Pregnant Cow Shot at California State Fair

Milk payments to Franklin County dairy farmers to be adjusted

CWT Expands Eligible Product List, Accepts Bids

Butter gained a penny and a half, closing Friday at $1.8150, up 57 cents from a year ago. Nine cars were sold. NASS butter averaged $1.7713, up 2.8 cents. NASS powder averaged $1.1865, down 4.7 cents, and dry whey averaged 36.21 cents, up 0.1 cent.

Looking ahead; Class III futures settled Thursday as follows August $14.92, September $15.37, October $14.99, November $14.75, and December $14.71. The Class IV price is $15.75, up 30 cents from June, and $5.60 above a year ago.

The four-week NASS-surveyed cheese price averaged $1.4567 per pound, up a penny from June. Butter averaged $1.7375, up 14.3 cents. Nonfat dry milk averaged $1.2277, down 3.5 cents, and dry whey averaged 36.41 cents, down a half cent.

California's comparable July 4a and 4b prices are scheduled for release on Monday.

(July 30, 2010) Believe it or not, the United States may be becoming less attractive as a foreign dairy export market. Dairy Profit Weekly editor Dave Natzke reported Friday that a USDA Foreign Agricultural Service report, “Dairy: World Markets and Trade,” says dairy imports both on a fat and skim milk equivalent basis have been declining in recent years.

For example, according to USDA analysts, cheese imports have declined annually since 2003, and, at an estimated 245 million tons in 2010, are about half the 476 million lbs. imported seven years ago. 

Some of the downturn must be attributed to the economy, but the report indicates the cheese market is becoming increasingly global, and the margin between U.S. and world cheese prices is declining, leading foreign exporters to shift their focus to other markets. 

On a skim solids basis, imports are largely accounted for by casein, milk protein concentrates (MPCs) and whey products, according to Natzke. The report notes U.S. production of milk protein concentrates has just started to pick up the pace, and could likely lead to a reduction of imports of those products in the future.

Switching to an issue that Dave and I and many others well remember from our youth is the ongoing competition between butter and margarine. Natzke said “It’s another bit of good news for dairy producers.”

The Central milk marketing order administrator’s office reports U.S. 2009 per capita butter consumption in food products was 5 pounds, unchanged from the year before. Meanwhile, per capita margarine consumption was 3.7 pounds, a decline of about six-tenths of a pound. The butter-to-margarine ratio, at 1.35 pounds of butter for each 1 pound of margarine consumed, is the highest ratio in favor of butter since 1980, Natzke reported, and represents a remarkable turnaround since 1990, when butter consumption was less than four-tenths of a pound for each pound of margarine.

(July 29, 2010) A rose by any other name is still a rose, so it has been said, but that doesn’t apply to dairy products, according to the National Milk Producers Federation (NMPF). The Federation’s Chris Galen updated DairyLine listeners in Thursday’s broadcast on imitation dairy product labeling.

You recall that, in April, NMPF wrote the Food and Drug Administration asking it to crack down on what NMPF calls the “misbranding of non dairy products that use terms like milk, cheese, or yogurt.”

This week, NMPF responded to requests by the FDA for public input on what types of information should be allowed on the front of packages, including labels and shelf tags when consumers encounter these products in stores. Comments posted on NMPF website

“We’ve used this as another opportunity to remind the Food and Drug Administration that they really should disallow the use of terms like soy milk, rice yogurt, and so on,” Galen said, “Because those are often times things that consumers look at first and the only things they look at when they make a purchasing decision.”

He adds that when consumers see plant-based products with milk or yogurt in their name, they assume those products contain similar levels of protein, vitamins, and minerals that dairy products do but “research shows that imitation products made from plants, vegetables, weeds, and seeds don’t have the same level of nutrition,” Galen said.

What asked if NMPF has received any reaction from the FDA, Galen answered that this comment period will take a while to work through but they did receive a letter from the FDA, in response to the April petition, thanking NMPF for their response and said their input would be “take under advisement.”

Galen said the FDA hasn’t quite brushed NMPF off but were fairly non committal in terms of what they’re going to do, “so we’re just going to keep up the drum beat on this and keep pressure on the federal government, particularly the FDA, because they seem very concerned about how foods are presented, marketed, and packaged so the whole issue of whether or not foods have the right names to begin with should be a front and center issue for them,” he concluded.

“That’s quite significant,” according to University of Wisconsin’s Dr. Brian Gould, who said in Tuesday’s DairyLine Radio broadcast that butter has gained 15 percent since June 1^st. “There hasn’t been a down day at the CME spot price, it’s been going up continuously.”

The high butter price has broader implications with respect to the federal pricing system. For example, last Friday the advanced Class I was released and the Class IV was the mover at $15.77 compared to the advanced Class III of $13.66. 

“So again, almost more than a two dollar difference between Class IV and Class III and it’s been that way for six out of the last eight months,” Gould reported. “So it’s truly a change in the market conditions and it’s due to purely what’s going on in the butter side.”

He said that it could stay that way for a while with the heat and humidity affecting a large portion of the U.S.  “The components are going down a little bit and being allocated to butter because it’s so valuable.”

The high butter price may bode well for cheese. “Again, the price of cheese may go up a little bit because less components going into the cheese vat.”

Gould said he has a model on the Understanding Dairy Markets website, where current futures market data and state specific statistical analysis to look at the relationship between the announced Class III and the futures Class III and the mailbox. Using last week’s end of week Class III futures prices, we see that over the July to December period, the U.S. average Federal Order mailbox is projected to be about $15.76. Wisconsin is $15.93 and California, not surprisingly, at $14.32.

“These are substantially higher  then obviously what happened at this time last year," he concluded.

(July 26, 2010) America loves cheeseburgers and dairy farmers have impacted that value chain, according to Jim Montel, executive vice president of strategic initiatives for Dairy Management Incorporated. He talked about the dairy check off partnership with McDonalds in Monday’s “DMI Update.”

He pointed out that cheeseburgers use a large quantity of cheese and reported on McDonald’s introduction last year of the Angus burger which became very popular. That spurred the competition that looked at the result so Burger King and Wendy’s introduced their own comparable sandwiches.

Cheeseburger servings the last 12 months jumped 9 percent and 2 percent in the total category, according to Montel. That translates into about 122 million more pounds of milk in cheese being consumed, he said, and “a great return on investment for our dairy farmers.”  

(July 23, 2010) Cheese prices continued to move higher this week with the blocks closing Friday at $1.6025 per pound, up 2 3/4-cents on the week, and 40 1/4-cents above a year ago.

Barrel closed at $1.56, up 3 1/2-cents on the week, and 39 cents above a year ago. 

Cheese prices have strengthened for six consecutive weeks. Six cars of block traded hands on the week and eight of barrel. The NASS-surveyed U.S. average block price hit $1.4369, up 2.6 cents from the previous week, and barrel averaged $1.4766, up 5.6 cents.

Cash butter closed Friday at $1.80, up 2 1/2-cents on the week, and 54 cents above a year ago. Butter has also increased for six weeks in a row. Only one car was sold all week. NASS butter averaged $1.7438, up 2.4 cents.

Cash Grade A nonfat dry milk closed Friday at $1.21, down three quarters on the week, while Extra Grade held all week at $1.2250. NASS powder averaged $1.2335, up 0.1 cent, and dry whey averaged 36.15 cents, down 0.1 cent.

(July 23, 2010) The August Federal order Class I base milk price was announced this morning by the Agriculture Department at $15.77 per hundredweight, up 11 cents from July and $5.73 above August 2009. That put the 2010 average at $14.74, up from $10.95 a year ago, but down from $18.75 in 2008. The Class IV advanced pricing factor was the "higher of" in driving the Class I value and there will be no MILC payment to producers.

The NASS-surveyed butter price averaged $1.7321 per pound, up 17 cents from July. Nonfat dry milk averaged $1.2333, down 7 cents. Cheese averaged $1.4497, down 2.3 cents, and dry whey averaged 36.18 cents, down a penny.

2-week Product Price Averages:

(July 23, 2010) Looking back on the first six months of 2010, the average cow generated about $1,640 in milk sales, up about $283 per cow from 2009, according to USDA data reported by Dairy Profit Weekly editor Dave Natzke.

The average cow produced about 10,675 pounds of milk in the first half of 2010, up almost 300 pounds from a year earlier, and the 2010 all milk price has averaged about $15.38 per hundredweight, an increase of about $3.50.

“Multiply $283 by 9 million cows, and that results in a $2.5 billion increase in gross income compared to the first half of 2009,” Natzke said. “But despite the improvement, 2010 still is well behind income for both 2008 and 2007.”

One of the bright 2010 dairy spots is exports however a snag may be in the works, Natzke reported. Earlier this year, the European Union informed the U.S. that it is changing requirements for dairy product export certificates.

Since 1997, the EU has required imports of dairy products come from milk with a somatic cell count of less than 400,000 cells per milliliter. While that standard isn't changing, the EU said it will now require milk quality records for the milk from all individual farms used in the imported products, instead of just a single test from commingled milk.

National Milk and the U.S. Dairy Export Council asked the U.S. Food & Drug Administration to intervene, contending the issue is not related to food safety, but rather a potential artificial trade barrier. After meeting with U.S. government officials, the EU said it will extend the December 1 deadline to allow additional time to work out details.

(July 22, 2010) June butter stocks totaled 197.9 million pounds, down 14.6 million pounds or 7 percent from May and 65 million pounds or 25 percent below June 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon. May butter stocks were revised up nearly one million pounds from last month's estimate. 

