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Federal Order & California Milk Prices


Daily Cash Prices
    Futures Prices

01/05/09

PRICE

TRADES

BIDS

OFFERS

BUTTER Unchanged
$1.1300
0 0 0
BLOCK CHEESE -0.50
$1.1275
1 0 1
BARREL CHEESE -3.25
$1.0975
1 0 1
GRADE A NFDM -2.00
$0.8300
2 1 1
EXTRA GRADE NFDM  Unchanged
$0.8500
0 0 0
NASS Dairy Products Price Highlights   01/02/2009
Block:  -10.3 cents to $1.6523/lb. Barrel: -7.5 cents to $1.6317/lb.
Butter: -2.4 cents to $1.1498/lb. NFDM: -0.9 cent to 83.23 cents/lb.
Whey: -0.3 cent to 17.33 cents/lb.
C.C.C. Purchase Report   12/29-12/31/08
Product This Week Cume Last Year
Butter None None None
Cheese None None None
NFDM 8.5 million lbs.  114.6 million lbs. None
                     
         
*
Tuesday, January 6, 2009
Cash Cheese Prices Have Fallen Below the Government Support Level
Dairy Checkoff Successes: How Producers Helped Drive Sales in 2008  
CA: Cows coming to Salinas schools
KS: Dairy farmers crying over too much milk
Moderate demand for quality hay, strong
OH: Dairy scholarships available
WI: Area family wins young farmer award
Canada: Farmers face 2009 with tempered hopes
Canada: Oxford vet charged with cattle embryo fraud
Monday, January 5, 2009
November Dairy Products Report
Drink Milk Between Meals To Reduce Cavities
Podcast: Pfizer Vet Visit: Vaccines and your employees
CA: A bigger dairy industry needs more corn silage
2009 World Ag Expo Top-Five New Dairy Products Announced
2009 World Ag Expo Top New Products Unveiled
ID: Dairymen head into '09 with uncertainty
IL: Dairy dispute takes toll on northwest Illinois
NH: Alvirne instructor wins state farming award
NJ: "Cow taxes" would be detrimental to farmsteads
NY: Dairy farmers navigate turbulent times
NY: Declining milk prices good for shoppers, bad for dairy farmers
The Cow Is Not Like a Switch
WI: We have plenty of poop here; let's harnes
DE: Dairy house replica complete
Canada: Beef program reduces export issues
Australia: Dairy playing games with wheat markets
New Zealand: 1000 cows to be kept in shed
Argentina-Champion dairy cow cloned
Friday, January 2, 2009
December Federal Order Class III Milk Price is $15.28
Alliance of Western Milk Producers
'08 dairy feed costs and milk prices could go down as one of the worst on record
MN: Senator Skogen named dairy ‘Legislator of Year’
PA: Farm Show Friends Bond Over the Love of Cows
As Recession Deepens, So Does Milk Surplus
A story from an Awesome young boy
Thursday, January 1, 2009
Dairy Markets Weekly Review
A Look Back at 2008
Cross Country: 2008 closes on a sour note for farmers -- here's ...
Tags needed to transport dairy cattle in Texas
‘Slick’ gene helps cattle beat heat
Despite economy, consumers go to great lengths for raw milk
Australia: dairy farmers union concerned over milk prices
UK: Farm output 'under pressure'
UK: Dan Buglass: Warning over fall in beef self-sufficiency
Chinese dairy producer pleads guilty for 6 tainted baby formula deaths 
China dairy boss delayed reporting quality issues

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November Dairy Products Report
December Federal Order Class III Milk Price is $15.28
California December Class 4 Prices Announced
November Ag Prices Report
November Cold Storage Data
January F.O. Class I Base milk Price is $15.74
November Milk Production Up 1.4 Percent
California Class 1 Prices Up
Dairy Outlook
WASDE Report
Farm milk prices took a sharp drop
October Dairy Products Report
Cash Cheese Prices Have Fallen Below the Government Support Level

(January 6, 2009) Cash cheese prices fell below the government support level Monday, something that happens because it does cost manufacturers to sell product to the Commodity Credit Corporation (CCC).

