With one more trading day in the month of August, the cash dairy prices were unchanged Monday, with one carload of block cheese trading hands. The University of Wisconsin’s Dr. Brian Gould said it’s a bit of concern in terms of trying to get some kind of signal from the market. He said the increase in milk production and high cheese stocks has many believing the peak has arrived. 

“We at a reasonable level in terms of cheese and butter prices, relative to recent history,” Gould said, but he’s advised dairy producers to think more seriously about risk management at this time. One such tool is the Livestock Gross Margin Insurance program and, as of July, farmers in all of the lower 48 states can now participate. Previously, California and Idaho producers could not. The program sets a floor on your income over feed costs so it’s not locking anything but allowing for upward movement. 

Other changes in the works that will make this program more palatable, according to Gould, are the insurance premiums will be subsidized and won’t be due until after the insurance contract runs its course, and their level of deductible will increase, which should decrease the cost of this insurance program. He encourages producers to take a serious look at the program, especially with the changes that are being made.

The 2010/11 school is getting under way and with it another year of partnership between the dairy checkoff and the National Football League in the Fuel Up to Play 60 campaign. DMI’s Joe Bavido reported in Monday’s “DMI Update” that over 60,000 schools will participate in the program and that, last year, many dairy producers got the opportunity to see this program in action in their local schools. He said they hope to see even more participation this year.  

“The NFL’s Back to Football Friday campaign is a great way for producers to get excited about the upcoming year and NFL partnership,” Bavido said. Schools and youth across the country can show their team pride and celebrate the return of the NFL season by wearing their favorite NFL team gear and participate in NFL-themed events.  

Producers should contact their local Fuel Up to Play 60 coordinator to learn more about school-focused efforts in their region and how they can participate. Producers can also participate in the Show Your Pride photo contest that the NFL is offering to its partners and sponsors, including dairy farm families. The winning dairy entry will receive a visit from an NFL player to their farm, among other prizes. Details are available at www.backtofootballcelebration.com. The deadline is September 14.

California’s dairy farmers have been some of the hardest hit economically the past two years but a request to raise the minimum price there has been denied. Dairy Profit Weekly editor Dave Natzke reported Friday that the California Department of Food and Agriculture (CDFA) denied a request for an emergency public hearing on a proposal to set the California milk marketing order floor price at $14.50 per hundredweight for a minimum of two years.

In a letter to John Rossi, of the California Floor Price Committee, Kevin Masuhara, director of CDFA’s Division of Marketing Services, said the proposal’s request “would result in prices that are not in a reasonable and sound economic relationship with the national value of manufactured milk products,” as required by the state’s Food and Agricultural Code.

According to USDA, California farmers received an “all milk” price of about $11.50 per hundredweight in 2009. Through the first seven months of 2010, the California price has averaged about $14.14.

The request also proposed consideration of a program requiring milk and milk products produced outside California to be sold at a price at least equal to prices paid to California dairy producers. In his letter, Masuhara said CDFA had no authority to implement such a program, Natzke reported.

Farmers have been watching feed prices closely but there was some good news this week on that front. The Agriculture Department reports that the 2010 cotton harvest will total 18.5 million bales, up from the 18.3 million forecast in July, and a 52 percent increase from the previous season’s 12.1 million bales.

Cotton Incorporated’s Tom Wedegaertner reported in Friday’s DairyLine that last year saw a fairly small crop but this year saw additional acres planted and really good growing conditions in Texas and that will mean about twice as much cottonseed available for the dairy trade than last year.

“Last year, because it was such a short crop, people got used to the price of cottonseed being fairly high,” Wedegaertner said, “But the new crop prices, I think, are in some cases $100 a ton less than what they are right now for old crop seed so the prices will be coming down as we move into harvest but I caution dairymen to keep an eye on the weather. If we have a hurricane move into the cotton belt then everything changes over night.”

National Milk’s Chris Galen weighed in Mexico’s imposition of tariffs on some U.S. exports to that country, which include some cheeses in Thursday’s DairyLine and said that, when the NAFTA agreement was signed more than 15 years ago, the U.S. agreed to allow Mexican long haul truck carriers access to the U.S. market but there hasn’t been any progress made in doing that so Mexico is permitted under the NAFTA agreement, to penalize U.S. exports to that country until the issue is resolved.

National Milk is focused on pressuring the Obama Administration to resolve the stalemate, Galen said, so we’re no longer in violation of the NAFTA agreement. The Federation is generating letters that dairy farmers can send to the White House, he said, asking for expeditious action on this matter.

