The 2009 U.S. crop harvest has been slow, adding clouds to a dairy feed price picture that looked to be brightening just a month ago. Dairy Profit Weekly editor, Dave Natzke, reported Friday that we’re at a point when the nation’s soybean harvest should be winding down and the corn harvest should be more than half finished however, a cool growing season, followed up by a wet fall in many areas, has put farmers well behind normal in their harvest schedules.

Based on USDA’s Crop Progress report, less than half of U.S. soybean acreage and only about one-fifth the corn acreage has been harvested, according to Natzke, both running about 40 percentage points behind normal. The wet conditions are also raising concerns regarding mold growth in the field and, in the case of silage, frosted forages could hurt storage fermentation, negatively affecting feed quality, he warned.

Another factor in determining feed prices is demand. University of Illinois ag economist, Darrel Good, says China has been aggressive in buying soybeans but has backed off somewhat on corn purchases. However, demand for corn by the U.S. ethanol industry has been robust, he said.

“So, with eyes on the weather, harvest prospects and demand, corn and soybean futures prices have been on a roller coaster in October,” Natzke said. Despite being down from monthly peaks, December corn futures prices are about 50 cents per bushel higher than a month ago; with soybean meal futures prices up about $10 per ton. On a positive note, Natzke pointed out that, since April, U.S. average alfalfa hay prices have been running $30-$50 ton lower than the same month a year earlier, providing some feed price relief for farmers.

The old joke is that if you don’t like the weather, wait a while and it will change, Natzke concluded. USDA’s Crop Production report will be released November 10 and that should give us a clearer view of the 2010 feed price picture. And, of more immediate interest, USDA will announce final monthly U.S. average feed prices on Friday afternoon, which will be used to determine September’s Milk Income Loss Contract program payment.

Another 26,412 dairy cows are taking early retirement from the dairy industry, along with 465 bred heifers. That’s the tally in the latest Cooperatives Working Together (CWT) herd retirement, the fourth such program in the last 12 months.

The cows came from 154 accepted bids and represent about 517 million pounds of milk, according to National Milk’s Chris Galen in Thursday’s DairyLine. Added with the previous buyouts since December 2008, 252,000 cows representing 5 billion pounds of milk will have been removed, he said.

CWT economists had estimated, coming into 2009 that about 250,000 cows representing 5-6 billion pounds of milk would have to be removed from the market to bring supply and demand into balance and strengthen farm milk prices, according to a CWT press release.

CWT members in 33 states submitted 168 herd retirement bids, down from the 312 bids submitted in the last buyout, but Galen pointed out that this was the third such program this year so “we knew that there would be less demand,” this time and, if you factor in the previous programs, “that’s an enormous amount of milk that we’re removing so CWT has definitely done the heavy lifting, not only last year but especially in 2009, in the face of this terrible price trough to reduce the herd size to where prices can now start recovering.”

There were no surprises in this latest round, according to Galen. Most of the cows and milk removed was from the West, he said, where the pain has been most pronounced. Field auditors will begin visiting the farms whose bid was accepted to verify production records, inspect the herds, and tag each cow for slaughter. Those farmers will be notified no later than November 16 as to whether their bid was accepted, he said.

Cody, Wyoming dairy producer Scott George hosts farm tours for local youth and talked about the reasons why in DairyLine’s “Beef Checkoff Update” Wednesday.

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He said it’s important to communicate to all consumers so they understand where their food comes from. He said he wants them to know that they take good care of their animals and they teach visitors that cattle are great recyclers in that they eat food and products that otherwise would end up in a landfill.

They also inform their visitors that a single three-ounce serving of beef will give them 51 percent of the protein they need each day and 38 percent of the zinc they need. Zinc aids in good memory and a good immune system, according to George.

That serving of beef also provides 14 percent of the iron one needs each day which helps fight anemia, and it provides the B complex vitamins and minerals that children need.

“That simple little three ounce serving, which is less than a quarter-pounder hamburger, only has 179 calories,” George said, “And yet it’s packed full of nutrients and this is the message we take to children and their parents so they understand the importance of animal protein in their daily diet.”

George also believes the beef check off is a wise investment even as a dairy farmer. “Ultimately our animals end up in this food stream,” he concluded, “And if we can’t keep our consumers consuming this product, we’re going to lose a very valuable revenue stream.”

This week’s Success Strategies, John Ellsworth gives us steps to get back in the game for the coming year.

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The first day trading in the last week of October was quiet, with all prices remaining unchanged. The University of Wisconsin’s Dr. Brian Gould, said in Tuesday’s DairyLine that people are trying to catch their breath from the dramatic changes of last week so he doesn’t see Monday’s trading as a good indicator of what’s going to happen the rest of the week.