The June American cheese inventory, at 628.4 million pounds, was up 13.5 million pounds or 2 percent from May and 26.4 million pounds or 4 percent above a year ago. May revised estimates were lowered nearly 2.3 million pounds.

Total cheese stocks amounted to over 1.027 billion pounds, up 10.4 million pounds or 1 percent from May and 39.2 million pounds or 4 percent above a year ago. May revised estimates were lowers nearly 2.5 million pounds. 

(July 22, 2010) National Milk has weighed in on the June 15 release of the Dietary Guidelines Advisory Committee’s report for 2010 (DGAC). Chris Galen likened it to the World Cup of food and nutrition policy in his weekly Thursday program. 

The guidelines are updated every five years and the dairy industry has a great deal riding on the outcome of this, according to Galen, because of the strong and prominent role that milk and dairy products historically have enjoyed.

Dairy critics have become bolder in the last decade or two, he said, and claim that alternative and imitation dairy products should be included or that a plant-based diet is preferable to consuming animal products.

This is why National Milk has been so involved in this process, Galen said, and issued comments on the advisory committee’s report affirming their recommendation of three servings of dairy products per day for children two and younger and that a range of dairy products, milk, cheese, and yogurt be included.

“They are nutrient dense and offer a big nutritional bang for the buck,” Galen argued, “And real milk and dairy products should be preferred over imitations because some of these plant-based foods like soy drink and rice yogurts etc. are trying to elbow their way into the guidelines and recommendations and we want to keep elbowing them out.”

The danger is that it comes down to politics versus science and Galen warned that food has become a lot more political over the last 10 years. “The stakes become higher and that’s why it’s very important to have sound science guiding the process that we’re undertaking,” Galen said.

Congress is also trying to renew the Child Nutrition Reauthorization Act which outlines what types of products are served in schools. Galen pointed out that these dietary guidelines have to be followed in school lunch programs and “that’s why these guidelines are so very important in making certain that dairy still has a prominent role in government feeding programs.”

Related Link: http://www.nmpf.org/washington_watch/standardsandsafety/nutrition

Given the outlook for feed and milk prices, the ratio will remain nearly the same in 2011. Although producer returns have improved over 2009, the improvement is not enough to result in higher average cow numbers this year or next.

Cow numbers are expected to average 9.1 million head this year and be about the same next year. According to the June Milk Production report, monthly cow numbers have increased fractionally since the first of the year but still trail yearearlier levels.

Meanwhile, milk per cow continues to trend upward on a year-overyear basis. The increased output per cow will more than offset reduced herd size this year, resulting in more milk. Production in 2010 is forecast at 191.2 billion pounds. Next year, the forecast decline in cow numbers is expected to slow even further and production per cow is expected to be closer to trend, rising 1.6 percent year-over-year. The result is an estimated 193.5 billion pounds of milk in 2011.

Economic recovery is continuing apace in Asia and South America and coupled with weaker production in Oceania has tightened global diary product supplies. However, prices were lower at the most recent world Dairy Trading auction. According to Dairy Market News, seasonally strong production in Northern Hemisphere countries and optimism for the upcoming season in Australia and New Zealand pushed down prices.

The lower auction prices may have anticipated greater global supplies in the coming year. U.S. Milk equivalent exports are projected to reach 5.3 billion pounds in 2010 and 5.1 billion pounds next year on a fats basis.

Exports on a skims-solids basis are expected to climb to 26.3 billion pounds this year and rise to 27.3 billion pounds in 2011. The skims-solids export forecasts are in the range of 2008 export totals after last year's falloff.

Correspondingly, U.S. imports will be lower this year. Milk equivalent imports are projected at 4.5 billion pounds on a fats basis and 4.6 billion pounds on a skim solids basis this year. Imports are forecast to rise slightly to 4.7 billion pounds on a fats basis and 4.8 billion
pounds on a skims-solids basis in 2011.

The most recent Cold Storage report shows butter stocks at the end of May at 16 percent below year-earlier levels and total cheese stocks are 5 percent ahead of a year ago. The relatively higher cheese stocks and relatively low butter stocks compared with last year are contributing to butter prices being higher than cheese prices.

The July Dairy Products report shows May end-of-month nonfat dry milk (NDM) stocks at 26 percent below year-earlier levels. Fats-basis domestic commercial use is projected to rise by 1.3 percent in 2010 and by another 1.5 percent in 2011. A rise in domestic commercial use is likely on a skims-solids basis as well, but the increase is expected to be a moderate
0.1 percent in 2010 and 0.9 percent in 2011. basis, ending commercial stocks are expected to tighten both this year and next, and on both a fats- and skims-solids basis. The drawdown in stocks on a skims-solids basis is expected to be more pronounced next year than in 2010.
The current situation has Class IV prices above Class III prices, a reflection of the tightness in fat availability. Lower fat tests have boosted butter prices and may have helped firm up cheese prices as well.

This situation should correct itself early in 2011. Prices for the major dairy products, except butter, are expected to rise slightly next year.

Cheese prices are expected to average $1.465-$1.495 per pound in 2010 and $1.520-$1.620 per pound in 2011. Butter prices are forecast to average $1.530-$1.590 this year and $1.400-$1.530 per pound next year. NDM prices are expected to average $1.195-$1.225 per pound this year and $1.235-$1.305 in 2011. Whey prices are forecast to average 36.5-38.5
cents per pound in 2010 and 37.5-40.5 cents in 2011.

Class IV milk prices are forecast to average $14.65-$15.05 per cwt this year and increase slightly to $14.40-$15.50 per cwt, in 2011. The Class III price is projected to average $13.80-$14.10 per cwt in 2010 and climb to $14.40-$15.40 per cwt in 2011. The all-milk price is expected to average $15.80-$16.10 per cwt in 2010, with a rise to $15.90-$16.90 in
2011.

(July 21, 2010) Downes-O’Neill dairy broker Dave Kurzawski said Monday’s Milk Production report was “a surprise.” Most analysts expected a 1-1 1/2 percent gain and he warned that this kind of bearish news should bring weaker prices but, if it doesn’t then the market likely believes July output will be hurt by the hot weather.

Kurzawski expects cheese prices to top $1.60 for the short term though he cautioned that “we’re in uncharted waters as far as forecasting how high this price will go.” “Will this be the case 60 or 90 days from now is too early to tell,” he said, “But that is the case right now.”

The butter price is the highest it has been in several years and showing no signs of weakness, according to Kurzawski. “Cream multiples in the country are still trading at $1.50 plus, meaning, if you buy a load of cream, you’re paying a butterfat plus this cream multiple.”

Typically at this time of year trading runs around $1.20, according to Kurzawski, so there’s real good strength in the cream market and on the butterfat side of things and he doesn’t see that going away either, any time soon. “Both the strength in the CME spot cheese market and the butter market right now may override this bearish milk production number,” he concluded.

(July 20, 2010) The cash block cheese price was bid another quarter-cent higher in the first day of trading of the third week of July as it anticipated that afternoon’s release of preliminary June milk production data. The barrels were quiet at $1.5250.

The University of Wisconsin Emeritus Professor Dr. Robert Cropp said in Tuesday’s DairyLine that hot weather is the likely cause. “Buyers evidently think that things will be tighter down the road even though we still have a good supply of cheese in storage,” Cropp said, in fact the highest level since 1984 and “sales are mixed.”

Mozzarella sales are good, according to Cropp, thanks to frozen pizza demand, but fluid sales are off, so the demand side is not really strong but the export market is good. He cited a new report showing May cheese exports were up 105 percent from a year ago and butter exports were up 266 percent.

He cautioned however that there’s plenty of milk and plenty of product out there but “the thinking is that things will get tighter and this is good news.” A cheese price that’s almost $1.58 is “reasonable,” he said, but he figured that would happen at the end of August or September.

Some believe that, even if June milk production was up a fair amount from a year ago, the market would pretty much ignore that, knowing that July output is going to be down due to hot weather. Cropp concurred and said that weather and the drop in milk composition, particularly butterfat but also protein, from a year ago will likely fall even more with the hot weather so product yield is down.

Production per cow in the 23 major States averaged 1,816 pounds for June, 67 pounds above June 2009. The number of milk cows on farms in the 23 major States was 8.35 million head, 87,000 head less than June 2009, but 10,000 head more than May 2010. 

California production was up 3.5 percent from a year ago,  with 53,000 fewer cows. However, output per cow gained 125 pounds. Wisconsin was up 5.1 percent, thanks to 5,000 more cows and 80 pounds more per cow. New York was down 0.2 percent, on 13,000 fewer cows but output per cow was up 40 pounds. Idaho was up 3.5 percent, on 10,000 fewer cows but a 30 pound increase per cow. Pennsylvania was up 1.1 percent. Cow numbers were down 4,000 head but output per cow was up 30 pounds. Minnesota was up 2.1 percent, due to 1,000 more cows and a 30 pound gain per cow.

The biggest increase was in Wisconsin, up 5.1 percent. Washington state and Michigan were next, both up 4.7 percent. 

The biggest decline was in Missouri, down 5.4 percent, due to 9,000 fewer cows, however output per cow was up 35 pounds from a year ago. Colorado was next, down 2.9 percent with 9,000 fewer cows, however output per cow was up 85 pounds. Texas had the third biggest drop at 0.5 percent with 18,000 fewer cows, but output per cow was up 65 pounds.