 

The cheese has to meet grade, explained Downes-O’Neill dairy economist, Bill Brooks in Tuesday’s DairyLine. There’s a delay in getting paid for the product, he said, and the manufacturing process itself may be an issue as they have not been specifically making product for sale to the government under the price support program so the product that is being made is not eligible to be sold to Uncle Sam at this point so the price keeps going down under it can find a home.

 

It’s hard to say how low it will go. Brooks pointed out there’s been such a quick turnaround, having come into December at over $1.80 per pound and left December and begin the new year below support. There isn’t much downside price risk, he said, but blocks have fallen below $1.00 a pound and “hopefully that doesn’t happen but that is a potential.”

 

Cash Grade A nonfat dry milk dropped 2 cents Monday, to 83 cents per pound and two sales occurred, something Brooks called “surprising,” considering powder has been moving to the government at 80 cents per pound. This is the first sale since early October, he said, and “Not surprising that the price would go down but a little surprising that there would be some sales occur in that market that will continue to work its way down to that 80 cent level.”

 

Real change or chump change. That's the title of IDFA's "Processor's Perspective" on tomorrow's DairyLine as we look at the changing of the guard in Washington and John Ellsworth has his "Success Strategies" program in our second half.

November Dairy Products Report

(January 5, 2009) The Agriculture Department’s November Dairy Products report issued today puts butter production at 133.6 million pounds, up 3.6 million pounds or 2.8 percent from October and 2.8 million pounds or 2.2 percent above November 2007. 

Mozzarella cheese output totaled 260.2 million pounds, down 3.7 million pounds or 1.4 percent from October, and 13.3 million pounds or 4.9 percent below a year ago. Total Italian type cheese, at 336.6 million pounds, was down 7.5 million pounds or 2.2 percent from October, and 9.3 million pounds or 2.7 percent below a year ago.

Cheddar production totaled 258.9 million pounds, up 3.6 million pounds or 1.4 percent from October, and 3.6 million pounds or 2.3 percent above a year ago. Total American type cheese amounted to 340.5 million pounds, down 2.6 million pounds or 0.8 percent from October, but 15.8 million pounds or 4.9 percent above a year ago.

Total cheese output came to 826 million pounds, down 17.5 million pounds or 2.1 percent from October, but 10.8 million pounds or 1.3 percent above a year ago. 

November nonfat dry milk output amounted to 134.8 million pounds, up 13.8 million pounds or 11.4 percent from October, and 34.8 million pounds or 34.8 percent above a year ago.  

Drink Milk Between Meals To Reduce Cavities

(January 5, 2009) Moms have said it for years. Now the American Academy of Pediatrics (AAP) is saying it; drink milk or water between meals and you will reduce the risk of cavities and ensure good oral health in your children. The policy statement was published in the December issue of Pediatrics, according to the National Dairy Council’s Mary Martin Nordness in Monday’s “DMI Update.”

 

Nordness said parents are encouraged to give no more than four ounces of 100 percent fruit juice per day, avoid serving children carbonated beverages and juice drinks, and encourages families to follow eating recommendations consistent with the MyPyramid recommendations from the U.S. Department of Agriculture.

 

“The take home message from all this,” Nordness said, “Is that children should consume only milk or water between meals and that parents should encourage nutrient rich, low fat or fat free milk at all times for beverages.”

 

The AAP is concerned about the growing number of overweight children in our country, according to Nordness, and “recommending low fat or fat free milk over juice insures that kids will be consuming a beverage that provides vitamins and minerals for growth and development and very few calories.” “The first step is to be a good role model parent,” she concluded, “So instead of choosing a soda, choose low fat milk.”

 

Downes-O'Neill dairy broker, Bill Brooks, has our weekly dairy market analysis on tomorrow's DairyLine and John Ellsworth has his weekly "Success Strategies" program in our second half.