He believes the market will closely watch what’s happening in the European Union because of the elimination of export subsidies on skim milk powder, which used to be about 13 cents per pound. The Whole milk powder subsidy was halved, according to Gould, and is now just 10 cents per pound, and the butter subsidy was reduced from 44 cents to 26 cents, a drop of 18 cents.

That’s good news for U.S. producers, he said, as it makes U.S. dairy products more competitive, not only with the reduced export subsidies, but the U.S. dollar is falling in value relative to EU and New Zealand dollars and most major currencies, “so our exports are getting cheaper,” he said.

That could mean a reduction in the use of the Dairy Export Incentive Program by the U.S., according to Gould, which has been very active from July onward and significant tonnage was subsidized and exported.

A year ago, U.S. dairy exports were on fire and that situation could return. Gould pointed out that in June and July there was significant improvement in U.S. dairy exports and, in second quarter 2009, the U.S. was a net dairy exporter although that slowed in August for some commodities. Skim milk powder and lactose exports remained strong, he concluded, but “Things are looking up in terms of exports and that’s good news for U.S. dairy producers.”

The Agriculture Department issues its monthly Ag Prices report Friday morning. That will include the latest milk feed ratio and October Federal order milk prices are announced Friday morning. California prices are out the following Monday. Check here for complete details.

Our series of discussions with Dairy Management Incorporated CEO Tom Gallagher continued on Monday’s “DMI Update.” We discussed recent research which indicates that chocolate milk is an excellent beverage to consume after vigorous exercise as an energy replacement.

Gallagher reported that several universities have even adopted chocolate milk in their training programs for their football and other sports teams. That word is spreading, according to Gallagher, and has become an excellent marketing tool.

He reported that health professional organizations have approved the concept however, because chocolate milk contains sugar, it sometimes comes under attack so the dairy check off has worked with processors and health professionals to reformulate so that most of the chocolate milk sold in schools only contains 25-26 grams of sugar. Previously, sugar content could be as high as 33 grams, he said.

The two fold strategy of the check off, according to Gallagher, is to market the research so consumers can understand what chocolate milk can do for them and secondly to make sure health professionals support the claim that it’s important to make flavored milk available to kids because it provides them the nutrients with very little sugar.

The challenge is to get the story straight on sugar, he concluded, and those who want the energy replacement benefit, like what they get from other beverages like a Gatoraid, can know that chocolate milk offers much the same benefit.

Dr. Gary Neubauer, Dairy Technical Services Consultant with Pfizer Animal Health, continues his podcast series on Lepto Hardjo Bovis. This week he discusses how the disease resides and spreads on dairy farms.

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USDA announced the November Federal order Class I milk price this morning at $12.86 per hundredweight, up 51 cents from October, but $2.67 below November 2008. The Class III advanced pricing factor was the “higher of” in driving the Class I value.

Market analyst, Alan Levitt predicts the November MILC payment to producers should be around 37 cents.

The two-week NASS-surveyed butter price averaged $1.2245 per pound, up 5.9 cents from October. Nonfat dry milk averaged $1.0299, up 7.6 cents. Cheese averaged $1.4155, up 3.5 cents, and dry whey averaged 31.86 cents, up 2.4 cents.

California’s changing dynamics has prompted calls for increases in the state’s minimum milk prices paid to dairy farmers. The California Department of Food and Agriculture has scheduled a public hearing November 9, in response to dairy organization requests to consider adjusting state pricing formulas to boost farmer prices.

Dairy Profit Weekly editor Dave Natzke reported Friday that two proposals have been submitted so far. The Alliance of Western Milk Producers requested a permanent 50 cents per hundredweight (cwt.) increase in the Class 1 price, and increases of 26 cents per cwt. for Class 2 and 3 milk.

Western United Dairymen requested consideration of a uniform 50 cents per cwt. increases to class 1, 2, 3, 4a and 4b for six months, beginning January 1, 2010.

Reasons behind the requests are two-fold, according to Natzke. Low milk prices and high operating costs have resulted in severe financial losses for dairy farmers. As a result, California cow numbers are down about 73,000 from a year ago, and milk production through the first nine months of 2009 is down about 4 percent compared to the same period a year earlier.

Lower milk volumes are apparently affecting milk processing plants, Natzke reported. USDA’s latest dairy product report shows California’s total cheese and nonfat dry milk production was down from a year earlier, as milk supplies fell below manufacturing plant capacity.

A quick update on another story we’ve been following. President Barrack Obama has reportedly signed the fiscal year 2010 ag appropriations bill into law. That bill includes $350 million in emergency aid for U.S. dairy farmers. It will now be up to U.S. Agriculture Secretary Tom Vilsack to determine how $290 million of that will be distributed.

This week’s Success Strategies podcast, John Ellsworth discusses four major areas of discontinuity underlying social and cultural reality.

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