Milk Production in the April - June quarter totaled 49.7 billion pounds, up 1.7 percent from the April - June quarter last year. The average number of milk cows in the U.S. during the quarter was 9.11 million head, 151,000 head less than the same period last year.

(July 19, 2010) National Dairy Council’s (NDC) Vice President, Jean Ragalie was back in Monday’s “DMI Update” to continue last week’s update on the “Fuel Up to Play 60” program, of which the dairy check off is involved. She said it’s popular because it enables schools to get kids to eat better and be more active.

“When we talk about eating better,” Ragalie said, “That means eating foods that they (kids) should be eating more of.” She said it takes a positive approach to nutrition and a critical part of that is eating more low-fat and fat-free dairy products and making more of them available in schools.

That means getting kids to drink milk more often, according to Ragalie, and have it in more places in the school. The “New Look of School Milk” program does that, she said, and the popular plastic re-sealable bottles are now in 11,000 schools nationwide.

Healthier school pizza is another area, she said, meaning tasty low-fat cheese on the pizza and “we know kids love pizza.”

It also means looking at the nutritional value of flavored milks, Ragalie said, and “the opportunity that presents to get more kids to drink more milk, more often.”

Breakfast is another important area. Kids get more than 50 percent of their calories at school, according to Ragalie, and making sure they have access to a nutritious breakfast as well as lunch and snack time so “there’s a lot of opportunities for encouraging consumption of more low-fat and fat-free dairy products as well as fresh fruits and vegetables and whole grains.”  

Butter inched higher in an effort to bring sellers to the market closing Friday at $1.7750, up 1 1/4-cents on the week, 52 1/2-cents above a year ago, and the highest since December 2004. Only two cars were sold all week. NASS butter averaged $1.7201, up 1.7 cents. The Daily Dairy Report says cream is very tight due to strong Class II production and decreasing component levels in milk.

Cash Grade A nonfat dry milk closed the week at $1.2175, up three quarters of a cent. Extra Grade closed at $1.2250, down a half-cent. NASS powder averaged $1.2336, down 4.8 cents. Dry whey averaged 36.21 cents, down a penny.

(July 16, 2010) While much of the dairy economy has been gloomy for quite some time, one area that's beginning to brighten is in dairy trade. Dairy Profit Weekly editor Dave Natzke reported in his Friday program that USDA’s monthly estimates shows the value of May 2010 U.S. dairy exports reached levels the industry hasn’t seen in almost two years, when milk prices were at their peak.

May exports, estimated at $364 million, were up $67 million or 22 percent from April and nearly double the $182 million exported in May 2009. With May’s estimates, export values have exceeded imports in nine of the past 10 months.

The last time monthly U.S. dairy exports topped $300 million was in October 2007 through August 2008, according to Natzke, and the $350 million mark has only been topped five times in history.

In contrast to the big jump in exports, U.S. dairy imports were up just 2 percent in May from April, to $206 million, and were down 14 percent from May 2009. Year-to-date, cheese imports were down 8 percent compared to last year and means the fiscal year dairy trade surplus stands at about $387 million, Natzke said.

In another trade area that we don't talk much about, U.S. dairy cattle exports are also growing, Natzke reported. U.S. female dairy cattle exports in 2010 are on a record pace, bolstered by a strong U.S. supply of heifers, and demand from oil-rich countries. 

After a lull earlier in the decade, annual dairy cattle exports have doubled since 2007, to more than 16,000 head last year, Natzke reported. And, through the first four months of 2010, cattle exports had already topped 11,000 head. 

Mexico remains a leading market for U.S. dairy cattle, but oil-producing countries, such as Saudi Arabia, have sharply increased dairy cattle buying, and superior cow and heifer quality and health make the U.S. an attractive market, he concluded.

(July 15, 2010) The Agriculture Department today announced new one-year allocations under the Dairy Export Incentive Program for the July-June 2010/11 year. They include 150.4 million pounds of nonfat dry milk, 46.5 million pounds of butterfat, and 6.7 million pounds of various cheese.

The allocations, which correspond to World Trade Organization limits, are the same as the previous DEIP year however, because of current international and domestic market conditions, invitations for offers will not be made available until further notice, according to USDA.

(July 15, 2010) National Milk’s Chris Galen gave highlights of their latest Cooperatives Working Together (CWT) herd removal in his weekly Thursday broadcast and stated that “CWT in its current form, at its current funding and participation level cannot really continue much longer.” He said “That’s a decision that we’ll have to ask our members to make at the end of this year,” when asked if CWT would continue.

He reported that a little over 34,000 dairy cows will go to slaughter in the latest program and, when asked if that was what they expected, Galen replied “That it’s a little hard to say given the price level that we had offered,  how many farms would actually submit bids,” but he called the participation “good.”

Field auditors will begin visiting the accepted farms in the three dozen states this week to check production records, count cows, and tag them for processing. Just over 650 million pounds of milk will be removed, he said, making it an average size retirement. Of the three removals conducted in 2009, two were larger than this one, he said, and the last one in 2009 was smaller but “This still indicates there’s certainly a lot of financial stress on farms.”

He also pointed out that the average herd size which was accepted is 177 cows and very close to the national average herd size in the U.S. today.

CWT has been discussed in the larger context of farm policy reform, according to Galen, and is why NMPF’s “Foundation for the Future” proposal included a role for a voluntary CWT program in the future but “it will be a different role than what it’s been doing the past seven years so it’s a little bit soon to predict other than I do think that CWT will be different in the future than what it’s been since 2003.”  

(July 14, 2010) The Texas Beef Council works in partnership with the Texas Dietetic Association and DairyMax to engage dietitians and local media to communicate the benefits of lean beef and dairy in a healthy diet, according to the Texas Beef Council’s Stacy Bates. Bates reported in Wednesday’s DairyLine that they provide accurate, science-based nutrition information to consumers across the state and work with registered dietitians, via the Dietetic Association, to reach the media to teach consumers how beef and dairy fit into the diet as a “nutrient-dense food.”

Programs such as the “Creating the Perfect Plate,” and “Making Your Calories   Count With Nutrient Rich Foods” programs give dietitians ways to get those messages to consumers in a way that’s realistic and approachable.

Dietitians are accepting of the information, according to Bates, especially when you consider how nutrient rich both foods are and they’re willing  to communicate that information to people who are “more overweight than they have ever been but also more under nourished, so they can get the most nutrient bang for their calorie buck.”

When we think about nutrition, we’re really thinking about it differently, we’re thinking about including more nutrient rich foods like lean beef and low-fat dairy so they get the needed vitamins and minerals for the calories that we’re getting in return.

(July 13, 2010) Cheese prices keep climbing. The blocks were bid up another penny and a quarter in the first day of trading in the second week of July and hit $1.54 per pound. Barrels gained penny, hitting $1.51, also on one unfilled bid.

“That’s been our pattern essentially for the past seven or eight sessions,” said Downes-O’Neill dairy economist Bill Brooks in Tuesday’s DairyLine. “Sellers have moved away from the market and, instead of stepping back in around the $1.50 area where they have been the three or four other times that we’ve seen the price rallies, they’re stepping back even a little bit farther.

He said that’s probably not surprising, given the fact that we’re close to the middle of July and heat and humidity have been prevalent. It’s not been out of the ordinary, he said, but it has been prevalent in the eastern two thirds of the country and impacting milk production a little bit and components so “I guess we’re seeing a seasonal rise in our cheese prices.”

He looks for a peak in the $1.60s but, given some of the outside factors from an economic standpoint, that might not happen. He quickly added that, even last year’s terrible financial time, we ended up over $1.70 on cheese in December so “the $1.60s is not going to be out of the question and whether it goes any further than may depend on where our economic activity ends up at.”

The other point of attention is butter which gained three quarters of a cent and hit $1.77 on Monday. The last time butter was that high was October 2008, according to Brooks, and is “probably a more true reflection of demand but it’s also a situation where folks have been holding back and not selling as the market was going higher in anticipation of higher prices.”

Up until Monday, there had been an offer of $1.80 on butter for seven straight sessions, Brooks reported, but two trades occurred Monday at $1.77 so “we might be coming into a point where we’re going to see a little more activity as folks may start to think this market is starting to top out.” He adds that we’re only a couple months away from the Southern Hemisphere’s production session getting ramped up so that will take away some of the international inquiry that our domestic butter market has been getting.

He doesn’t expect that to attract butter imports because the international market is tight enough to take up everything that the Southern Hemisphere will produce but he warned that the higher prices will take away some of the domestic demand because prices are not to a level to attract imports.  

(July 12, 2010) Dairy farmers, through the National Dairy Council (NDC), have provided child nutrition, research, education, and communications to schools for over 95 years and the newest program is called “Fuel Up to Play 60.” NDC Executive Vice President, Jean Ragalie, reported in Monday’s “DMI Update” that it’s a partnership between the NDC, the National Football League, and USDA.

In its first year it’s already in 60,000 schools across the U.S., according to Ragalie, and is expected to continue to grow. When asked why it’s so popular, Ragalie said it came about at the right time and the right place.

“Kids are fatter, weaker, and wider than ever before,” Ragalie said, “And schools are a critical place for us to get our students and youth eating better and moving more and this program is a one-stop shop for schools to look at nutrition and physical activity.”

One of the “magic formulas,” she said, is that it encourages kids to eat more of the foods that they aren’t eating enough of, which includes low fat and fat free dairy products. The program will get even more dairy products into the schools, she concluded, “so kids are eating more nutrient rich foods than ever before.”

