Archive for the ‘Todays Dairy News’ Category

USDA’s latest Dairy Outlook

June 18, 2014 – As it always does, USDA’s monthly Livestock, Dairy, and Poultry Outlook, issued Wednesday, mirrored dairy projections contained in the latest World Agricultural Supply and Demand Estimates report issued June 11. Milk and dairy product prices remain near record levels on continued strong demand and forecasts were raised only slightly in June from May. However, higher expected production next year lowers milk and dairy product prices in 2015 compared with 2014.

June projected corn prices were lowered slightly from May to $4.45 – $4.65 per bushel for 2013/14, based on reported prices to date. The 2014/15 corn price is forecast below current year prices but is unchanged from the May projection of $3.85 – $4.55 per bushel. The soybean meal price for 2013/14 is estimated at $485 per ton. The 2014/15 soybean meal price forecast is unchanged from May but is expected to be sharply lower than this year at $355 – $395 per ton.    The preliminary alfalfa price was reported in the May Agricultural Prices report at $224 per ton; higher than April’s reported price and about the same as May a year ago.

Consequently, the milk-feed price ratio is likely to remain at a level that would support expansion in the dairy herd in 2015.

Last month’s forecast of herd expansion in the second half of the year was based on strong milk prices and moderating feed costs. The June forecast is unchanged from May and cow numbers are placed at 9.26 million head for the current year. Cow

numbers for 2015 are forecast up slightly from 2014 to 9.34 million head, also unchanged from the May forecast. Current-year output per cow is lowered fractionally from May to 22,270 pounds per cow and is based on lower expected output per cow in the second quarter. Next year’s forecast of output per cow is unchanged from May and is up nearly 2 percent from the 2014 projection. The June milk production forecast for 2014 rounds to 206.1 billion pounds, unchanged from May. For 2015, milk production is unchanged from May at 212.1 million pounds. The likely stronger milk-feed price ratios for both this year and next should presage expanded year-over-year production.

Fats basis 2014 milk equivalent imports were raised in June to 3.5 billion pounds, but are expected to slip to 3.4 billion pounds in 2015. Skims-solids basis milk equivalent imports are raised this month to 5.6 billion pounds for the current year and to 5.2 billion pounds for 2015. The forecast increases from May are based on higher imports of food preparation items, whey products, and, to a lesser extent, casein and milk protein concentrates.

June forecast fats-basis exports for 2014 are increased this month from May to 13.4 billion pounds and to 13 billion pounds for 2015. Butter exports have retreated as U.S. prices have become less competitive on the global market. The butter decline was more than offset by continued strong cheese exports. The higher June forecasts are expected to carry over into 2015. However on a year-over-year basis, the 2015 forecast export decline is based on expected strong foreign competition.

Exports on a skims-solids basis are increased to 39.4 billion pounds for 2014 and are unchanged at 38.6 billion pounds for next year. Higher skimmed milk powder, whey, and cheese are the basis of the higher skim-solids export number this year.

Although the United States is expected to remain competitive in the global market, foreign competition will likely lower exports on a year-over-year basis in 2015.

Milk production is expected to increase in 2015 compared with this year. Lower feed prices will improve the profit outlook for producers next year. Continued strong demand, both foreign and domestic, will moderate price declines in 2015.    To view the entire report log on to: http://www.ers.usda.gov/publications/ldpm-livestock,-dairy,-and-poultry-outlook.aspx.

 

Quarterly and annual milk prices and projections

Year           All milk         Class III         Class IV

2009

12.83

11.36

10.89

2010

16.26

14.41

15.09

2011

20.14

18.37

19.04

2012

18.53

17.44

16.01

2013

  Q1

19.53

17.44

17.71

  Q2            19.57           18.04          18.62
  Q3            19.60           17.81          19.13
  Q4            21.50           18.67          20.74
Year            20.05           17.99          19.05

2014

  Q1            24.53           22.61          23.10
  Q2 24.40-24.60 22.65-22.85 22.95-23.25
Q3 21.95-22.45 19.65-20.15 20.80-21.40
Q4 20.85-21.65 18.40-19.20 19.05-19.95
Year* 22.90-23.30 20.80-21.20 21.45-21.95
2015
  Q1            20.50-21.50 16.45-17.45 18.05-19.15
  Q2
Q3
Q4
Year* 19.75-20.75 16.95-17.95 18.65-19.75

 

2012    2013    2014  1st      2nd  3rd     4th     2015  1st

Milk Output (bil.lbs.)  200.5   201.2   206.1  51.1  52.8  50.9  51.3  212.1  52.5

Cow #s (mil)                 9.23     9.22    9.26   9.22   9.24  9.27  9.29   9.34    9.30

July FO Class I Milk Price Up 16 Cents

June 18, 2014 – The Agriculture Department announced the July Federal order Class I base milk price Wednesday at $23.02 per hundredweight, up 16 cents from June, $4.11 above July 2013, and equates to about $1.98 per gallon.

