Dairyline.com Blog

The 2010 planting season is getting near, but we haven’t closed the books on the 2009 harvest season quite yet. Dairy Profit Weekly editor Dave Natzke reported Friday that last fall’s weather-delayed harvest forced USDA to re-survey some Great Lakes and Southeast U.S. crop growers in February, and this week’s crop production report lowered 2009 estimates for both corn and soybeans, although just slightly.

Corn production was lowered 20 million bushels, Natzke reported, but the revised estimate of 13.1 billion bushels is still a record high. Combined with lower expected exports due to large foreign supplies, dairy producers buying feed should see slightly lower corn prices, he said, with the middle of the projected range at about $3.60 per bushel.

The news is somewhat different for soybeans however, with 2009’s production revised at 3.36 billion bushels, down about 2 million bushels from the January estimate. Ending stocks were reduced thanks to increased activity in the export market, and this week’s Senate passage of a biodiesel tax credit could mean more soybeans will be used for fuel production, Natzke warned. USDA put the mid-range season-average soybean price at the farm level at $9.45 per bushel, and a soybean meal price at $295 per ton.

Natzke went on to report that the first of five joint Department of Justice/USDA’s workshops on competition and regulatory issues in agriculture began March12, in Ankeny, Iowa. DOJ’s Antitrust Division chief Christine Varney and U.S. Agriculture Secretary Tom Vilsack were expected to participate.  A session dedicated to concentration and vertical integration in the dairy industry will be held June 7 in Madison, Wis.

Natzke ended his report with a plug for one of the top dairy producer meetings of the year, the Professional Dairy Producers of Wisconsin annual business conference, March 16-17, in Madison, Wisconsin.

dairyline Dairy Profit Weekly, Dave Natzke, Todays Dairy News

National Milk’s final Import Watch for 2009 reflects the economic situation of the U.S. and the world, according to Jim Tillison in Thursday’s broadcast. Imports of all dairy products except butter and Cheddar cheese were down from a year ago. Butter imports were up slightly from 2008 and 2007, he said, but comparable to 2005 and 2006.

The Import Watch monitors four types of cheese, according to Tillison, and Cheddar showed the only increase from 2008 but was comparable to imports in 2005-2007. Imports of American, Italian, and Goya cheeses were all down.

Perhaps the most significant figure regards milk protein concentrate (MPC) and similar products, Tillison said, and he reported that imports of MPC, casein, and casinates were down significantly in 2009 from 2008 and were at their lowest levels in the last five years.

U.S. manufacturers are also producing more of the products we import. For the first time, USDA’s January report included U.S. production of MPC. Tillison said “That’s significant because it means domestic MPC production is becoming a factor and is hopefully displacing MPC imports with U.S. produced milk.”

dairyline Todays Dairy News, nmpf

The Agriculture Department has raised its 2010 milk production estimate in its latest World Agricultural Supply and Demand Estimates report issued this morning to 189.5 billion pounds, up 600 million pounds from last month’s projection, and compares to 189.3 billion in 2009.

The report cites relatively low cow slaughter and reports that January milk cow numbers were higher than expected. The pace of herd reduction is slowed from last month, the report said.

Dairy exports on both a fat and skim-solids basis were lowered due to slightly weaker-than-expected international demand during the early part of the year. Imports for 2009 were adjusted to reflect December trade.

Fat and skim-solids ending stocks were forecast higher for 2010 as production was increased and exports reduced.

Cheese prices were reduced as higher stocks are expected to pressure prices. Butter price forecasts were raised slightly on the strength of current demand although higher milk supplies and weaker cheese prices may encourage high butter production pressuring prices later in the year. Nonfat dry milk prices were forecast lower as export demand lags. Whey prices were raised slightly reflecting recent market strength.

The Class III milk price was reduced as weaker cheese prices more than outweigh gains in whey prices. Look for a 2010 Class III average of $14.20-$14.80 per hundredweight, according to USDA, down from the $14.90-$15.60 expected a month ago. The 2009 average was $11.36.

The 2010 Class IV price was lowered reflecting weaker nonfat dry milk prices which more than offset higher butter prices. The Class IV price is projected to range $13.65-$14.35, down from $13.95-$14.745 expected a month ago. The 2009 average was $10.89. The 2010 all milk price is forecast at $15.55-$16.15 per cwt.

dairyline Government Reports, Todays Dairy News

Dairy farms are an important part of a local economy, according to Pennsylvania dairy producer and Beef Council Board member, John Ligo.  Ligo pointed out in Wednesday’s “Beef Board Update” that he operates a mid size operation with about 200 cows and grows most of his crops. He pays wages for about 6-8 employees per year, totaling about $150,000 per year, plus taxes etc., so every seven years he pays out about $1 million in wages, he said.

 

 Beef Board Update with John Ligo: Play Now | Play in Popup | Download

Ligo reported that he pays taxes on a “fair amount of property” of about $20,000 per year or about $100,000 over a five year period. He also points out that his operation is not a great user of municipal services in that they do not require much in the way of police or fire protection and there’s no water or sewer services or other things that residential housing requires.

Revenue per cow on a dairy farm runs about $3,000-5,000, according to Ligo, and compares to about $300-500 per cow on a beef operation. Revenue per acre runs about $1500.00, compared to $350-$450.00 on a grain farm, he said, “So the amount of economic activity is very intense.”