(July 9, 2010) Cash cheese strengthened in the shortened 4^th of July holiday week. The blocks closed that Friday at the year high $1.5275 per pound, up 7 1/4-cents on the week, and 43 3/4-cents above that week a year ago. Barrel closed at $1.50, up 10 cents, and 41 cents above a year ago. Only one car of block traded hands on the week and one of barrel. The lagging NASS-surveyed U.S. average block price slipped 0.4 cent, hitting $1.4025. Barrel averaged $1.4007, up 1.2 cents.

Butter closed at $1.7625, up 1 1/4-cents on the week, and 54 cents above a year ago. Nothing was traded all week. NASS butter averaged $1.7014, up 5.4 cents.

Cash Grade A nonfat dry milk closed the week at $1.21, down 2 cents, and Extra Grade closed at $1.23, down 1 1/2-cents. NASS powder averaged $1.2816, up 6.6 cents, and dry whey averaged 37.27 cents, up 0.9 cent.

Latest World Ag Supply and Demand Estimates

(July 9, 2010) The Agriculture Department continues to increase its estimate on U.S. milk production. Forecasts for 2010 and 2011 were raised slightly from last month in the latest World Agricultural Supply and Demand Estimates report issued this morning. Look for 2010 output to hit 191.2 billion pounds, up from the 190.4 billion estimated a month ago, and compares to 189.3 billion in 2009. 2011 production is now estimated at 193.5 billion pounds, up 500 million pounds from last month’s projection as milk cow numbers have remained higher than expected, according to USDA, and milk per cow is expected to increase more rapidly than previously forecast.

Exports for 2010 were raised reflecting strong sales of dairy products but fat-basis exports for 2011 were unchanged from last month as production of fat-based products by competing exporters is expected to increase in 2011. However, the forecast of skim basis exports is raised for 2011 as nonfat dry milk (NDM) exports will likely reflect improving economic conditions. Fat-basis imports for 2010 and 2011 were forecast lower reflecting tight world supplies and growing international demand.

The 2010 Class III milk price forecast was reduced on a lower cheese price forecast, but the Class IV price forecast is raised as the price forecast for butter is raised, more than offsetting a reduction in the NDM price. The 2011 forecast for butter is raised slightly but forecasts for other products are unchanged.

Look for the 2010 Class III price to average $13.80-$14.10 per hundredweight, down from the $13.95-$14.35 predicted last month, and compares to the 2009 average of $11.36. The 2011 average is projected at $14.40-$15.40, up a nickel from last month’s estimate. The 2010 Class IV price is projected to average $14.65-$15.05, up from $14.45-$14.95 predicted a month ago, and compares to just $10.89 in 2009. The Class IV will average $14.40-$15.50 in 2011, according to USDA, up a nickel from last month’s estimate. The all milk price is forecast to average $15.80-$16.10 for 2010 and $15.90-$16.90 for 2011.

(July 9, 2010) Early retirement will come to 34,442 dairy cows, according to a press release this week from the Cooperatives Working Together program (CWT.) 194 bids were tentatively accepted in its latest herd retirement and represent about 653,893,409 pounds of milk.

Dairy Profit Weekly editor, Dave Natzke reported in his weekly Friday DairyLine broadcast that CWT farm auditors will begin visiting the farms next week, checking milk production records, counting cows and then tag them for processing. All farmers will be notified whether their bid has been accepted no later than July 30, and farmers will have 15 days after notification to sell their herds.

(July 8, 2010) On June 24, the Federal Register published a correction to USDA’s June 14 final decision on the “fluid milk product” definition. This definition determines what products are priced at Class I, and which are required to pay the Class I price to the pool.

National Milk’s Roger Cryan reported Thursday that, five years ago, USDA had an accounting problem. Beverages existed that were formulated to compete with milk but the manufacturers of those beverages were paying the Class II price for the milk they used. Whey ingredients were not counted and fluid milk drinks that had less than 6 1/2 percent nonfat milk solids were exempted so a hearing to fix the problem was conducted, Cryan said, and cooperatives proposed that the solids test be dropped.

National Milk proposed a protein test for defining fluid milk products instead, Cryan reported, and USDA held a hearing in June 2005 where other proposals were made, including one to exempt yogurt drinks and kefir from Class I pricing.

Five years later a final decision was made and the good news for dairy farmers, according to Cryan, is that the standard was tightened in some respects. He said, it used to be that if a drink was under 6 1/2 percent nonfat milk solids, it would be exempt from Class I pricing even if it contained as much milk protein as regular milk; and whey solids were not counted as dairy solids in defining these products.

Now it also has to be under 2 1/4 percent protein so National Milk’s proposal was accepted, Cryan said, “And more of the products formulated to compete with milk that, generally are not as good as milk, would at least have to pay the Class I price for the milk they use.”

The bad news, he said, is that the proposal to exempt yogurt drinks and kefir was accepted so drinks containing at least 20 percent yogurt and kefir do not have to pay the Class I price. Those yogurt drinks are essentially the same as flavored milks, according to Cryan, and kefir has no legal definition so it’s uncertain how that will be measured.

Yogurt makers claim that their yogurt beverages are not drinks however NMPF argued that that “yogurt drinks” are clearly “drinks,” have nearly the identical composition and form as many flavored milks, and are clearly sold to be consumed in the same manner as milk.

(July 7, 2010) The International Dairy Foods Association’s (IDFA) Jerry Slominski gave DairyLine listeners the “Processor’s Perspective” on supply management in Wednesday’s broadcast. He said that supply management is being touted by some as the remedy for price volatility in dairy but IDFA and its membership are concerned that the industry is looking backwards. 

“Instead,” Slominski said, “I hope we focus on adopting changes that will allow the industry to innovate and grow by reforming our existing programs and adopting margin insurance and similar risk management proposals that are supported by many dairy organizations.”   

Supply management programs have been tried and have failed around the world, according to Slominski, and “while supporters argue that we only need to rework some of the details of supply management, a new trigger here, a different way of imposing quotas there, and it will be different this time. But, truth is, supply management is a failed idea from the past that should remain in the past.” 

He pointed to what has happened in Canada since a quota system was adopted nearly 40 years ago. Since then, Canadian milk production has actually declined while US production has increased by over 62 percent, Slominski said, and Canadians consume less dairy than before yet Americans are eating more dairy products overall. 

The argument that the Canadian quota system has saved their small farms is false, according to Slominski. Canada has seen the same steady decline in small farms in recent decades as we have here in the United States, he said.

“But, the most telling fact about the Canadian system is that Canadian companies are now investing in dairy facilities here in the US and elsewhere because they can no longer grow in Canada,” Slominski said.  “And, I just read how Canadian dairy farmers are buying operations in the US because they can no longer tolerate having someone tell him how much milk they can produce.”   

“2009 was a historically tough year for dairy farmers,” Slominski admitted, “But instead of adding an old idea of supply management to a patchwork of outdated and ineffective dairy policies, I hope we can support the good ideas that are out there  like risk management, that will help farmers get through difficult times.”

“The US dairy industry faces a tremendous opportunity to grow, to innovate and produce new exciting dairy products, and to keep and create jobs and help our nation's economy out of its current rut,” Slominski concluded. 

“We can do this if we allow everyone to compete and manage their farm businesses successfully but not if the pessimists continue to spin the myth that the grass is greener north of our border.”  

June Dairy Month ended on a pretty good week, with most prices inching higher. Alan Levitt, editor of the CME’s Daily Dairy Report, said in Tuesday’s broadcast that it’s no surprise that cheese is moving up but he warned that there may be some resistance at $1.50 if production is still somewhat heavy.

He cited last week’s Dairy Products report which showed May cheese output up 2 1/2-percent from a year ago and he reported that the CME futures contract is pricing cheese in the mid to upper $1.50s for the rest of the year.

Butter is at the highest it has been since the fall of 2008, according to Levitt, and cream supplies are still tight. Butter production was down 5 1/2-percent in May, he said, but said he had to “rain on the parade a little bit.”

Butter prices are climbing, he said, but the June Class IV price came in lower than expected because of a sharp decline in powder prices. He blamed a surge of discounted sales of nonfat dry milk out of California which sent the NASS surveyed prices and the California weighted average down. Survey prices were down 9-10 cents last week, according to Levitt, and volume was three or four times as much as had been selling in recent weeks.

A penny on nonfat is almost 9 cents on the Class IV price and the Class II, Levitt explained, and the Class I in Federal orders and California is currently driven by the Class IV, as is the 4a and the Class II so that took some off the end result.

“The powder price seems to be under some pressure,” Levitt reported, orders have slowed, inventories are building, and nonfat futures for the second half of 2010 are averaging just $1.16 “So there’s not a lot of expectation that prices are really going to take off any time soon.”  

Dairy Management Incorporated’s Joe Bavido talked about so-called social media in Monday’s “DMI Update,” and said interest and participation in social media has sky rocketed in the past year. In an effort to encourage producers to use videos to highlight their positive messages about dairy, DMI’s MyDairy program is sponsoring the Why I Love Dairy Video Contest.

If you participate in the myDairy Online Advocacy Program and have access to www.mydairytoolkit.com, you’re eligible to enter, according to Bavido. Write a script, recruit your “actors,” grab your video camera, Bavido said, and tell the world why you love milk and dairy products, being a dairy producer, caring for cows or just being part of the dairy business.

