The October Milk-Feed Price Ratio is 2.23, down from September’s revised estimate of 2.38, according to USDA’s “Ag Prices” report and compares to 2.11 in October of 2009.

The All Milk Price was estimated at $18.30 per hundredweight, up 60 cents from last month’s estimate, and $4.00 above a year ago.

Corn averaged $4.78 per bushel, up 78 cents from September, and $1.17 above a year ago. The soybean price, at $10.70 per bushel, was up 72 cents from September, and $1.27 above a year ago. Alfalfa baled hay was $118.00 per ton, up $1.00 from September, and $9.00 above a year ago.

While the country seems deeply divided politically going into next Tuesday’s elections, “unity” and “consensus” were themes emphasized this week’s joint annual meeting of National Milk, the National Dairy Promotion and Research Board, and the United Dairy Industry Association in Reno, Nevada.

It was the 14th joint annual meeting of the three organizations according to Dairy Profit Weekly editor, Dave Natzke, in Friday’s broadcast, and quite possibly the most pivotal in its history. In addition to presentations on dairy promotion activities and partnerships, a lot of time was devoted to explanation and discussion of National Milk’s “Foundation for the Future” federal dairy policy proposal, including a “town hall” style meeting to open the program, and in presentations by National Milk chair Randy Mooney and President & CEO Jerry Kozak.

Dairy consensus was a major theme of both sessions, Natzke reported, with National Milk leadership asking dairy farmer delegates and others in the dairy industry to unify behind what they hope is a fundamental change in U.S. dairy policy in the 2012 Farm Bill.

As we have reported in the past; the Foundation for the Future proposal would eliminate large components of current dairy policy, including the Dairy Price Support and Milk Income Loss Contract programs, replacing them with a Dairy Producer Margin Protection program, to help producers protect against low milk prices and/or high feed costs through both base and supplemental insurance programs.

The proposal includes a Dairy Market Stabilization Program to take steps to balance supply and demand by reducing milk payments in surplus situations; and calls for reforms in the Federal milk marketing order program.

“Foundation for the Future is one of several dairy policy proposals being offered as the result of the devastating economic situation dairy farmers have faced for the past two years, Natzke said. “In urging consensus among dairy farmers, Mooney and Kozak stressed the plan, as a complete package, is a compromise that serves all dairy farmers equally, while probably just as important, is politically practical and passable, no matter which party comes into power on November 2.”

Much of the “cream of the crop” of the dairy industry was in Reno, Nevada this week for the joint annual meeting of National Milk, the National Dairy Promotion and Research Board, and United Dairy Industry Association. The theme this year was “Creating a Path to Prosperity” and focused on the dairy industry’s future.

One important element of the future is the CWT program and CWT CEO, Jim Tillison, reported in Thursday’s broadcast that the CWT Committee met on Monday and decided that the emphasis for the rest of 2010 and in 2011 should be on its export assistance rather than additional herd removals.

Dairy economist, Dr. Peter Vitaliano, believes the export assistance can be as effective, if not more effective, than the herd retirement programs have been, according to Tillison, and producers themselves have said they prefer selling more dairy products than removing milk production.

National Milk’s Board affirmed the decision, Tillison reported, and carryover funds will be used toward that end. The board authorized a 2-cent per hundredweight assessment on CWT members with the cavatiot that 75 percent of U.S. dairy producers participate in the program, he said, so an emphasis will be made on signing up new members.

Thursday was the first day of the general session and started with a town hall type meeting addressing National Milk’s “Foundation for the Future” dairy policy proposal to answer all of the questions attendees have.

“People need to understand what all of the elements of the program are,” Tillison concluded, “And once they do that, they pretty much have gone on board saying that this is the new direction that the dairy industry should take.”

Dairy producers are very important beef producers, according to John Freitag, Executive Director of the Wisconsin Beef Council. We talked about it at the recent World Dairy Expo where they exhibit every year and that conversation became Wednesday’s “Beef Board Update” on DairyLine Radio.  

Beef Board Update with John Freitag Play Now | Play in Popup | Download

That was the message at World Dairy Expo, according to Freitag. There’s a lot of ways that dairy producers interact with consumers via milk and dairy products, he said, but 22 percent of U.S. beef is produced by dairy farmers, “So we’re talking to them about their role in producing beef for the consumer and what we have to do to maintain the confidence of the consumer in our product.”  

When it comes to dairy producer benefits from the beef check off, first and foremost is research, according to Freitag, who cited the new beef cuts that have come out of the chuck that are now being offered as well as some new cuts out of the round that were developed this year; meat that in the past was ground chuck or chuck roast and “now we’re making steaks out of and some plants are actually taking these cuts and merchandizing them to the consumer so we’ve added value to that dairy cow as well as the beef cow and market bulls.”  

He admitted that dairy producers at Expo regularly asked him why they have to pay the beef check when they sell a dairy heifer to a neighbor or a baby calf. The law states that you have to pay a dollar every time that animal changes possession, Freitag said, “So we’re just educating producers about the check off, how it works, and the benefits they receive from it.”

Milk pricing, immigration, environmental issues, livestock siting, animal welfare and consumers’ image of dairy producers are among the many topics speakers will address at the PDPW Dairy Policy Summit, Wednesday and Thursday, Oct. 27-28, in Madison.

PDPW's Shelly Mayer Play Now | Play in Popup | Download

The two-day conference will cover 10 hot topics that can impact the future of dairy businesses.