December Federal Order Class III Milk Price is $15.28

The December federal order benchmark Class III milk price was announced Friday at $15.28 per hundredweight (cwt.) down 23 cents from November and $5.32 below December 2007. That pulls the 2008 average to $17.44, down from $18.04 in 2007 and compares to $11.89 in 2006. The Class IV price is $10.35, down $1.90 from November and $8.83 below a year ago.

 

Looking ahead; the 2009 Class III futures contracts settled Wednesday as follows: $10.80 for January, $10.28 in February and the low for 2009, and $10.77 for March. The high was $14.17 in October.

 

The four week NASS-surveyed cheese price averaged $1.7544 per pound, up fractionally from November. Butter averaged $1.2448, down 39 cents. Nonfat dry milk averaged 84.25 cents, down 2.8 cents, and dry whey averaged 17.3 cents, down 1.65 cents per pound from November.

 

California’s December 4b cheese milk price is $13.95 per cwt., down $1.19 from November, $4.63 below December 2007, and $1.33 below the comparable Federal order Class III price. The 4b averaged $16.85 in 2008, down from $17.46 in 2007. The December 4a butter-powder price is $10.15, down $2.05 from November and $8.99 below a year ago. It averaged $14.49 in 2008, down from $17.41 in 2007.

 

 

CLASS & COMPONENT PRICES:

COMMODITY            

December 2008 November 2008 October 2008

Class II Milk Price

$11.21 cwt. $ 14.45 cwt. $16.60 cwt.

Class II Butterfat Price

$1.3068 lb. $1.7800 lb. $1.8577 lb.

Class III Milk Price

$15.28 cwt. $15.51 cwt. $17.06 cwt.

Class III Skim Price

$11.12 cwt. $9.64 cwt. $10.97 cwt.

Class IV Milk Price

$10.35 cwt. $12.25 cwt. $13.62 cwt.

Class IV Skim Milk Price

$6.01 cwt. $6.26 cwt. $7.40 cwt.

Butterfat Price

$1.2998 lb. $1.7730 lb. $1.8507 lb.

Nonfat Solids Price

$0.6680 lb. $0.6953 lb. $0.8226 lb.

Protein Price

$3.6390 lb. $3.1301 lb. $3.5490 lb.

Other Solids Price

$-0.0269 lb. $-0.0099 lb. $-0.0047 lb.

Somatic Cell Adjustment Rate

$0.00088 per 1,000 cells $0.00088 per 1,000 cells $0.00095 per 1,000 cells
PRODUCT PRICE AVERAGES December 2008 November 2008 October 2008
Butter $1.2448 lb. $1.6356 lb.  $1.6996 lb.
Nonfat Dry Milk $0.8425 lb. $0.8701 lb. $0.9987 lb. 
Cheese $1.7544 lb. $1.7511 lb.  $1.9065 lb
Dry Whey $0.1730 lb. $0.1895 lb.  $0.1945 lb.
'08 dairy feed costs and milk prices could go down as one of the worst on record

(January 2, 2009) Feed represents one of the largest production costs for dairy farmers and the relationship between 2008 dairy feed costs and milk prices could go down as one of the worst on record.

 

The December milk feed ratio was just 1.97, according to the USDA’s latest Ag Prices report, down from November’s revised estimate of 2.02, and compares to 2.85 in December 2007. A ratio of 3.0 or higher is considered positive for milk production. December’s ratio is the 13th consecutive month below that threshold.

 

Dairy Profit Weekly editor, Dave Natzke, reported in Friday’s DairyLine that, while most dairy producers grow their own feed, USDA’s monthly milk-feed price ratio is an indicator of milk income relative to feed costs and, based on preliminary estimates, the average milk-feed price ratio for all of 2008 was just 2.01, the lowest annual average since at least 1985, the earliest records he could find.