Your video should be fun, consumer-friendly and less than two minutes long. Possible themes include dairy product quality, safety and nutrition; animal care and well-being; sustainability and environmental stewardship; or dairy’s contributions to the economy and local communities. The most entertaining and creative videos will be posted to www.DairyFarmingToday.com and other Dairy Farming Today channels.

Dairy producers, dairy farm families, and dairy businesses, clubs and associations are all welcome to enter. A panel of expert judges will select four finalists, one from each entry category; the individual or organization submitting that video receives a $200 Target Gift Card. The Grand Prize winner will be selected at the 2010 World Dairy Expo in Madison, Wisconsin, based on onsite voting by Expo participants at the DMI booth, Sept. 28-Oct. 2. The Grand Prize is a Flip Cam UltraHD – High Definition Digital Camcorder.

For more details and an entry form, visit www.mydairytoolkit.com and enter your password. To join the myDairy program and obtain a password, email your name, contact information and a few sentences about yourself and your dairy affiliation to mydairy@rosedmi.com. Entries are due by 5 p.m. CST on Tuesday, August. 31, 2010.

(July 2, 2010) The cash block cheese price closed June Dairy month at $1.4550 per pound, up 4 1/2-cents on the week and 34 cents above a year ago. Barrel closed at $1.40, up a half-cent on the week, and 30 cents above a year ago. Ten cars of block traded hands on the week and three of barrel. The NASS U.S. average block price lost 3.6 cents, dipping to $1.4063. Barrel averaged $1.3885, down 0.2 cent.

Cash butter closed Friday at $1.75 up 3 cents on the week, 55 3/4-cents above a year ago, and the fifth consecutive weekly increase. Only one car was sold on the week. NASS butter averaged $1.6478, up 4.7 cents.

Cash Grade A nonfat dry milk lost 2 cents on the week, closing Friday at $1.23. Extra Grade held all week at $1.2450. NASS powder averaged $1.2159, down 9 1/2-cents, and dry whey averaged 36.34 cents, down 0.8 cent.

(July 2, 2010) The June Federal order Class III milk price was announced this morning by USDA at $13.62 per hundredweight (cwt.), up 24 cents from May, $3.65 above June 2009, and $1.39 above California’s comparable 4b price. The 2010 Class III average now stands at $13.58, up from $10.19 at this time a year ago, but compares to $18.26 in 2008.

Class III futures portend more gain to come. The July contract settled Thursday at $13.51, August at $14.34, and September at $14.87, with a peak of $14.85 in October before the seasonal downturn. The Class IV price is $15.45, up 16 cents from May and $5.23 above a year ago.

The NASS-surveyed cheese price averaged $1.4475 per pound, up 2.2 cents from May. Butter averaged $1.5946, up 1 1/2 cents. Nonfat dry milk averaged $1.2631, up 1.1 cent, and dry whey averaged 36.88 cents, up fractionally from May.

(July 2, 2010) The supply management drumbeat continues. Rob Vandenheuval, general manager of California’s Milk Producers Council’s (MPC), said in Friday’s broadcast that he is traveling around the country, explaining legislation that has already been introduced on Capitol Hill to deal with dairy’s financial crisis.

Referred to as the Dairy Price Stabilization Act, the MPC has actively supported the concept that would, as Vandenheuval put it, “try to align future growth in milk production with future growth in demand for milk.” He said it fits nicely with some of the other proposals being talked about, like National Milk’s which, he said, is much broader and includes a “basket of concepts.” The House bill MPC supports is HR5288, and the Senate version is S3531.

Some believe the Midwest is balking at supply management while the West is in favor of it, but it was not that long ago that the West was opposed and the Midwest had support for it.

Vandenheuval responded, saying that in the past, supply management conjured up the idea of a Canadian style quota system and, while there may have been some interest in that in the past, there’s never been enough broad support for it to make it happen.

The last couple of years we have seen the development of ideas such as the Dairy Price Stabilization Act or the Marginal Milk Pricing idea, which he said, has been popular in other parts of the country, where we get the same benefits of a supply management program, without having the downside of a quota system.

“We found a way to allow continued growth, which we need in this industry,” Vandenheuval said, “But do a better job of aligning that growth with demand.”

He admitted the Midwest is a high growth area right now and will be for the next decade so, “We have structured a plan that all parts of the country can be comfortable with. They can do the growing that they need to do, while at the same time insure that not all 65,000 dairymen are growing at the same time and create the chronic surpluses that we’ve seen over the last 10 to 20 years.” 

(July 1, 2010) The Agriculture Department’s May Dairy Products report puts butter production at 131.4 million pounds, down 1.7 million pounds or 1.3 percent from April and 7.8 million pounds or 5.6 percent below May 2009.  

Mozzarella cheese output totaled 293.9 million pounds, up 5.6 million pounds or 1.9 percent from April, and 22 million or 8.3 percent above a year ago.

Total Italian type cheese, at 369.5 million pounds, was up 2.9 million pounds or 0.8 percent from April, and 23.6 million or 6.8 percent above a year ago.

Cheddar production totaled 286.3 million pounds, up 15.3 million pounds or 5.7 percent from April, but 1.1 million pounds or 0.4 percent below a year ago.

American type cheese amounted to 369.3 million pounds, up 10.8 million pounds or 3 percent from April, and 1.3 million pounds or 0.3 percent above a year ago.

Total cheese output came to 877.9 million pounds, up 15.9 million pounds or 1.8 percent from April, and 21.8 million pounds or 2.5 percent above a year ago. 

Nonfat dry milk output, at 154.4 million pounds, was up 2 million  pounds or 1.3 percent from April, and 3.9 million pounds or 2.6 percent above a year ago. 

National Milk’s vice president of Scientific and Regulatory Affairs, Jamie Jonker, pointed out in Thursday’s DairyLine that the “medically important antimicrobial drugs” are drugs used in both human and animal medicine and, “when thinking of the drugs used in dairy animals we have to consider how they are used.”

The FDA is looking at antibiotics used in human medicine that are also used in feeds to improve feed efficiency or rate of gain in animals, according to Jonker, who said there are restrictions on the use of those drugs in dairy animals because they may show up as residues in the milk.

“We do have products that we use in dairy animals that are not used in human medicine such as ionophores,” Jonker said. They are used routinely in growing dairy animals and lactating dairy animals to improve feed efficiency and, as of now, are not considered in the FDA draft guidance.

One concern for dairy producers, according to Jonker, is medicated milk replacer which uses important antimicrobial drugs that are also used in humans but it’s unclear whether or not FDA views the way that they are used in milk replacers as growth enhancement, in other words, a non-therapeutic use verses a therapeutic use and that’s something that has to be explored further. National Milk will consider that, he said, as it prepares comments on the draft guidance in the next 60 days.

There is a legitimate concern regarding the overuse of antibiotics. Case in point; one can hardly buy a hand soap today that doesn’t have antibiotics in it. Jonker said it’s not just the use of antimicrobials in animal livestock but asks; “Is there a general overuse of antimicrobials across the general human population?”

“If you look at areas where you are most likely to find bacteria that are resistant to a lot of different types of antimicrobials, you find them in hospitals,” Jonker concluded, “So I think that there needs to be a balanced approach at looking an antimicrobial use, not just within animals but across all uses in animals and humans.”

Rob Vandenheuvel, of California’s Milk Producers Council, talks about the legislative proposals made on Capitol Hill to deal with dairy’s financial crisis and Dr. Paul Chandler, has his weekly “Nutrition Update” in our second half.

(June 30, 2010) June Federal Order milk prices are announced Friday morning. Market analyst, Alan Levitt, predicts the Class III price will come in at $13.63 per hundredweight. That would be a 25 cent increase from May and $3.66 above a year ago.

He predicts the Class IV price at $15.76. That would be a 47 cent increase from May and $5.54 above a year ago. Check here for the official prices along with California’s June 4a and 4b prices.

(June 30, 2010) DairyLine’s parent company, DairyBusiness Communications, in January, launched Say Cheese magazine. Editor Pat Dailey talked about its goals in Wednesday’s broadcast. Short answer, said Dailey, is to sell more cheese.

“We want to educate consumers and readers about the many different kinds of cheese that are available, how to use them, how to enjoy them and integrate them into their lives so that they understand how to navigate the cheese counter much more effectively.”

The magazine features a lot of educational material, according to Dailey, and introduces them to new cheeses, how cook with them, and how to pair them with different accompaniments.

Say Cheese started in California with 50-55,000 copies and the reception has been so strong, she said, that the third issue, coming in July, will go to Oregon and Washington, and the January issue will be expanded to the East Coast.

Say Cheese is targeted to consumers but Dailey is quick to point out that it came about from discussions with dairy farmers. Many farmers do farmstead cheese themselves, she said, or are working with cheese makers and manufacturers that purchase their milk, and the farmers felt that greater education about cheese was needed. For more information, log on to www.saycheesemedia.com.  

(June 29, 20101) The June Milk-Feed Price Ratio is 2.33, up from May's revised estimate of 2.19, according to USDA’s “Ag Prices” report issued Tuesday, and compares to 1.45 in June of 2009. 
 
The All Milk Price was estimated at $15.80 per hundredweight, up 70 cents from last month's estimate, and $4.50 above a year ago. 

Corn averaged $3.38 per bushel, down a dime from May, and 63 cents below a year ago. The soybean price, at $9.39 per bushel, was down two cents from May, and $2.01 below a year ago. Alfalfa baled hay was $119.00 per ton, down $2.00 from May, and $9.00 below a year ago.