The seven month average now stands at $23.02, up from $18.32 at this time a year ago and compares to $16.34 in 2012 and $18.55 in 2011.    The two-week, NDPSR-surveyed, butter price used in calculating this month’s Class I value was $2.1845 per pound, up 16.7 cents from June. Nonfat dry milk averaged $1.8526, down 2.4 cents. Cheese averaged $2.0334, down 17 cents, and dry whey averaged 67.67 cents per pound, up fractionally.

No Crash in Cash Cheese or Butter

June 13, 2014 –  No crash in cash cheese or butter….That’s  the read of FC  Stone dairy broker Dave Kurzawski. Speaking in

Dave Kurzawski, FC Stone

Dave Kurzawski, FC Stone

Friday’s DairyLine, Kurzawski said the cheese  market seems more stable right now and he credited pipeline refilling as buyers  try to replenish supply from previous sales. But, he admits that we’re putting  more milk into the cheese vat right now and he sees that continuing for awhile  and more cheese will be made over the next 30-60 days than less. That will  result in continued pressure on spot prices, he warned, and he expects lows in  the $1.85-$1.90/lb. range.

Butter wise, Kurzawski says the market is tighter right now and he  pointed to strong ice cream sales as cream demand is strong. He doesn’t see much  downside for butter, in fact the “pricing skew,” he said, is directing milk out  of the churn and more into the vat as “manufacturers don’t want to make a ton of  excess butter at these price levels.” He looks for “inflated butter prices” for  at least the next 30-45 days.

DairyBusiness Update editor Lee Mielke asked him how he, as a long time dairy broker, views the Farm Bill’s  new safety net for dairy farmers, the “Margin Protection Program.” Do you, in  any way, see it as a threat or competition to using dairy options and futures  for risk management?

He admitted that there’s a lot of talk of that potentially cannibalizing some of the sell side interest on the futures and options market but he doesn’t quite agree. He called the program “a good tool, a progressive tool as far as from a government perspective, a government program that has been put out.” He said it’s a “real advancement in that sense,” but believes it will be used to “augment a producer’s risk management plan, not replace it.”

University Team to Create Web Based Margin Protection Tool

June 10, 2014 – Members of the Dairy Markets and Policy Team were asked by the Farm Services Agency of the U.S. Department of Agriculture to partner with them in developing a web-based tool that will assist farmers in making their decisions about participating in the new Margin Protection Program for Dairy Producers (MPP). In addition to developing the tool, the team will organize various educational activities and materials to help producers understand how they can use the tool, identify the nuances of how the program works, and think about the milk price and margin risks they face.

“In designing and developing these materials we fully expect to work with and be a resource for the large network of extension educators and industry partners who are routinely in the business of working with dairy farmers and helping them gather the information to think about the management decisions they face every day,” the team said in a statement.

The partnership with USDA will allow FSA and the University based team to coordinate separate responsibilities for the ultimate benefit of dairy farmers. FSA and its regional offices will be the source of information and place to go for producers who want specific information about the program, signup procedures and other specific program information such as eligibility, payment processes and so on. USDA can answer questions about how MPP works and can show interested parties how to find the University based materials. There will be a link to all the Farm Bill decision tools on the USDA website. However, USDA staff will not provide advice to farmers on what decision they should make under MPP.

Our decision support aids will not be designed to provide financial or risk management advice, rather we will try to give producers the tools to help them make the most informed MPP coverage decisions for their farm operation,” team members said. “We encourage producers to take full advantage of all the resources available to them. This is a brand new program, with new rules and new mechanisms. We know quite a bit about the sequence of things that need to happen before MPP is formally launched, but we do not have a specific timetable.”