 

The good news is that December corn and soybean prices were approaching 2008 lows, according to Natzke, and hay prices were down $25 per ton from the highs earlier this fall. The big culprit in this month's low index, he said, is the U.S. average milk price, which fell to $15.90 in December, the lowest level of the year.

 

One glimmer of good news, Natzke said, is that energy-related costs have come down. December fuel prices were down 14 percent from November and 31 percent less than December 2007.

 

Natzke also had an update on an issue that remained contentious throughout much of 2008; R-CALF USA, a beef ranchers’ organization, said USDA issued a new memo regarding the National Animal Identification System (NAIS). R-CALF said a previous memo, which mandated premises registration for some livestock producers (participating in some federal disease programs and who are engaged in interstate commerce) was illegal. USDA’s new memo states there is a procedure for producers to remove their names from the NAIS database, ensuring premises registration is voluntary, Natzke reported.

 

A Look Back at 2008

(January 1, 2009) DairyLine’s first program of 2009 featured National Milk’s Chris Galen with a look back on 2008. He said that 2008 will go down in the books as a year dominated by politics and economics and predicted 2009 would be more of the same.

 

Last year was a good year overall for dairy farm prices, he said, although 2008 ends on a down note for dairy product prices and 2009 will begin with prices being very low.

 

The silver lining, according to Galen, is the steep drop in input costs, especially on feed and oil prices being reflected at the gas pump. Hopefully, they’ll be reflected in lower fertilizer and farm chemical costs in 2009, he said.

 

“The big story in 2008 was the economy, both domestically and internationally,” Galen said, and as 2009 starts, we’re going to have a new administration in town and a new Congress and their first order of business is to develop a massive stimulus package designed to get the U.S. economy going.”

 

National Milk wants to work to make sure that agriculture’s interests are addressed as part of that stimulus package because what’s good for the economy overall will certainly be good for dairy farmers down the road.

 

Galen predicted that the economy will be the big story in 2009 and a lot of it will be played out in terms of politics of winners and losers and who gets the best deal in the coming stimulus package and we want to make sure that dairy is at that table as well.

 

Economics will play a big role worldwide and will impact the export markets, Galen said, which has had a huge influence on dairy’s bottom line the last couple years and that has turned around but anything we can do to stimulate not just the U.S. economy but the world economy will be good for our export capabilities and will be good ultimately for dairy farmer’s prices.

California December Class 4 Prices Announced

California’s December 4b cheese milk price was announced this morning at $13.95 per hundredweight, down $1.19 from November and $4.63 below December 2007. The 4b averaged $16.85 in 2008, down from $17.46 in 2007. The December 4a butter-powder price is $10.15, down $2.05 from November and $8.99 below a year ago. It averaged $14.49 in 2008, down from $17.41 in 2007.  http://www.cdfa.ca.gov/dairy/min_priceletters_main.html

Dairy Markets Weekly Review

(December 31, 2008) All eyes are on cheese prices where blocks plunged to the government support level Wednesday, closing the New Year’s holiday week at $1.1325 per pound, down 13 3/4-cents on the week, $1.02 below that week a year ago, and the lowest block price since March 2006. Barrel closed at $1.13, down 17 3/4-cents on the week and 96 cents below a year ago. Eight cars of block traded hands on the week and two of barrel. The NASS prices were not available at our deadline.

 

Butter closed at $1.13, down a penny on the week and 8 3/4-cents below a year ago. Five cars were sold on the week. Cash Grade A and Extra Grade nonfat dry milk both closed at 85 cents per pound, down a penny and a half on the week.

California is no longer isolated

(December 31, 2008) Another one of the challenges in 2009 is in California where dairy producers and their organizations are agonizing over the decision whether to become a federal order in view of the recent decision by the California Department of Food and Agriculture to reduce the state’s Class I milk prices.

 

“California is no longer isolated,” explained Jeff VandenHeuvel, Vice Chairman of Chino-based Milk Producers Council in Wednesday’s DairyLine. “For many decades we were able to do our own thing,” he said. “We had a low cost of production relative to the rest of the country and we had a Class I market that nobody else could reach because we were isolated from the rest of the country.”