(June 29, 2010) The cash block cheese market gave back all of Friday gain in CME trading the last Monday of June Dairy month. The barrel gave up most of Friday’s jump however butter held at an amazing $1.72.

The University of Wisconsin’s Dr. Brian Gould said in Tuesday’s DairyLine that the butter market is anticipating improved exports and given the “normal level of stocks,” any increase in butter exports is “really going to have a positive impact on prices,” and the upward trend since May is indicative of that.

Cheese prices are reacting the year over year increases in milk production, according to Gould, and the “exceedingly high stocks of cheese.”

Gould also commented on Friday’s Department of Justice/USDA workshop on competition and regulatory issues in the dairy industry. He said a primary concern of a lot of the attendees was a possible change in the Capper-Volstad act which exempts cooperatives from antitrust litigation. The message that came out from the workshop, he said, was that there would not be any changes.

The workshop featured three panels, one dealing with the state of the industry, one with market consolidation, and one on price and market transparency. Gould said it was a packed house and remains to be seen whether anything of substance will come of it.

He expressed concern in that most of the comments that were made in the two public comment periods were centered on milk pricing, which was really not the focus of the workshop.

Tomorrow on DairyLine, we'll learn about "Say Cheese" magazine and John Ellsworth has his final "Success Strategies" program. Next week we begin an exciting new series we're calling "The Bottomline," brought to you by the Professional Dairy Producers Foundation.

(June 27, 2010) Dairy farmers, processors, and lawmakers met in Madison June 25 for a Department of Justice/USDA workshop on competition and regulatory issues in the dairy industry. It was the third in a series but focused on dairy.

U.S. Agriculture Secretary Tom Vilsack acknowledged the financial struggle in rural America, particularly among dairy farmers, and emphasized the importance of cooperatives in agriculture and said the purpose of the workshop was not to weaken cooperatives.

Christine Varney, Assistant Attorney General, said they are working to improve competitiveness and is mindful of concern in the industry over competitiveness at the farm as well as at retail and foodservice, including school milk.

Dairy Profit Weekly’s Dave Natzke reported that a lawmaker and producer panel

dealt with market transparency as one of the issues in the morning session. Criticism was voiced of the Chicago Mercantile Exchange for being too thinly traded and easily manipulated.

The farmer’s share of the retail dollar was also raised, Natzke reported, as being squeezed by large retailers plus concentration and consolidation among large processors.

Wisconsin’s two Democratic Senators Herb Kohl and Russ Feingold as well as Secretary Vilsack and Secretary Varney said the CME would likely be a focus of an investigation.

Several farmers pointed to the CME as the reason for the severe market volatility in cheese which in turns affects all milk prices. There was also concern voiced regarding trading against interest, Natzke said, where organizations bought cheese at low prices on the CME and then sold it back on the CME at a higher price, effectively keeping a lid on prices.

(June 25, 2010) The cash dairy markets had little reaction to this week's Cold Storage report. Block cheese closed Friday at $1.41 per pound, up a half-cent on the week, and 29 cents above that week a year ago. Barrel closed at $1.3950, up a penny on the week and 30 1/2-cents above a year ago. Only two cars of block traded hands on the week and six of barrel. The lagging NASS-surveyed U.S. average block price lost 1.7 cents, slipping to $1.4414. Barrel averaged $1.3909, down 3.6 cents.

Butter closed Friday at $1.72, up 8 1/2-cents on the week, 51 1/2-cents above a year ago, and the highest it has been since September 2008. Only six cars were sold on the week. NASS butter averaged $1.6012, up 2 1/2-cents.

Cash Grade A nonfat dry milk held all week at $1.25. Extra Grade lost a half cent, closing at $1.2450. NASS powder averaged $1.3059, up 0.2 cent, and dry whey averaged 37.18 cents, up 0.4 cent.

(June 25, 2010) With U.S. milk production on the rise and more than a billion pounds of cheese in storage, attention remains on a controversial topic in the dairy industry, establishing supply-demand balance controls, according to Dairy Profit Weekly editor Dave Natzke in Friday’s DairyLine.

Earlier this month National Milk proposed sweeping changes to federal dairy policy, and one of the most controversial components is the Dairy Market Stabilization Program. Simply put, the plan deducts money from a dairy farmer’s milk check if national average income margins fall below trigger levels. Only dairy farmers who produce more their designated milk base would pay the deduction, getting a signal to cut the milk supply. 

Connie Tipton, head of the nation’s dairy processor organization, vowed to fight any proposals establishing supply management controls, saying a mandated program would raise consumer prices, decrease dairy product demand, encourage non-dairy substitutes in manufacturing, and hurt U.S. dairy exports.

That drew outrage from Rob Vandenheuvel, general manager of California’s Milk Producers Council, a dairy farmer organization which been promoting a supply-demand balancing program of its own as a means to help financially struggling dairy farmers. Another organization promoting its own supply management plan, Holstein USA, is holding its annual convention in Minnesota this weekend. One of the topics will likely be whether to endorse National Milk’s proposal.

Natzke went on to report on another controversial topic, this one related to dairy feed. The U.S. Supreme Court ruled 7 to 1 that a California federal judge went too far when he imposed a nationwide ban on planting genetically engineered alfalfa seed, known as Roundup Ready alfalfa.

USDA initially approved the seed in 2005, but U.S. District Court Judge Charles Breyer issued the ban, ordering the agency to conduct a more extensive environmental impact study of the herbicide-resistant seed. USDA issued a draft environmental impact statement last November, and is expected to take final action next spring, which could pave the way for farmers to plant the seed next growing season.  

(June 23, 2010) State Beef Council check off dollars help add value to beef and dairy farmers and help drive consumer demand for beef through events like the “Boilermaker” event in Utica, New York, in July, according to Jean O’Toole, New York Beef Industry Council director of retail, foodservice, and consumer events.”

Speaking in Wednesday’s DairyLine, O’Toole said the “Boilermaker” includes a 15K road race, the largest in the U.S., a 5K run, a three milk walk, and a kid’s run and beef is involved in a “massive way.” She reported that they have a large tent with the theme “Beef Up Your Health” which offers glucose and blood pressure testing, they have the “Beef It’s What’s For Dinner culinary stage to teach attendees how to cook beef properly, a “Beef Booth,” and a “Power of Protein challenge.”

Beef, veal, and dairy producers are competing in the ZIP team, which stands for zinc, iron, and protein. The local dairy princess is involved as Upstate Dairy donated chocolate milk to the kid’s run so they have a “nice recovery drink,” one of Chocolate milk’s many attributes, and the local Beef Council dietician is there for nutrition consulting.

The event draws radio, newsprint, and TV coverage and “When you have 100 runners wearing our “Team ZIP” shirts, you get the media’s attention.” The shirts read, “Beef, It’s What’s For Dinner.” 

(June 22, 2010) May butter stocks totaled 211.5 million pounds, up 5.2 million pounds or 3 percent from April but 41.8 million pounds or 16 percent below May 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon. April butter stocks were revised down nearly 1.3 million pounds from last month's estimate. 

The May American cheese inventory, at 617.2 million pounds, was up 7.7 million pounds or 1 percent from April and 31.1 million pounds or 5 percent above a year ago. April revised estimates were lowered nearly 4.5 million pounds.

Total cheese stocks amounted to over 1.018 billion pounds, up 10.4 million pounds or 1 percent from April and 48.4 million pounds or 5 percent above a year ago.

(June 22, 2010) Monday’s cash block cheese market gave back Friday’s half-cent increase and the barrels were unchanged prompting analyst Mary Ledman, Principal of Keough Ledman and Associates Incorporated in Libertyville, Illinois, to predict sideway trading for this week’s cheese market until we see a down tick in milk production.

She reported that there is a strong flush in the Midwest, pointing to Friday’s preliminary data showing Wisconsin up 5.8 percent in May, Minnesota up 3.8 percent, Michigan up 4.4 percent.

She said we have to see a moderation in the growth of milk production before we’ll see any clear upward signals on cheese prices.

Friday’s reported increase in milk output was not as much as many had expected however Ledman pointed to USDA revisions on March cow numbers which added about 6,000 head to the herd and USDA’s revisions have tended to be increases and not decreases, she said.

“There’s plenty of milk in most areas of the country,” Ledman said, and a considerable amount of condensed skim in the marketplace and she believes it’s being priced very competitively against nonfat dry milk powder and resulting in less cream being available in the marketplace and enhancing butter prices.

The cash butter price jumped a penny and three quarters Monday. She attributed that to seasonally low component levels in milk. Some believe that feed is having a negative impact as well but this is also the seasonal high demand period for butterfat and the increased sales of condensed skim is shorting the amount of cream available for the churns as well.  

(June 21, 2010) U.S. dairy exports are strong again and April data was reported in Monday’s “DMI Update” by the U.S. Dairy Export Council’s Margaret Speich. Speich reported that milk powder, whey proteins, cheese, butterfat and lactose exports posted gains over a year ago.

April exports were valued at $291 million, up 68 percent from a year ago, according to Speich, the highest figure (on a daily average basis) since September 2008. Looking more broadly, at the first four months, exports were valued at $1 billion, up 52 percent, she said.

On a product basis, exports of milk powder remained strong in April, up 51 percent in volume. Exports of whey proteins in April were the highest in two and a half years, principally led by big volume gains of 45 percent to China and 57 percent to Southeast Asia. In addition shipments to Mexico were up 12 percent.