DairyLine has heard the issue revolves around the safety of the trucks coming up from Mexico. Others charge that it’s because of union opposition and politics but Galen stated that the Mexican trucks would have to meet the same safety requirements that U.S. trucks do but “It’s no different than if Mexico was using a safety issue to bar our food exports to Mexico.”

“This has been a sore point for many years,” he concluded, “Mexico does have the right to impose tariffs on selected groups of foods exports and it’s not just dairy and cheese products, pork is included, pistachios, and last year it was another set of products so they’re going to continue to keep pressure on the U.S. to do something about this so we need to have the U.S. dairy industry put pressure on the White House to take action to resolve the issue.”

The Professional Dairy Producers of Wisconsin has been busy with several activities, including the ACE Twilight Meeting. Shelly Mayer, Executive Director, explains in this interview with DairyLine’s Lee Mielke.

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The Pennsylvania Beef Council (PBC) recently began an innovative way to communicate to its producer members, using a monthly e-newsletter. PBC director of communications, Carrie Bomgardner, talked about it on Wednesday’s Beef Board Update.

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She says the newsletter inform producers of coming events for its Beef Quality Assurance program (BQA) such as the latest training dates and where they will be conducted.  

The newsletter also tells producers how their checkoff dollars are being spent, consumer events and retail and foodservice partnerships. 

The biggest surprise, according to Bomgardner, was the response they received from their producer members whenever they send out the e-newsletter. She said it’s been an effective way of getting producers to sign up for the BQA program.  

Pennsylvania serves as a hub for BQA efforts in eight states in the Mid Atlantic; West Virginia, Maryland, Virginia, New York, Maine, Vermont, and New Jersey. More than 3,000 Pennsylvania producers alone are now certified.  

Bomgardner’s office helps facilitate these meetings and regional meetings and encourages members to be certified, though each program has its own unique spin on the DQA but the PBC serves as a coordinator to make sure they’re all on the same page.

NEW YORK — Aug. 24, 2010 — Pfizer Animal Health and the American Association of Bovine Practitioners (AABP) Foundation are proud to announce that 29 veterinary medical students received essential financial support that will help secure the future of large-animal veterinarians in the United States.

 “We’re excited to partner with Pfizer Animal Health again this year to make this scholarship available,” says M. Gatz Riddell Jr., DVM, executive vice president, AABP. “The first year of veterinary practice can be very difficult for many graduating students, and having financial help through this scholarship can make things a bit easier.” 

The AABP Foundation/Pfizer Animal Health Veterinary Scholarship is part of Pfizer Animal Health’s Commitment to Veterinarians, an initiative supporting veterinarians through training and education, research and development, and investment in the future of the veterinary profession. The scholarship is funded through a unique partnership with veterinarians, animal health suppliers and dealers, and is awarded to beef and dairy veterinary students to help offset the cost of veterinary school.

 This year, the AABP Foundation and Pfizer Animal Health presented 29 students from across the nation with a $5,000 scholarship at the AABP Annual Meeting held Aug. 18 to 21 in Albuquerque, N.M. Recipients’ costs of traveling to and staying at the AABP Annual Meeting also are included in the scholarship. 

Funding for the scholarships is provided by the Pfizer Animal Health FFA/AABP support program. The program, which provides funding for local FFA chapters in addition to the AABP Foundation/Pfizer Animal Health Veterinary Student scholarships, offered a 1 percent rebate on Pfizer Animal Health cattle products from Jan. 1 through March 31, 2010. Participating partners were able to direct funds to any local FFA chapter(s) or the AABP Foundation/Pfizer Animal Health Veterinary Student Scholarship Program. 

“We recognize the need to encourage and support students in pursuing large-animal veterinary medicine,” says Julian Garcia, marketing group director, Pfizer Animal Health. “We know how important large-animal veterinarians are to providing a safe and healthy food supply, and we are honored to partner with AABP to support these and other veterinary students interested in pursuing a career in large-animal veterinary medicine.”

Photo caption: Pfizer Animal Health and the American Association of Bovine Practitioners Foundation presented 29 bovine veterinary students from across the country with $5,000 scholarships at the AABP Annual Meeting held Aug. 18 to 21 in Albuquerque, N.M.

Two trades in Monday’s trading pushed the cash butter price up 7 cents, to at $2.11 per pound. Downes-O’Neill dairy broker Bill Brooks said in Tuesday’s DairyLine that’s the highest butter price since May 17, 2004, when it hit $2.17.  