The Agricultural Act of 2014 instructs USDA to “establish and administer” the new program by 1 September. In the press release announcing the University awards, USDA states: “Sign-up for the newly established Margin Protection Program for Dairy (MPP) begins late this summer”.

This is a strong indication of their goal but not a specific timetable for the various steps of releasing the rules, starting a sign-up period, and concluding enrollment. There remain many details for FSA to sort out in the implementation of the final and formal program. The framework for a MPP decision tool has been created, but the University team will need to know the final rules before a tool can be finalized and released publically. At this time, they cannot be more specific about when the tool will be available. USDA is already beginning to provide information about the program and will no doubt add to the information on their website as new information becomes available.

Although it is difficult to plan a specific schedule or even to know how much time will be available for various activities, the team is developing a multipronged education plan. There will be web-based educational materials and webinars, but team members also want to do some hands-on workshops.

“As a group, our focus will be on several “trainthe- trainer” type workshops around the U.S. We anticipate that extension educators and industry groups will be developing local educational programs,” they said.  ”Indeed, USDA is providing additional funding to State Cooperative Extension systems to support the overall producer education effort relative to new FSA-based programs. In our home states and in collaboration with partners elsewhere, we intend to be involved in more direct producer training as well. It will be our highest priority to provide producers with the tools and information that will help them to make the most informed decision possible.”

In the coming weeks and months, producers may visit:  www.dairymarkets.org for information on the tool and our educational activities. This website contains publications, data tools, and a variety of information generally applicable to dairy markets and policy.

Members of the Dairy Markets and Policy Team :
Marin Bozic, University of Minnesota
Brian Gould, University of Wisconsin
John Newton, University of Illinois
Charles Nicholson, Penn State University
Andrew Novakovic, Cornell University
Mark Stephenson, University of Wisconsin
Cameron Thraen, Ohio State University
Christopher Wolf, Michigan State University

 

Cheese Will be Choppy

June 6, 2014 — Look for “choppiness for the next several weeks” in the cheese market, according to Jerry Dryer, Editor of the Dairy and Food Market Analyst. Speaking in Friday’s

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy & Food Market Analyst

DairyLine, Dryer said the market is “trying to figure itself out.” He adds that the outlook is that supplies are going to be relatively tight however we’re working through the spring flush right now and, while milk has peaked in the Upper Midwest, you still have cheese coming out of the vat and cheese coming out of the cooler as it has to sit in the cooler 10-15 days before it’s eligible to come to the CME or the market. “So you have a little extra product hanging around the edges,” Dryer said, but he believes prices will hover about 2 cents below or above $2 per pound.

First Quarter 2014 commercial disappearance of milk and dairy products was up 3.3% from a year ago, according to USDA’s latest estimates. The data closely matches Dryer’s numbers however Dryer used data from this week’s Dairy Products report to project disappearance through April. Doing so, Dryer reports that disappearance has likely eased some from that 3.3 percent but is still “very strong.”

For the three months ending in April, Dryer reports American cheese disappearance was up 2.4 percent and other cheese was up 3.5 percent. The total cheese category was up about 3 percent and he noted that, interestingly, U.S. cheese sales were down 2.5 percent in that period. All of the increase was attributed to exports, he said, and he reported that he had just got off the phone with a cheese exporter who told him that he was “optimistic about the future and is writing orders as we speak.”

First Quarter butter disappearance was down, according to Dryer, but has since popped sharply higher, up 6.2 percent, in the most recent three months.

“Demand and usage of dairy products has remained relatively strong,” Dryer concluded, but he warned that “Higher prices are going to keep taking a toll on those consumption numbers as we move through the next three or four months.”

DFA Opens Nation’s Most Modern Milk Powder Processing Plant

June 4, 2014 — A brand new dairy processing plant capable of handling up to 2.2 million lbs. of milk per day was shown off to the press on June 3 in Fallon, NV.  Dairy Farmers of

DFA’s new powder processing plant in Fallon, NV

DFA’s new powder processing plant in Fallon, NV

America (DFA), the largest dairy cooperative in the U.S., introduced its state of the art facility that is currently producing whole milk powder (WMP) principally for the export market, notably China.

Using the latest technology for production, energy efficiency and sanitation, the plant at capacity will be able to produce up to 250,000 lbs. of powder per According to Wesley Clark, plant manager, current production is six 55-lb. bags per minute in a 14-hour shift, producing enough to fill five to seven cargo ship containers.  They are transported 20 to 30 containers at a time directly to the ocean port of Oakland, CA.