Cheese exports in April a record high in volume, up 72 percent from April 2009. And, if you look at the first four months of this year, U.S. exports of cheese were up 43 percent, she said, and looking at a percentage basis, in the first four months of this year, U.S. exports were equivalent to 29 percent of the milk powder produced, 63 percent of whey proteins and 3.1 percent of cheese. Overall, April exports represented 12.3 percent of U.S. milk solids production, the most since August 2008.

April revised production at 15.2 billion pounds, was up 1.8 percent from April 2009. The April revision represented an increase of 14 million pounds or 0.1 percent from last month's preliminary production estimate.

Production per cow in the 23 major States averaged 1,889 pounds for May, 55 pounds above May 2009. 

The number of milk cows on farms in the 23 major States was 8.33 million head, 143,000 head less than May 2009, but 4,000 head more than April 2010.

California production was up 0.2 percent from a year ago,  with 65,000 fewer cows. However, output per cow gained 75 pounds. Wisconsin was up 5.8 percent, thanks to 5,000 more cows and 95 pounds more per cow. New York was down 0.4 percent, on 13,000 fewer cows but output per cow was up 30 pounds. Idaho was up 1.8 percent, on 4,000 more cows and a 20 pound increase per cow. Pennsylvania was up 1.3 percent. Cow numbers were down 6,000 head but output per cow was up 40 pounds. Minnesota was up 3.8 percent, due to 1,000 more cows and a 60 pound gain per cow.

The biggest increase was in Wisconsin, up 5.8 percent. Washington state was next, up 5 percent,  due to 10,000 more cows and a 15 pound increase per cow. Michigan saw the third biggest production increase in the nation, up, 4 percent, with 1,000 more cows and a 80 pound increase per cow.

The biggest decline was in Missouri, down 7.5 percent, due to 9,000 fewer cows, however output per cow was up 10 pounds from a year ago. Colorado was next, down 6.3 percent with 11,000 fewer cows, however output per cow was up 50 pounds. Kansas had the third biggest drop at 2.7 percent with 5,000 fewer cows, but output per cow was up 25 pounds.

(June 18, 2010) The cheese price roller coaster headed back up mid way through June Dairy Month as the market awaited the May Milk Production report which came out Friday afternoon after our deadline. Cash block closed that morning at $1.4050 per pound, up 3 1/2-cents on the week, 28 3/4-cents above a year ago, and reversed three weeks of decline. The barrels closed at $1.3850, up 5 1/2-cents on the week, and 31 1/2-cents above a year ago. Fourteen loads of block traded hands on the week and 35 of barrel, all of them on Friday. The NASS-surveyed block price average lost a penny, slipping to $1.4581. Barrel averaged $1.4274, down 5.2 cents.

Butter continued its climb, closing Friday at $1.6350, up 2 1/2-cents on the week, and 43 cents above a year ago. Only three cars were sold on the week. NASS butter averaged $1.5766, up 3.4 cents. NASS powder averaged $1.3039, up 0.1 cent, and dry whey averaged 36.83 cents per pound, down 0.3 cent.

The two week NASS-surveyed butter price averaged $1.5620 per pound, down 2.6 cents from June. Nonfat dry milk averaged $1.3037, up 5.8 cents. Cheese averaged $1.4726, up 6.1 cents, and dry whey averaged 36.98 cents, up just under a penny.

2-week Product Price Averages:

(June 18, 2010) The Obama Administration’s look into antitrust and competitive issues focuses its attention on the dairy industry next week. Dairy Profit Weekly editor Dave Natzke reported Friday that representatives of both the USDA and Department of Justice, including U.S. Agriculture Secretary Tom Vilsack, U.S. Attorney General Eric Holder, and Assistant Attorney General for the Justice Department's Antitrust Division Christine Varney, will participate in what's billed as a “public workshop” to examine competition and regulatory issues in the dairy industry.

Wisconsin Gov. Jim Doyle, state ag secretary Rod Nilsestuen, as well as many of Wisconsin’s Democratic congressional representatives will participate, according to Natzke. Organizers have promised time for dairy farmers, processors and academia to provide input during the workshop, which is set for 9 a.m.-6 p.m., June 25, on the University of Wisconsin campus in Madison, Wis.

“The Obama Administration has stepped up investigations related to antitrust issues in the dairy industry,” Natzke reported, “And Wisconsin is in the center of one of those storms.” Last January, the Justice Department filed a suit challenging Dean Foods’ 2009 acquisition of two fluid bottling plants from Foremost Farms, a Wisconsin-based cooperative, alleging the deal hurt competition in the sale of milk to schools and stores in the Upper Midwest. Deans and Dairy Farmers of America, the nation’s largest dairy cooperative, also face an antitrust lawsuit in Vermont.

The dairy session is the third in a series of five workshops planned by the Obama Administration. The Department of Justice and USDA will hold another public workshop, Aug. 27, in Fort Collins, Colo., where the focus will be on the livestock industry. That will be followed by a workshop on financial margins in agriculture, December 8, in Washington, D.C.  Previous workshops covered general agriculture and poultry industries, according to Natzke.

The general public and media interested in attending the Wisconsin workshop should register at www.surveymonkey.com/s/V3FHXPY

Please visit the Antitrust Division's events website: www.justice.gov/atr/events.htm, 
or contact agriculturalworkshops@usdoj.gov for more information.

(June 17, 2010) National Milk CEO Jerry Kozak talked about the Federation’s “Foundation for the Future” plan on Thursday. He called it a “comprehensive look at all aspects of our milk pricing system.” He admitted they have a “massive challenge” to communicate what the plan is about, explain the reasoning behind its features, and welcomed input from producers and others in the agricultural community.

Various other proposals have already been made such as the Specter-Casey bill, Holstein Association plan, Milk Producer’s Council’s plan, and when asked about charges that National Milk being late in coming to the program, Kozak explained that their proposal was a year-long project dealing with a lot of “tough stuff.”

He referred to National Milk’s expertise in dairy policy and the time it took to research the direction to go. He said they evaluated many of the other proposals and included a number of the ideas from other groups in the Federation plan.

“Rather than saying we like or don’t like certain proposals,” Kozak said, “I think it’s far better to focus on the fact that the difference with our proposal is that it is a comprehensive proposal.” He said that it looks at revising farm safety nets, revising the Federal order system, establishes a new margin protection program, and establishes a dairy market stabilization effort.

“If you look at all of the other proposals,” Kozak said, “Most of them are sort of single focused and, with all due respect to proposals that have been put up by the Congress, I think we’re in a better position to try to control our destiny and our membership is in a better position to tell the Congress what we think we should do rather than for the Congress to tell us what we should do.”

(June 15, 2010) Downes-O’Neill dairy broker Dave Kurzawski looks for more upside on the cash cheese market. Speaking in Wednesday’s DairyLine, Kurzawski said the market appears to be in balance in the mid $1.30s per pound “although the buyers put up a pretty good fight last week,” and he expects them to be back this week.

He adds that, when you also consider the butter price ($1.6150), which he doesn’t see dropping any time soon, that gap will likely be narrowed and cheese will soon be above $1.40 again.

He doesn’t expect much market reaction to National Milk’s proposed changes to U.S. dairy policy but quickly added that the market has “substantial premium on Class III futures right now,” but doesn’t see anything in the Federation’s proposal that is bullish or bearish for milk. He called it “progressive,” and one he likes.

Dairy processors have also praised the plan with the exception of its supply management provisions. Kurzawski said that when you compare National Milk’s version of supply management with other proposals, the Federation plan is leaner and more mild and there’s a sunset provision and “appears to be a little bit more palatable than some of the other growth management programs that are being discussed.”

When asked about the CME’s announcement of the June 21 startup of a new cheese futures and options contract, Kurzawski said “it’s going to be a great contract,” praising it as another risk management tool for dairy producers or end users.” He warned that a lot of times a new contract will have problems in it infancy but he doesn’t believe that will be the case for this one but “only time will tell.” For more information, call Dave at 1-800-231-3089.

A grassroots effort is underway for a 4^th of July Milk Dump to get U.S. lawmaker’s attention to the financial plight of dairy farmers, organized by West Winfield, New York dairy producers Dave and Robin Fitch. Robin Fitch told DairyLine “We have been suffering in the dairy industry for over a year and a half now with the lowest of lows” (milk prices).

Fitch said officials told her there was no hope for change until the 2012 Farm Bill but dairy farmers across the country are expressing support for the Milk Dump effort, which is not being organized by any particular farm group. She added that the effort is not just for farmers but for consumers as well who “want safe quality food that is produced in our country.”

Milk dumps in the past have garnered headlines but have not successfully achieved change in police or prices but Fitch argued; “We can all sit at our tables and we can talk and we can complain but until we do something, nothing is going to change so it is up to the farmer to take back their independence and make the stand that we need to do something to make a change.” For more information, call Dave or Robin at 315-822-5093 or email to fitchrnd@yahoo.com.  

Listen to audio 

For more information, call Dave or Robin at 315-822-50093 or email to fitchrnd@yahoo.com.

The plan would transition existing safety nets into a Dairy Producer Margin Protection Program to guard against periods of severe financial pressures, establish a Dairy Market Stabilization Program to help address periodic imbalances in production and demand and reform the market order program.

Dairy Farmers of America CEO Rick Smith offered a ringing endorsement of the proposal in a June 10 conference call, explaining that, as dairy prices are now determined by global factors, the resulting extreme price volatility never allows dairy farmers to succeed.

He called the current down cycle “unparalleled” in severity and length, causing many farmers to lose a generation of wealth. He charged that “We really need to take the risk of new dairy policy and we can’t wait for the 2012 Farm Bill.”