He said it’s not out of the question that butter can be above $2 or even higher but it doesn’t happen very often. By the way, the record high on butter was $2.81 on September 4 and 18, 1998 but then it came crashing down, according to brooks who warned that will likely happen again.  

He added that butter stocks at that time in 1998 were running around 25-40 million pounds whereas Friday’s Cold Storage report put July 31 stocks at almost 200 million pounds “so a big difference in our reserve supply.” That’s even above the 2004 level which was the last time butter was this high. The inventory at that time was in the mid 170 million range.  

“There’s been a lot of demand for cream,” Brooks explained, “And there’s just a whole different outlook as far as where the market is at and where it’s going because our reserve supply is still very adequate.”  

He’s not sure if this high price will attract imports because there isn’t a great deal of butter supply on the world market but the Oceania region’s production season is beginning so that will increase the world supply and could potentially bring in imports but it till likely spur some substitution for butter in the U.S.  

The higher butter price could pull cheese prices higher as well, according to Brooks, but he’s cautious because we have a large inventory level of cheese and is why there’s a widening gap between cheese and butter. 

This is a slow week with respect to agriculture reports that we regularly monitor. There are none but keep checking here for the latest dairy news from across the country as well as market information and, please vote on our webpoll. We’d like to know what your cost of production is. Click on the results after you vote and see how you compare.

ARLINGTON, VA – Cooperatives Working Together (CWT) accepted six requests from members for assistance in selling cheese and butter to customers in Europe, the Middle East, and North Africa. The products will be delivered September 2010 through February 2011.

Dairy Farmers of America will receive help in exporting 240,300 pounds of cheese. Darigold had one request accepted for 110,200 pounds of butter, CDI/Challenge had two requests accepted for 2.5 million pounds of butter, and Land O’Lakes had one request for 555,600 pounds of butter and one request for 123,500 pounds of cheese accepted by CWT.

Since CWT reactivated the Export Assistance program in March 18, 2010, it has assisted members in making export sales of Cheddar, Monterey Jack, and Gouda cheese totaling 19,019 metric tons (41.9 million pounds) to 23 countries on four continents. In addition, sales of butter and anhydrous milkfat totaling 14,886 metric tons (32.8 million pounds) have been made to eleven countries on three continents.

Assisting CWT members through the Export Assistance Program positively impacts producer milk prices in the short-term and long-term by helping member cooperatives to gain and maintain market share, thus expanding the demand for U.S. dairy products.

CWT will pay export bonuses to the bidders only when delivery of the product is verified by the submission of the required documentation.

Cooperatives Working Together (CWT) is being funded by dairy cooperatives and individual dairy farmers, who are contributing 10 cents per hundredweight assessment on their milk production through December 2010. The money raised by CWT’s investment is being apportioned between two supply management programs that strengthen and stabilize the national all milk price. For more on CWT’s activities, visit www.cwt.coop.

Last week we reported some bad news on the export front as the Mexican government announced that it would impose tariffs of 20-25 percent on several major categories of U.S. exports to Mexico, including many cheeses. At issue is U.S. compliance with NAFTA obligations to provide Mexico with cross-border trucking access into the U.S. 

Alan Levitt, editor of the CME’s Daily Dairy Report, on Monday, said the U.S. has failed to honor its NAFTA obligations now for 15 years and Mexico finally challenged the U.S. position and lost so Mexico has been imposing retaliatory tariffs since March 2009 but it is a rotating list and now cheese is taking its turn on the list. 

The cheeses involved include Cheddar, Mozzarella, Gouda, Provolone, Colby, Monterey Jack, cream cheese, and others but Levitt points out that this action affects about 90 percent of the cheese we export to Mexico. Over the last three years that would be about 7 million pounds of cheese per month, according to Levitt, “a pretty significant volume,”  

He adds that the U.S. had a great opportunity in Mexico. Because of NAFTA, the U.S. was able to export tariff free whereas U.S. competitors were paying higher tariffs. That gave the U.S. a competitive advantage, he said, and the U.S. had built up its market share to over 60 percent, “now it really puts us in a tough spot.” 

Mexico had been the U.S. largest market for dairy exports and still is, Levitt said, and, over the last three years, about 30 percent of U.S. cheese exports went to Mexico. The U.S. had been running at record levels of cheese exports this year, Levitt reported. Some of that is due to the CWT program but Mexico is not on the CWT list, Levitt concluded, “So I believe we will continue to move cheese but we’re almost sure to see a drop in cheese exports to Mexico.”