Farm milk prices keep inching higher but they need to. The Agriculture Department announced the July Federal order Class III price this morning at $13.74 per hundredweight, up 12 cents from June, and $3.77 above July 2009.

That pulls the 2010 average to $13.60, up from $10.16 at this time a year ago, but compares to $18.25 in 2008.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.

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.

“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.

Tomorrow on DairyLine, Dairy Profit Weekly editor, Dave Natzke, reports on a new Agriculture Department study that indicates the U.S. is becoming less attractive as a dairy import market. He looks at the ongoing competition between butter and margarine consumption, and Dr. Paul Chandler has his weekly “Nutrition Update” in our second half.

The California Beef Council (CBC) has made social media a new priority, according to Shannon Kelley, PR Coordinator.

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Speaking in Wednesday’s “Beef Board Update,” Kelley said that many groups and organizations, including our adversaries, are using social media to get their information to consumers as well as to producers and the CBC thought it was time to join that conversation.

The goal is to “get their story heard,” she said, respond to misinformation, and highlight checkoff funded tools available to members. She added that the priority started with consumers but they soon learned that the majority of the Beef Checkoff’s Facebook fans were beef producers, so now the Beef Board can reach and educate both consumers and producers.

The latest addition was a producer profile video that features a San Francisco Bay area ranch family, highlighting their environmental efforts and has been an effective tool in reaching consumers as well as beef producers.

The video is also presented at producer meetings, according to Kelley, and producers have volunteered to shoot their own videos to tell their story to consumers so the website was revamped and the CBC joined Facebook and has a Twitter handle, and a YouTube channel, and even has a ranch family that blogs for the CBC.

“Again this is supposed to be more consumer outreach and it has been,” Kelley concluded, “But this has kind of excited producers to get involved and kind of ignited a little flame. Some are Facebooking beef information, she said, and she suspects that some have even joined Twitter.

The butter market continues to show strength, trading at $1.80 to start the week. That’s the highest level since 2004.“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 1st. “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.

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.”

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.

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.

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.

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.