Because of the unique processes used here, the shelf life of this product is up to two years, compared with just six months for conventionally produced wmp.  Only 45 employees are needed to operate the entire plant. DFA official Jay Waldvogel explains that the value of whole milk powder on the world market is currently about $4000 per metric ton or $1.80 per lb., although it has ranged from $6000 down to $3500 in recent times.

Dairyman Alan Perazzo, left, and plant manager Wesley Clark display a 55-lb. bag of whole milk powder produced by DFA’s new plant in Fallon, NV.

Dairyman Alan Perazzo, left, and plant manager Wesley Clark display a 55-lb. bag of whole milk powder produced by DFA’s new plant in Fallon, NV.

If the plant produces the 40,000 metric tons per year as planned, annual gross revenue would equal $160 million at current prices.  This results in a farm milk price of about $18 per cwt for class IV milk. DFA officials said that for the first time, a plant was sited and built to meet market demand rather than to deal with a local supply.  While the initial focus is on whole milk powder for the Asian market and China, officials said the plant will be able to produce skim milk powder and “instantized” product with larger particles for other foreign and domestic customers.

Milk for the plant currently comes from 19 northern Nevada dairies which supply only about half of the milk needed, with the remainder coming from selected dairy operations in California.  Efforts are continuing to attract producers to the region, as DFA works with private developers and state and local officials. Tom Heren of AGRPROfessionals, headquartered in Colorado, tasked with recruiting new producers to the region, says that there is moderately priced land available along with water and feed supplies.  The high desert climate allows dry lot style facilities and government officials are supporting these efforts. Local producers too welcome this new facility which will provide a stable and expanding market for their milk.  Dairyman Pete Olsen, who milks 2000 cows in Fallon, is a DFA board member and a county commissioner.  He said that the plant has the potential to revitalize Nevada’s small but important dairy industry.  Fallon area producer Alan Perazzo, a DFA member, says that now he and his brother can consider expansion to bring in the next generation on their family farm. DFA based in Kansas City, MO is owned by nearly 9000 member farms producing 44.5 billion lbs. of milk annually and operates 33 processing plants across the U.S.

Young Dairy Farmers Lobby on Capitol Hill

June 5, 2014 — About 60 young dairy farmers from across the country met in Washington D.C. last week to lobby on several issues they say won’t go away without being resolved. The group is part of the National Young Cooperator (YC) Program organized by the National Milk Producers Federation.

Even though the Farm Bill is now in our rear view mirror, NMPF says there are plenty of issues Congress should focus on including two trade agreements and immigration reform.

“We also have the issue of GMO labeling and why we don’t want to see mandatory federal laws that require GMO labeling,” NMPF’s Chris Galen said. Instead, NMPF supports a measure that would make the labeling of food containing genetically modified organisms voluntary.

Another important issue is trade policy and getting good deals both with the Trans Pacific Partnership (TPP) and the Trans Atlantic Partnership (TTIP).

“Those deals are still pending right now and we want to convince our lawmakers that dairy farmers need to have a good outcome in both the Atlantic and Pacific deals,” Galen said.

The issue of immigration reform won’t be resolved anytime soon as there’s a very narrow window between June and the first Tuesday in November.

“Our expectations are fairly low,” Galen said. “It does not look like immigration reform will get done, unfortunately.”

Even if Congress doesn’t take up the issue until after November, Galen says it’s important to have dairy farmers visit Capitol Hill to remind lawmakers that this issue is not going to go away.

“It’s not going to get resolved unless there is federal legislation,” he said. “The same applies to the GMO issue and with the trade policy issues as well.”

NMPF organized the YC Program in 1950 to educate and build leadership ability in young dairy farmers, designed for dairy producers 40 years of age and younger. A YC fly-in was held last week in conjunction with NMPF’s June Board of Directors meeting.

See more at: http://www.nmpf.org/about-nmpf/young-cooperators#sthash.naT2b5w7.dpuf

Federal Order Benchmark Milk Price Drops $1.74

June 4, 2014 – The Agriculture Department announced May Federal order milk prices this afternoon. The benchmark Class III price is $22.57 per hundredweight (cwt.), down $1.74 Calffrom April, $4.05 above May 2013, $3.23 above California’s comparable 4b price, and equates to about $1.94 per gallon.    Looking ahead, Class III futures settled today as follows: June, $21.21; July, $20.33; August, $20.21; September, $20.23; October, $19.85; November, $19.42; and December, $18.95.