 

The barriers have been broken down the last 10-15 years, according to VandenHeuvel, and plants and dairies have been built just over the border “for the specific reason of exploiting the fact that the state order cannot regulate interstate commerce.” He said that officials who run the state order have decided to “keep discounting the California Class I price to a point where it makes no economic sense to bring any milk in here.”

 

For California dairy producers, that means that the amount of revenue they would normally expect to come in from Class I sales is not going to be there, VandenHeuvel warned, amounts to millions of dollars and “happens at a time when the cost of production advantage that California historically has had, has evaporated as well.”

 

VandenHeuvel said it has become very expensive to produce milk in California and competitors like Texas, New Mexico, and Idaho “can fully match us in cost of production so something absolutely has to change and a federal order is a very viable option for California and we need to take a hard look at how to do that.”

 

“We could continue to sell our milk cheap,” he concluded, “It would be foolish to do that but we’ll see whether the leadership of California is willing to step up and take a serious look at a federal order. They have not been willing to do that so far but there’s nothing so powerful, as an idea whose time has come. This is clear.”
 
Western United Dairymen has notified DairyLine that they will hold industry wide meetings for California dairy producers and processors in February to present an in depth analysis of the federal order issue. Milk Producers Council newsletter has more here.

November Ag Prices Report
(December 30, 2008 The December Milk-Feed Price Ratio is 1.97, down from November's revised estimate of 2.02, according to USDA’s “Ag Prices” report issued this afternoon, and compares to 2.85 in December of 2007. 
 
The All Milk Price was estimated at $15.90 per hundredweight, down $1.20 from last month's estimate, and $5.60 below a year ago. Corn averaged $4.05 per bushel, down 21 cents from November, but 28 cents above a year ago. The soybean price, at $8.97 per bushel, was down 41 cents from November, and $1.03 cents below a year ago.
Text | PDF
2009 Milk Prices Will Be Challenging

(December 30, 2008) One of the challenges of 2009 will be milk prices and the big question now is, are we close to the bottom on cheese prices. Blocks slipped another quarter-cent lower in the first day of trading since the Christmas break, to $1.2675 per pound, while barrel was unchanged, holding at $1.3075, 4 cents above the blocks.

 

The University of Wisconsin’s, Dr. Brian Gould, said in Tuesday’s DairyLine, if you look at the 2009 futures market, it’s almost two different years. The Class III milk price average for the first half of 2009, as of December 24, was $12.22, with a low of $11.56.

 

There is a recovery in the second half of the year, he said,  as the average is $14.46, and “After we get through January and February, the market thinks there’s going to be a steady increase in that Class III, depending what causes that Class III, or whether the Class III affects the cheese price, the chicken and egg question.” Gould says we could see a recovery in the second half of 2009

 

But, dairy producers appear to be thinking something different. The latest Livestock Slaughter report shows 208,200 culled dairy cows were slaughtered under federal inspection in November, down about 9,200 head from October and 28,000 less than November 2007. For January to November, cull cow slaughter totaled 2.3652 million head, up about 70,300 from the same period in 2007.

 

Gould warned that farmers are not reducing their herds as much as we would think and that could mean more downward pressure on the milk price. He raised the issue of the impact of the CWT herd removal but did not have an answer.

 

When asked about the butter market, Gould said the Class IV is about as low as you can go, a little above $10.00 per hundredweight, but he doesn’t see it going much lower. Butter stocks are not abnormal, Gould concluded, although the export market is softening.

 

Will California become a federal milk market order?  Dairy producers and their organizations are debating the pros and cons of doing so in light of the California Department of Food and Agriculture’s decision to reduce Class I milk prices there.  

Pizza Has Been a Life Line To Dairy Industry

(December 29, 2008) Pizza has been a life line to the dairy industry as more and more milk finds its way into the vat for pizza cheese instead of the bottle. But that growth has cooled some and the dairy check off is partnering with the pizza industry to reinvigorate the pizza category.

