This week’s Milk Production Council newsletter features information on the Dairy Price Stabilization Program / Growth Management Plan. There’s growing interest in the plan by dairy groups, and the article goes into why it’s so important for the future of our industry. The article is posted here: http://www.milkproducerscouncil.org/052909_gmp.htm
Friday’s up tick on the block cheese price will have a lot of eyes watching to see if the rebound will be sustained this week. The University of Wisconsin’s, Dr. Robert Cropp, said in Tuesday’s DairyLine broadcast that he expects strength in the block price as we move into June and, while it was at $1.29 per pound in March, he pointed to the small decrease in April milk production. If milk output continues to slip, he believes block could be trading at $1.30 by the end of June.
“It’s the softness in the demand side,” explained Cropp, both on the export front and the domestic front so we have to get milk production trending below a year ago and, hopefully with the CWT program I think things will tighten as we move into the summer.
It’s a little peculiar that the barrel price is so far below the block price in that this is the grilling season and barrels normally get a little tighter, according to Cropp, so with the blocks strengthening, maybe the barrels will follow.
He also praised USDA’s announcement that it will reopen the Dairy Export Incentive program. The powder market is tightening, he said, and government price support purchases are slipping, so if the product is not overhanging the market is a positive factor for the industry.
This week’s Pfizer Vet Visit, Dr. Gary Neubauer, Senior Veterinarian at Pfizer Animal Health, discusses the economics of extended therapy products.
While U.S. milk production is starting to moderate, Dairy Profit Weekly editor, Dave Natzke, turned our attention to dairy product demand in Friday’s broadcast. He reported that, according to the U.S. Dairy Export Council, 2009 dairy exports continue to lag far behind 2008’s record pace.
Overall first-quarter exports (January-March 2009) were valued at $502.4 million, down 51 percent from the same period a year earlier. On a volume basis, exports of nonfat dry milk, cheese, butterfat, fluid milk and whole milk powder are all down substantially from a year ago, he said.
Whey continues to be a bright spot in the export market. Dry whey exports are up 19 percent for the quarter, with total whey protein exports up 3 percent for the first quarter of 2009 compared to a year earlier.
March dairy exports were valued at $173 million, up 8 percent from February, but less than half the total for March 2008.
March imports were valued at $238 million, down 8 percent from February, but it’s the sixth consecutive month dairy imports have surpassed exports. Through the first five months (October 2008-March 2009) of fiscal year (FY) 2009, the dairy trade deficit is estimated at $409 million, according to Natzke.
There’s better news on the domestic front, he said. Consumer Price Index (CPI) data released by the Bureau of Labor Statistics, shows April 2009 retail dairy prices were down 1.3 percent compared to March 2009, and down 5.1 percent compared to April 2008.
Retail whole milk prices are down nearly 17 percent from a year ago, while butter is down 11 percent, and cheese is down just over 1 percent. Those lower prices should help stimulate sales as we head into summer, Natzke concluded. For More Dairy News Click Here
Ray Nebel, Senior Reproductive Management Specialist at Select Sires, continues his discussion on the effects the economy has on sex sorted semen.
Dairy importers may soon have to pay into the national dairy check off. The requirement is almost a decade in coming, according to National Milk’s Chris Galen in Thursday’s broadcast, and involved two farm bills. The USDA published a proposed rule May 19 on how it will calculate and assess it.
National Milk successfully lobbied for its inclusion in the 2002 farm bill but it was never implemented because the assessment was not being paid by all dairy farmers in all 50 states. That was corrected in the 2008 farm bill, he said.
Processors and opponents charge that this will invite a challenge at the World Trade Organization and or mean retaliation from other countries but Galen countered, “We have 10 other commodities assessing check offs, including big ones like beef, pork, and cotton, and we have never seen any kind of reaction from any of our trading partners.”
He encouraged farmers to write USDA in support of this because there is plenty of opposition from dairy importers who don’t want to have to pay however National Milk sees it as a “matter of fairness,” Galen said, “That, if dairy farmers pay to help to expand this market which they have been doing now for 25 years, we should have importers pay at least a portion of what dairy farmers here in this country are paying so everyone pays for a market from which everyone benefits.”
The Federation will soon make public its comments to USDA so farmers can respond and add their thoughts and direct them to USDA. “It’s been too long in coming,” he concluded, “and needs to be implemented as soon as possible.”
Success Strategie with John Ellsworth. This week John emphasizes the importance of constant self development.
The cash dairy markets started the new week with no changes as it awaited USDA’s Monday afternoon preliminary April Milk Production report. Downes-O’Neill dairy economist, Bill Brooks, said in Tuesday’s that “We still have a lot of product out there.” He said there was a lot of trading last week and “We have put in a bottom but it doesn’t like prices are going to rebound very strongly any time soon.”
He predicted that milk production will be below a year ago for the second consecutive month but warned, “We’re still chasing lower demand.” He admits it’s not consistent lower demand but it is lower demand and “We still have to match up our supply and that will bring the quickest change (in prices).” Milk production is slipping but, if demand doesn’t pick up, Brooks says, we’re “still on the treadmill,” and while the economic signals may have stabilized, “They’re not really getting better and that’s going to cause issues for us with demand as we go through the rest of this year and into next year and that’s not confined to just the U.S. It seems to be a worldwide phenomena right now,” he concluded.
Dr. Allan Britten’s weekly podcast from Udder Health Systems, Inc.