The five month Class III average now stands at $22.94, up from $17.69 at this time a year ago and $16.65 in 2011.

The May Class IV price is $22.65/cwt., down 69 cents from April but $3.76 above a year ago. The Class IV average for the year thus far now stands at $23.08, up from $18.02 a year ago and $15.24 in 2012.

The four-week, NDPSR cheese price average used in calculating this months’ prices was $2.1703/lb., down 18.4 cents. Butter averaged $2.0477, up 12.5 cents. Nonfat dry milk averaged $1.8768, down 14.2 cents, and dry whey averaged 67.45 cents per pound, down fractionally.

Great American Milk Drive Helps Local Food Banks

June 3, 2014 — The Great American Milk Drive brings the dairy industry together around the issue of hunger – which impacts 1 in 6 Americans. Together, MilkPEP and The NationalMilkDriveDairy Council have created a national campaign to elevate awareness of the need for milk in the nation’s feeding programs, allowing Milk Companies and Farm Families to join in together to provide Americans a simple way to help.

According to Feeding America, the nation’s largest domestic hunger-relief organization, milk is one of the items most requested by food bank clients, yet there is a nationwide shortage because it is rarely donated. Now, it’s going to be easier for Americans to lend a hand and contribute nutritious milk to food insecure families.

“The program is designed to encourage consumers to make a simple donation – purchasing an extra gallon of milk – that Feeding America will deliver to local families who need it most, said MilkPEP’s Victor Zaborsky.

With a simple click of a mouse at www.milklife.com/give or text message — text “Milk” to 27722 – it’s easier to buy much-needed milk and donate it for as little as $5.00 to a family who does not have regular access to milk. By entering your zip code, you can ensure that the milk is delivered from the farm to a local Feeding America food bank in your very own community.

“The program has already delivered more than 45,000 gallons, and we’ve only just begun,” he said. There are countless ways you and your brands can be a part of The Great American Milk Drive. From linking to the program from your website to hosting your own local events or even partnering with a retailer to create an in-store program. You can find more ideas, tools, tips and information at MilkPEP.org/Drive.

U.S. Dealing With Softening World Dairy Market

June 2, 2014 — The United States continued their record exports in the first quarter of the year, expanding sales of all major product categories, to nearly all major markets. In total,

Alan Levitt, USDEC

Alan Levitt, USDEC

first quarter exports were valued at $1.89 billion, up 39% from last year’s record pace. On a volume basis, exports were up 24% from last year, according to Alan Levitt of the U.S. Dairy Export Council.

“We saw double-digit increases in most products,” he told DairyLine. On a volume basis, exports of nonfat dry milk and skim milk powder were up 19%, cheese was up 42%, butterfat up 115%, whey products +12%. We also saw big gains in whole milk powder– up 236% — and milk protein concentrate – up 55%.

As far as where these U.S. exports are going, nearly two-thirds (63%) went to the top four markets: Mexico, Southeast Asia, Middle East/North Africa and China. Sales to these four markets were up 54% in Q1.

The big question is can this pace continue? It appears export orders are slowing in the second quarter. Levitt attributes a couple factors: greater competition from Europe and Oceania, where production has come back strong. As a result, world prices have come down quite a bit.

“We’re also going to start seeing more difficult comparisons in the months ahead,” he said. “U.S. exports started taking off in April-May 2013. So now we’re going to be comparing with those increased levels, and showing further increases on top of that will be tougher.”

Currently, the global markets continue to drift lower and we’re entering the summer lull.

“Buyers are cautious, but inventories aren’t excessive,” he said. “Also, milk production from the top global suppliers has peaked and is now on its way down. The New Zealand season is done. So we could see supply firm in the months ahead. The strength of the market in the second half will probably depend on how aggressively China comes back in the market.”

If you’re looking for some sort of indicator, Fonterra recently announced its first payout projection for the 2014/15 season and it came in 17% below the 2013/14 season. So over the next 12 months they expect world prices to be 15-20% lower than the record levels seen in this past year.

“But that’s still a very good price,” Levitt said. ”It means milk powder prices will average around $1.80.”

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