 

Dairy Management Incorporated’s, Joe Bavido, reported in Monday’s “DMI Update” that an industry task force has been created to develop an action plan for the dairy and pizza industry to reinforce pizza as the favorite choice of American consumers.

 

Increasing cheese on pizza is key to increasing overall pizza sales, according to industry experts, Bavido said, and “If you’ve been to any of the pizza chains lately you may have noticed they have reduced the amount of cheese their pizza.

 

Pizza sales directly affect overall cheese sales, according to Bavido, as about 25 percent of total cheese is used on pizza and that represents more than 25 billion pounds of annual milk production.

 

DMI is working with Domino’s Pizza to introduce a line of high quality specialty pizzas that will use up to 40 percent more cheese. DMI, together with the state and regional organizations, will invest some $10 million to support the launch of this campaign nationwide.

 

Producer funded efforts will support Domino’s franchisees in advertising, public relations, local market promotions, and communications activities and, with Domino’s investment, will result in about four times the initial investment of dairy producers.

 

The partnership will measure the overall increase in pizza and cheese sales in the test markets, he said, and how those changes in unit pricing at the consumer level affect total sales.

 

“DMI’s partnership with Domino’s and others in the pizza category can help lead to increased cheese sales on behalf of U.S. dairy producers,” Bavido concluded.

Milk Price News Is Not Encouraging

(December 26, 2008) The USDA has initiated signup for the Milk Income Loss Contract (MILC) program, which provides payments to farmers when the federal order Class I base price goes below $13.69 per hundredweight (cwt.) and Dairy Profit Weekly editor, Dave Natzke, warned in Friday’s DairyLine that current milk futures prices indicate that level could be breached in the first half of 2009, “So it's time for farmers to act.”

 

Under the revised program authorized by the 2008 Farm Bill, the program also includes a "feed cost adjuster," which adjusts the trigger level when dairy feed costs rise relative to milk prices. Payments are capped at just under 3 million pounds of milk per year, which Natzke said is equal to the annual production of about 145 cows. Dairy farmers should contact their local Farm Service Agency offices to sign up for the program, he said.

 

Speaking of lower milk prices; California will be lowering minimum milk prices paid to its dairy farmers. You’ll recall that California operates a state milk market order, separate from the federal order system and earlier this year, several California dairy farmer groups submitted a petition to the state's Department of Food and Agriculture, seeking a temporary increase of $1 per cwt. in the minimum Class 1 (or fluid) milk price to help pay for high feed and energy costs. 

 

Dairy processors countered with a request to lower the minimum price by $1.35 per cwt., saying dairy processors operating outside of the California milk marketing order’s reach had a competitive advantage and were able to buy milk at lower prices, and thus sell it to consumers at lower prices.

 

Earlier this month the California Ag Department sided with processors, announcing it would reduce Class 1 prices by about 35 cents per cwt., and Class 2 and Class 3 prices by about 26 cents per cwt., beginning in January. 

 

The “border wars” created by differences in federal order and California state milk marketing order pricing systems has prompted some dairy producer groups to ask for revisions to the state order, Natzke concluded, or include California in the federal order system. Additional Links: 

Hearing Panel Report - Addressing Class 1,2,3 Pricing Formulas
Stabilization & Marketing Plan - Northern California Marketing Area
Stabilization & Marketing Plan - Southern California Marketing Area
Procedural History
CDFA Final Industry Notice
Hearing Panel Report
Dairy Markets Weekly Review

(December 24, 2008) Cash cheese prices continued their descent Christmas Week, with block closing the shortened week at $1.27 per pound, down 3 1/4-cents on the week, 76 cents below a year ago, and just 14 cents above the government support price.

 

Barrel closed Wednesday at $1.3075, down 4 3/4-cents on the week, 67 1/4-cents below a year ago, but 3 3/4-cents above the blocks. Thirteen cars of block traded hands on the week and none of barrel.