The Pennsylvania Center for Dairy Excellence believes that about $13,000 per cow is returned in local economic activity so a dairy like Ligo’s would account for about $3.25 million worth per year, according to Ligo.

Another benefit of Ligo’s dairy is roadside pickup of litter on four miles of frontage, 1,000 acres of recreation, be it for nature observers, hunters, or fishermen, sweet corn sales, and even a little snow plowing. “We’re proud of what we can do for the local area,” he concluded

dairyline Cattlemen's Beef Board, Todays Dairy News, podcasts

This week’s Success Strategies podcast, John Ellsworth shares the best ways to avoid the feeling of entitlement.

 

 Success Strategies with John Ellsworth: Play Now | Play in Popup | Download

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Cheese prices continued to bleed the second Monday of March and Dairy Profit Weekly’s headline that forecasts may have been too optimistic may be hauntingly true. The University of Wisconsin’s Dr. Robert Cropp said in Tuesday’s DairyLine that a seasonal downturn after the first of the year was anticipated but “I don’t think anybody anticipated it to be this low.” He doesn’t think it can go much lower but the government support price is $1.13 on block and $1.10 on barrel.

Cropp said the January Milk Production report did not show a large enough decrease in milk production or in cow numbers, cheese stocks are relatively high, and cheese production is high, but he warned that “This market has to start strengthening some as we move into next month.”

Cash butter on the other hand continues to climb, gaining 2 cents Monday and hit $1.47, driven for the most part by the Easter-Passover holiday demand. Some people are building stocks for the summer, Cropp reported, thinking that supply will be tighter in the summer, there’s been some interest on the export market, and butter stocks are down a little from a year ago.

World nonfat dry milk prices are substantially above U.S. prices, although they have softened from a month or so ago according to Cropp, but likely got a little too high and demand resistance formed.

The main powder exporters, New Zealand and Australia, have not seen the increase in milk production they had expected and world demand has picked up, Cropp concluded, but many in the U.S. expect U.S. powder exports to climb. Exports did improve in October, November, and December from earlier in 2009.

dairyline Market Analysis, Robert Cropp, Todays Dairy News

DairyLine welcomes ClariFly® Larvicide as our newest sponsor. ClariFly® Larvicide is a feed supplement that prevents adult house flies, stable flies, face flies, and horn flies from developing in and emerging from the manure of treated cattle.

Katie Carriker is Western Regional Sales Manager for Central Life Sciences. We had the opportunity to speak with her at the recent Oregon Dairy Farmers Association Meeting in Bend, Oregon.

 

 Katie Carriker Discusses ClariFly Larvicide: Play Now | Play in Popup | Download

dairyline Todays Dairy News, podcasts

This week’s Pfizer Animal Health Vet Visit, Dr. Mark Kirkpatrick, Pfizer’s Dairy Specialist, discusses how to have an effective sub clinical mastitis protocol that can lead to higher economic returns for the dairy producer.

 

 Pfizer Vet Visit with Dr. Mark Kirkpatrick: Play Now | Play in Popup | Download

dairyline Vet Visit, podcasts

Dairy Management Incorporated’s Joe Bavido completed his series in Monday’s “DMI Update,” outlining the accomplishments of dairy check off partnerships in 2009 in driving dairy sales.

 

 DMI Update with Joe Bavido: Play Now | Play in Popup | Download

He emphasized how important collaboration is and how the Innovation Center for U.S. Dairy brought industry leaders together to “develop action plans which are in line with dairy producer priorities.”

The Innovation Center focuses on health and wellness, he said, product development and information, sustainability, consumer confidence, and globalization. More than 180 companies and 400 individuals were united in this effort, he said, to “protect and grow sales.”

Producers, through the U.S. Dairy Export Council, continued to help protect global markets for U.S. dairy exports, Bavido reported, and more than 9 percent of U.S. milk in 2009 was exported, despite the global economic downturn.

National and local dairy checkoff organizations also helped recruit thousands of dairy producers to tell their story to consumers, Bavido said. Check off staff developed enhanced training workshops that helped dairy producers and allied industries communicate on farm issues, including animal care and environmental stewardship, through community relations, presentations to local organizations, one-on-one conversations, and the newest venue, social media.

“This is just some of the many ways that the dairy check off program has been helping to use partnerships and innovation to drive sales in 2009,” he concluded.

dairyline DMI, Todays Dairy News, podcasts

The February Federal order Class III milk price was announced by the Agriculture Department Friday morning at $14.28 per hundredweight (cwt.), down 22 cents from January, but $4.97 above February 2009, and $1.33 above the comparable California 4b price. Class III futures portend a couple more months of loss. The March contract settled Thursday at $12.88, April $12.87, May $13.09, June $13.88, and July at $14.52, with a peak of $15.19 in September October. The February Class IV price is $12.90, down 95 cents from January but $3.45 above a year ago.

The four-week NASS-surveyed cheese price averaged $1.5110 per pound, down 2.6 cents from January. Butter averaged $1.3609, virtually unchanged. Nonfat dry milk averaged $1.0812, down 11.2 cents, and dry whey averaged 39.25 cents, up fractionally.

dairyline Government Reports, Todays Dairy News