slower output per cow, as “We’re coming off of a winter that, for many parts of the country, was one of the hardest ones they’ve had for quite some time.”  

The cows are reacting to that weather, according to Brooks, but expansion in our herds continues across the country and he doesn’t expect that to change as we “start to see some spring weather match our calendars,” and even more milk come on but “not enough to get the market excited, one way or the other.”

When asked if the block price will hit $2.00 again, Brooks said it’s possible and pointed to the closing of a block plant in Southern California in late 2007 which he says “flipped our supply demand situation.” He explained that, in the later stages of last year, barrels were tight and there was a lot more demand than what we had and we had inverted prices, with barrel above blocks.

Now we’ve flipped that around, he said, where blocks seem to be tight relative to demand. But, fundamentally, he’s not sure that $2.00 is justified, as demand for natural American cheese in February did not appear to be very good.

When asked how much of the strength can be attributed to the export market, Brooks said, there was some from “a psychological standpoint,” but “the absolute volumes doesn’t add up to much and commercial exports are included in the commercial disappearance numbers and based on his projection for February, it looks like cheese exports were down from a year ago. He said that “We may just be seeing a little bit of substitution taking place with commercial disappearance of cheese in the form of exports as opposed to it staying here and being consumed domestically.”

March Cold Storage Figures Released
(April 21, 2008) March butter stocks totaled 226.4 million pounds, according to the USDA’s latest Cold Storage report issued this afternoon, up 16 million pounds or 8 percent from February, and 33.3 million or 17 percent above those in March 2007. February butter stocks were revised up 9.3 million pounds.

American type cheese totaled 529.1 million pounds, up 16 million pounds or 3 percent from February, but 42.8 million pounds or 7 percent below a year ago.  February stocks were revised down 5.3 million pounds.

The total cheese inventory for March is 822.9 million pounds, up 21.9 million pounds or 3 percent from February, but 70 million pounds or 8 percent below a year ago. February stocks were revised down 4.5 million pounds. Full Report: Text | PDF

Dairy Situation and Outlook
By Bob Cropp, Professor Emeritus
University of Wisconsin Cooperative Extension
University of Wisconsin-Madison

(April 21, 2008) Milk production continues to increase by more than 2%. USDA's milk production report for the month of March showed production for the 23 reporting states up 2.4% from a year ago. Milk cow numbers were 9,000 head more than February and marks the 11th straight month that milk cows have increased over the month before. There were 1.7% more milk cows in March than a year ago.

Despite high feed costs milk production continues strong in the West. Compared to a March a year ago, milk production was up 2.4% in California, 8.2% in Idaho, 3.6% in Arizona, 8.3% in New Mexico and 10.1% in Texas. While there are reports some California dairy cooperatives have placed bases on their producers and that more cows are being slaughtered or leaving the state, California still had 3,000 more cows than February and 2.6% more than a year ago. These Western states all had more cows than a year ago except for New Mexico, which reported 9,000 fewer cows which was more than offset by 11.2% more milk per cow.

In the Upper Midwest, milk production also increased. March production was up 1.7% in Wisconsin, 1.4% in Iowa but up just 0.1% in Minnesota. While Minnesota had 1.8% more milk cows, milk per cow was down 1.5%. Iowa also had less milk per cow, down 1.1%, but it was more than offset by 2.4% more cows. Wisconsin had 0.4% more cows and 1.2% more milk per cow.

In the Northeast, cow numbers were down for both New York and Pennsylvania with milk per cow higher for New York but lower for Pennsylvania. Total milk production was still up 2.7% for New York but 2.0% lower for Pennsylvania. In the Southeast, cow numbers were down 5.4% in Florida more than offsetting 2.5% more per cow and netting 2.9% less total milk production.

Looking ahead milk production is likely to continuing to increase 2% plus over the next several months. While high feed prices may hold down increases in milk per cow to no more than 1%, earlier herd expansion decisions from record high milk prices in 2007 will hold milk cow numbers higher than a year ago. 

Despite more milk cheese prices have held up. When CME cheese prices do fall they quickly recover. On April 1st, CME cheddar barrels were $1.7375 per pound and 40-pound blocks at $1.8050 per pound. Barrels fell further to $1.69 per pound on April 8. But, as of April 18th, barrels were back to $1.84 per pound and 40-pound blocks to $1.9050 per pound. Factors holding up cheddar cheese prices are: less production of cheddar cheese, increase cheese exports and relatively tight stocks. Cheddar cheese production for 2007 was 2.3% lower than 2006. As of February 2008, cheddar production, adjusted on a daily basis, was still running 2.5% below year ago levels. February American cheese stocks were 8.3% lower than a year ago. Partly due to lack of plant capacity the increase in milk production is going into the production of other types of cheese rather than cheddar(for example, February Italian cheese production was 1.2% higher than a year ago) and into nonfat dry milk and skim milk  powder production. February nonfat dry milk production on a daily basis was 17.7% higher than a year ago and skim milk powder production was up 195.8%.

The year is starting out with good growth in dairy exports. For the first two months of the year compared to 2007, cheese exports were up 66.1%, nonfat dry milk up 79.9%, butter up 8.3% and whey protein concentrate up 3.8%. Dry whey exports, however, were 28.6% lower.

While February butter production on a daily basis was 5.6% higher than a year ago and stocks ample at 8.5% higher than a year ago, butter prices have shown some strength. CME butter prices were $1.3925 per pound on April 18th. Increased export activity and increased domestic use has improved nonfat dry milk prices. West nonfat dry milk prices are trading mostly in the range of $1.32 to $1.36 per pound. However, West dry whey prices remain depressed at $0.27 to $0.28 per pound.

Due to lower cheese, dry whey and butter prices the end of March and early April the mover for May Class I milk was announced almost $2.00 lower than April, $18.61 for April and $16.62 for May. While dairy product prices will average higher for the last half of April, lower prices earlier will result in an April Class III price of around $17.00, down about $1.00 from $18.00 in March.

Class III futures are very bullish. Class III prices are back to about $17.80 for May, with June at $18.55 and then above $19.00 through March of 2009 and even above $18.00 through March 2010. These prices are surely possible, but they will require milk production to not increase much more than 2%, domestic sales remain strong and expected increased exports of cheese, butter, dry whey and nonfat dry milk come to pass. Prices are very sensitive to rather small changes in or anticipated changes in any of these factors and can result in quite different milk prices. Price risk remains very real in the dairy industry.

Robert Cropp
racropp@wisc.edu
University of Wisconsin-Madison

California's March output was up 2.4 percent from a year ago, thanks to 47,000 more cows. Wisconsin was up 1.7 percent, on a 20 pound gain per cow and 5,000 more cows. New York produced 2.7 percent more milk than a year ago, thanks to a 50 pound gain per cow outweighing a 2,000 cow decline.

Idaho was up 8.2 percent, thanks to 36,000 more cows an 20 pound gain per cow. Pennsylvania was down 2 percent on a 30 pound decrease per cow and 1,000 fewer cows. Minnesota's output was up 0.1 percent with 8,000 more cows in the milking herd, but a 25 pound per cow reduction.

The biggest percentage gain was scored in Colorado, up 11.4 percent, followed by Texas,  up 10.1 percent, New Mexico was next with an 8.23 percent increase. The biggest loses occurred in Oregon and Missouri, both down 9.5 percent.