 

Cash butter closed at $1.14, down 3 cents on the week and 11 cents below a year ago. Only one car was traded.

 

Cash Grade A and Extra Grade nonfat dry milk closed at 86 1/2-cents per pound, down a penny and a half on the week. The NASS-surveyed prices were delayed until December 29.

Early Christmas Present - Exemptions from Environmental Regulations

It was announced last week that livestock producers will receive some exemptions from some new environmental regulations, an early Christmas present, according to National Milk’s Chris Galen.

 

Speaking in Wednesday’s broadcast, Galen reported that they have argued for some time that manure is not a toxic waste and yet the Environmental Protection Agency had been looking at treating livestock operations like dairy farms in the same way as so-called super fund sites.

 

The final rule was issued about a week ago, according to Galen, and exempts the reporting of animal wastes under what is termed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Galen said the law was designed to look at emissions from toxic waste sites and was never really intended to include dairy operations or other livestock operations.

 

EPA also granted a limited exemption to a related superfund law designed to let first responders in communities know about the presence of ammonia. While Galen admitted that there are ammonia emissions coming from some livestock operations, the law was never intended to incorporate dairy farms and other agricultural operations. Both of these exemptions were fought for by National Milk and other farm organizations for some time, he said, and “Hopefully remain the law of the land in the new Obama Administration.”

 

The Agriculture Department has opened the signup period for the MILC program, in view of falling milk prices. Dairy Profit Weekly’s Dave Natzke will have details on Friday plus a report on a controvercial decision in California to cut minimum prices paid to dairy producers.

Market Analysis with Alan Levitt

(December 23, 2008) The cash block cheese market slipped a quarter-cent Monday and closed at $1.2950 per pound. The government support price is $1.13. Market analyst, Alan Levitt, editor of the CME’s Daily Dairy Report, said in Tuesday’s DairyLine that he’s not sure the price will fall that far but holiday needs have been met and, with the end of the year approaching, no one wants to add inventory. Credit issues mean no one wants to pay for inventory and people are being very passive now.

 

On the other hand, Levitt said he wouldn’t be surprised if the market bumped up some after the first of the year, once people figure out how much cheese has actually moved over the holiday period. He reminded us that, last week, Jerry Dryer reported that cheese sales have been decent.

 

The market is being driven by intermediate demand, according to Levitt. People don’t want to buy an extra load or hold an extra load in storage and, “If we can get through the next couple weeks, we may actually see a little bit of a bump.”

 

“It’s been a couple years since cheese has been this cheap, Levitt said, “And people may look at picking up some more and putting it away in aging programs. You can go too wrong buying cheese at $1.30 in this day and age.”

 

Butter is at a five and a half year low, having been on a downward spiral the last couple months, once commercial exports dried up. The CWT program has helped keep some butterfat moving overseas, he said, but it hasn’t been enough so that price is heading toward support just as powder is already.

 

Last week’s Milk Production report shows that the signal still hasn’t got to farmers, according to Levitt. It’s the “quirk of the lags of the pricing signals,” Levitt said, and even though costs are up and profitability isn’t necessarily up, “milk prices have been pretty decent throughout this year.” The All Milk price will average about $18.35, he said, down about 75 cents from a year ago, but still a very strong year.

 

Producers are still adding cows, Levitt explained, with November cow numbers in the 50 states up 5,000 head in the 50 states and “they haven’t got the signal yet even demand has pulled back and by all rights, supply should be contracting.” “December prices will be decent and January won’t be too bad,” Levitt concluded. “February is where, by the time the lags flow through that’s where things are really going to bite hard.”  

November Cold Storage Data

(December 22, 2008) The Agriculture Department’s latest Cold Storage report issued this afternoon shows November butter stocks totaled 120.1 million pounds, down 20 percent or 29.3 million pounds from October, and were down 16 percent or 23.1 million from November 2007. 