National Milk’s plan also drew praise from dairy processors. The International Dairy Foods Association (IDFA) commended the margin insurance program but warned that the Dairy Market Stabilization Program would have “dire consequences for our industry and consumers.” IDFA said “Supply management will decrease demand for dairy products and dairy ingredients,” and “will drive low-cost non-dairy substitutions in foods and restaurants across the country.”

(June 11, 2010) In a special broadcast on Friday, DairyLine listeners learned of an innovative way to control a problem prevalent on most dairy operations, flies. Central Life Science regional sales manager, Rick Short, talked about ClariFly larvicide, which is a fly control that’s included in the feed.

ClariFly can be fed to beef and dairy cattle at all stages, lactating cattle, even veal and baby calves, Short said, and can actually be included in milk replacer.

Dosage depends on cow size and consumption, according to Short. It’s a small amount, he said, so there really no set dosage other than weight and consumption and is fed on the “30/30 rule.” Feed it 30 days before your last frost in the spring, Short said, until 30 days after your first frost in the fall.

“The old timers used to say we need a hard winter to kill all the bugs but that’s not actually an accurate statement, especially as far as flies are concerned, Short warned. “When flies hatch out, they hatch out in the manure before it starts getting very cold and when they hatch out, they will grow very slowly and, when the spring rain and the warm weather arrives, they hatch out as adults.”

ClariFly can go into pelleted or extruded feed as it’s a very stable molecule, he said, and there’s no need to be concerned about residue in the milk or meat. It even has Codex approval (World Health Organization) so “what goes in comes out in the manure.”

ClariFly mainly works on house flies, according to Short, and stable flies, which are the blood suckers. Cattle can lose blood from these flies, he said, and flies have been known to transfer over 60 diseases so, other than the bother that flies are to people and cattle, you also reduce the possible transfer of diseases, he concluded. For more information, log on to www.centralflycontrol.com.

(July 10, 2010) In a national conference call on Thursday, (June 10), Dairy Farmers of America CEO Rick Smith offered a ringing endorsement of the new dairy policies proposed yesterday by the National Milk Producers Federation, calling for, among other things, supply management.  He explained that as dairy prices are now determined by global factors, the resulting extreme price volatility never allows dairy farmers to succeed. 

He called the current dairy down cycle “unparalleled” in both its severity and its length, causing many farmers to lose a generation of wealth.  He went on to say that even in high price cycles, farmers lose because demand for dairy products is curtailed, reducing market opportunities. 

“We are in a global dairy economy and if it’s to be survival of the fittest, not even the fittest can survive,” he emphasized.

“We really need to take the risk of new dairy policy,” he said, “and we can’t wait for the 2012 Farm Bill.”

He termed the vote “historic” at NMPF in support of the program called “Foundation for the Future” because there were only two dissenting votes, and he said even those two were not in opposition to the production management aspects of the plan.

Smith said there is a national dairy farmer consensus advocating change, citing support not only from the cooperative members of NMPF but also from a coalition of dairy groups such as the Milk Producers Council in California, Dairy Farmers Working Together in the Northeast and the Holstein Association USA.

Also during the hour and a half long call, Smith explained that in the second half of 2008, during a period of high dairy prices, DFA had alerted its members to coming price difficulties.  He said no one, however, predicted the extreme depth and continuing duration of the current down market.  He said that while there are some signs of improvement, he couldn’t say that the near term will show any marked improvement.

He described a DFA member survey taken in mid-2009, the depth of the crisis, with 25% of the members responding.  He said it was a tribute to dairy farmer persistence that 90% said they saw the global market as an opportunity but that over 80% also said a change in dairy policy was needed to manage the resulting volatility.

The status quo isn’t working, Smith said.  The existing U.S. safety nets are not working.  The safety net that exist currently only helps those competitive exporters around the world but that does virtually nothing for us here at home.

He said producers do not want to receive direct payments from the government.

He advocated his strong support for the key elements of the NMPF program including reform of the Federal Milk Marketing Orders, disincentives for producers when there is not market for their milk with some form of price stabilization.

Also during the call, Smith reviewed DFA operations, saying the balance sheet is stronger than it’s ever been, the direction is to derived more income from the value added manufactured dairy products, allowing farmers to share in those higher margins.  He explained that during 2009, special payments of over $40 million had been made to members but he said they were only tokens and could not do enough to stem producer losses on the farm.

He described the cooperatives business units designed to help farmers reduce operating costs, including divisions for risk management, lending, on-farm energy, grazing and dairy supplies.

He says DFA remains focused on its core values of member service, integrity and quality while acknowledging that some “legacy issues” remain, a carry-over from past aggressive operating practices.

Based in Kansas City, MO, DFA is the nation’s largest dairy cooperative with 18,000 members producing 20% of the U.S. milk supply.

(June 10, 2010) In news from “the Hill;” National Milk expressed concern this week that dairy farmers will need to file a plan to avoid oil spills from their bulk tanks if changes in pending Environmental Protection Agency (EPA) regulations aren’t changed. The way they are written now, the butterfat in milk would be considered an oil and thus the law of unintended consequences is about to kick in this fall.

NMPF’s Jamie Jonker reported in Thursday’s DairyLine that the regulations referred to as the Spill Prevention Control and Countermeasure Rule (SPCC) looks to insure that oils are not spilled from containers and if it does happen, there’s a way to quickly clean up those spills. Animal fats would fall under this definition he said, and that would include milk.

The regulations have nothing to do with the oil gushing out of the ocean floor in the Gulf as they were written long before that occurred but revisions

NMPF worked with the EPA and other interested groups to obtain an exemption for bulk storage of milk products and the EPA was very ameanable to that in January of 2009, he said, but has not finalized that exemption yet.

It’s important for the dairy industry because of the approaching November compliance deadlines so, without that exemption, there’s significant uncertainty how dairy farmers would be affected.

The International Dairy Foods Association last week issued a press release saying that it had learned that the EPA had agreed to the exemption and Jonker said they have heard the same rumors and hopes they are true but there has not yet been an official statement from EPA to that effect.

(June 4, 2010) The May Federal order Class III benchmark milk price was announced this morning by USDA at $13.38 per hundredweight (cwt.), up 46 cents from April, $3.54 above May 2009, and 98 cents above California’s 4b cheese milk price. That pulled the 2010 Class III average to $13.57, up from $10.23 a year ago, but compares to $17.86 in 2008.

Thursday’s Class III futures portend a $13.52 Class III price in June, $13.28 in July, $13.87 in August, $14.52 in September, and a peak of $14.70 in November before retreating.

The May Class IV price is $15.29, up $1.56 from April and $5.15 above a year ago.

The four week-NASS-surveyed cheese price averaged $1.4257, up 4.3 cents from April. Butter averaged $1.5801, up 10.3 cents. Nonfat dry milk averaged $1.2520, up 13.1 cents, and dry whey averaged 36.45 cents, virtually unchanged.

(June 3, 2010) The Agriculture Department’s April Dairy Products report puts butter production at 138.6 million pounds, down 0.1 percent from March and 3.6 million pounds or 2.5 percent below April 2009.  

Mozzarella cheese output totaled 288.6 million pounds, down 11.7 million pounds or 3.9 percent from March, but 18 million or 6.6 percent above a year ago.

Total Italian type cheese, at 366.5 million pounds, was down 14.1 million pounds or 3.7 percent from March, but 20.5 million or 5.9 percent above a year ago.

Cheddar production totaled 272.7 million pounds, down 9.3 million pounds or 3.3 percent from March, but unchanged from a year ago.

American type cheese amounted to 360.1 million pounds, down 2.2 million pounds or 0.6 percent from March, but up 5.3 million pounds or 1.5 percent from a year ago.

Total cheese output came to 862.8 million pounds, down 28.8 million pounds or 3.2 percent from March, but 15.2 million pounds or 1.8 percent above a year ago. 

Nonfat dry milk output, at 150.1 million pounds, was up 10.7 million  pounds or 7.7 percent from March, but 3 million pounds or 2 percent below a year ago. 

(June 1, 20101) The Agriculture Department’s latest “Ag Prices” report shows an improved profit for dairy farms in May. The May index, at 115, is up 2.7 percent from a month ago and 29 percent higher than May last year.

The May all milk price of $15.00 per cwt is up 40 cents from last month and $3.40 from May 2009. The fluid grade milk price increased 40 cents and the manufacturing grade milk price 20 cents from the previous month.

(May 21, 2010) April butter stocks totaled 207.6 million pounds, up 11.7 million pounds or 6 percent from March but 32.4 million pounds or 14 percent below April 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon. 

The April American cheese inventory, at 614 million pounds, was up 11.9 million pounds or 2 percent from March and 36.6 million pounds or 6 percent above a year ago. March revised estimates were raised up nearly 1.3 million pounds.

Total cheese stocks amounted to 1.012 billion pounds, up 17.2 million pounds or 2 percent from March and 63.2 million pounds or 8 percent above a year ago.

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All rights reserved ª DairyLine 2000-2010
1843 Front Street Lynden, WA  98264
360.354.5596 ext:101 
E-mail: bbaker@dairyline.com

PrivacyStatement

DairLline Radio is an integral part of DairyBusiness Communications. 
Visit our site for complete company information.  This site contains links to other Internet sites. These links are not endorsements  of any products or services in such sites, and no information in such site has been endorsed or approved by this site. http://www.dairybusiness.com