The American cheese inventory stood at 529.2 million pounds, down 2 percent or 10.9 million pounds from October, but 2 percent or 11.8 million above a year ago. October American cheese stocks were revised down nearly 300,000 pounds. Total cheese stocks amounted to 821.3 million pounds, was down 1 percent or 7.7 million pounds from October but up 2 percent or 15.4 million above a year ago. October stock data was revised up 5.5 million pounds. Full Report:  Text | PDF

FDA recently announced new rules on health claims regarding calcium and vitamins

(December 22, 2008) The Food and Drug Administration (FDA) recently announced new rules on health claims regarding calcium and vitamins and they are very important for the dairy industry, according to the National Dairy Council’s Dr. Gregg Miller.

 

Miller talked about it in Monday’s “DMI Update” and said FDA revised the guidelines on calcium and osteoporosis. He reported that the rules now allow you to talk about calcium and Vitamin D and its ability to reduce the risk of developing osteoporosis.

 

FDA also broadened the claim. Before you had to target young women or Asian women, according to Miller, but now FDA is saying everyone in the population at any age needs calcium and Vitamin D for good bone health and to reduce the risk of osteoporosis so food processors, particularly dairy processors, will be able to use this claim on their labels.

 

For awhile, there seemed to be a calcium bandwagon and calcium was being advertised in a number of products like apple juice and even Tums. You don’t hear of that so much anymore and I asked Miller if that mantle had come back to dairy and he said yes.

 

More people are looking to dairy, not only for calcium but for vitamin D and for the unique nutrient package that dairy has to offer Miller said. Dairy offers nine essential nutrients, most of them important for bone health, “so people are coming back to dairy.”

 

He admits that calcium-fortified products are still available but Miller believes dairy is beginning to “overtake that healthy halo.” He adds that calcium is a natural part of dairy products so the calcium is more readily absorbed by the body and “people love that naturalness of dairy.”

Dairy Markets Weekly Review

(December 19, 2008) The hemorrhaging continues in the cash cheese market where 40-pound block closed Friday at $1.3025 per pound, down 21 cents on the week and 64 3/4-cents below a year ago. The blocks have lost 50 cents in three weeks.

 

The 500-pound barrels closed at $1.3550, down 16 3/4-cents on the week and 54 1/2-cents below a year ago. Twelve cars of block traded hands on the week and four of barrel.  The NASS U.S. average block price gained 2.9 cents, hitting $1.7763. Barrel averaged $1.7768, down 4.7 cents

 

Butter regained 12 cents in the first three days of trading this week but started to melt Thursday, losing 3 cents and another 3 on Friday, and closed at $1.17, up 6 cents on the week but still 15 1/4 below a year ago. Four cars traded hands on the week. NASS butter averaged $1.2346, down 18.3 cents.

 

Both cash Grade A and Extra Grade nonfat dry milk dropped 2 1/4-cents this week and closed Friday at 88 cents per pound. NASS powder averaged 83.93 cents, down 1.4 cents. Dry whey averaged 17.02 cents, down 0.3 cent.

 

Price support purchases this week amounted to 8.2 million pounds of nonfat dry milk, raising the cumulative total to 101.5 million pounds.

January F.O. Class I Base milk Price is $15.74

(December 19, 2008) The January 2009 Federal order Class I base milk price was announced this morning by the Agriculture Department at $15.74 per hundredweight, up 31 cents from December but $5.23 below January 2008. The advanced Class III pricing factor remained the “higher of” in driving the Class I value.

 

The NASS-surveyed product price on butter averaged $1.3262 per pound, down 32.6 cents from December. Nonfat dry milk averaged 84.6 cents, down 1.6 cents. Cheese averaged $1.7989, up 5.7 cents, and dry whey averaged 17.16 cents per pound, down 1.8 cents from December.

 

California’s January 2009 Class 1 price is $17.42 per hundredweight for the North and $17.69 for the South. Both are up 85 cents from December but are $5.54 below January 2008. 


Advanced Pricing Factors

Jan 2009 Dec 2008 Nov 2008