Topics on the table at the Dairy Policy Summit include water quality, consumers’ perception of and trust in farmers today, animal activism, dairy pricing, immigration, livestock siting, regulatory activities, air quality, and challenges associated with keeping beef in today’s school lunch programs.

There wasn’t much reaction to Friday’s Cold Storage data in the cash dairy markets in the final Monday of October. Butter remained at $2.1850 per pound, where it’s been since October 7, and has only dropped a nickel since its peak, according to Dr. Robert Cropp, emeritus professor at the University of Wisconsin at Madison in Tuesday’s DairyLine.

He pointed to the latest data showing butter stocks were down 43 percent from a year ago while butter production was only up slightly, so he believes butter will hold for the next week or two as holiday orders are filled.

Buyers and butter producers are hesitant because of concern over inventory values losing ground, according to Cropp, but sales are good, though he sees prices dropping to the $1.70 or below by November or the end of the year.

It’s a different story for cheese. The block price has lost a little over a dime in the last two weeks but cheese stocks have built a little. September stocks were not up a lot from August, which Cropp called “encouraging,” but they’re higher compared to a year ago, when you look at the total cheese inventory which is the same amount that we had in 1984, Cropp cautioned, “so that’s pretty high.”

Buyers are waiting to see how low prices go. He doesn’t see cheese prices rebounding as we get closer to the holidays and looks for prices to fall to about $1.55-$1.60 per pound by the end of the year. He doesn’t expect a rebound then  until second quarter 2011.

The dairy check off’s “Fuel Up to Play 60” campaign remains a popular program in U.S. schools. Pennsylvania dairy producer Paula Meabon, who also chairs the National Dairy Board, reported in Monday’s “DMI Update” that the National Dairy Council (NDC) and the National Football League have teamed up to make this program what it is.

Meabon pointed out that the NDC has been in schools since 1915 so it brings the nutrition aspect to schools and schools know that the NDC is reputable. The NFL brings “star power”, according to Meabon so the program effectively teaches kids that, not only do they need nutrition, they need 60 minutes of exercise. And, the USDA is part of the campaign, Meabon said, because it works into their plan for healthier U.S. kids.

Meabon said they hope to get the program into every school in the nation. The campaign is in its second year and is currently in 64,000 schools out of 96,000 in the nation, with 55 million kids. The program is currently reaching 36 million kids, she said, “So this is a big initiative and we want to get everyone involved.”

State and regional DMI staff contact schools to sell them on the program, according to Meabon, who called the effort “phenomenal,” because the state and regional groups work in a unified marketing plan with DMI. She also encouraged dairy producers to contact their local schools to make sure “Fuel Up To Play 60” is part of their curriculum.

September butter stocks totaled 129.8 million pounds, down 25.5 million pounds or 16 percent from August and 98.1 million pounds or 43 percent below September 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon. August revised butter estimates were raised nearly 3.5 million pounds.

The September American cheese inventory, at 635.6 million pounds, was unchanged from August, but 39.4 million pounds or 7 percent above a year ago. August revised estimates were raised nearly 8.9 million pounds.

Total cheese stocks amounted to over 1.046 billion pounds, up 5 million pounds or 1 percent from August, and 62 million pounds or 6 percent above a year ago. August revised estimates were raised nearly 5.7 million pounds.

The November Federal order Class I base milk price was announced this morning by the Agriculture Department at $17.24 per hundredweight, up 66 cents from October and $4.38 above November 2009. That put the 2010 Class I base average at $15.21, up from $11.25 in 2009, and compares to $18.23 in 2008. The Class IV advanced pricing factor remained the “higher of” in driving the Class I value.

The two-week NASS-surveyed U.S. average butter price hit $2.1942, up 7.4 cents from October. Nonfat dry milk averaged $1.1755, up 4 cents. Cheese averaged $1.7695, up 9.5 cents, and dry whey averaged 36.34.

Milk production is expected to continue to rise in 2011 according to the USDA’s Livestock, Dairy, and Poultry Outlook issued this morning. However, higher expected feed prices will likely limit producer profits. Domestic demand, especially for cheese, remains strong. Although world prices favor U. S. exports, they are expected to decline in 2011, more steeply on a fats basis than on a skims solids basis. Milk prices in 2011 are expected to remain near 2010 levels.

In the 2010/11 crop year; the U.S. Department of Agriculture recently lowered corn production and ending-stock forecasts. Prices are expected to average $4.60 to$5.40 per bushel in 2010/11. In contrast, soybean meal prices are not expected to differ much in 2010/11 from last year. The soybean meal price is forecast at $290 to $330 per ton this year compared with $311 the last crop year.

The expected higher corn price will push the benchmark 16-percent protein mixed-dairy ration over $8 per hundredweight (cwt) in 2011, up from about $7.30 per cwt in 2010.

Although milk prices in 2011 are forecast to remain near this year’s level, higher feed prices are expected to squeeze producer margins, impacting the size of the dairy herd in 2011. The U.S. dairy herd is expected to advance to 9,155 million cows next year, up about 0.4 percent from the 2010 projected average.

However, during the year, incentives to expand the herd will diminish. Milk per cow is also expected to advance, rising to 21,405 pounds, up 1.3 percent from this year’s expected output per cow. Growth in milk per cow is expected to slow as higher feed prices take hold. The result for the year will be nearly a 1.7-percent rise in milk production in 2011 to 196 billion pounds.

Domestic demand for dairy products, cheese especially, has been firm through2010, and demand is expected to remain strong into 2011, at least in the first half of the year. Domestic commercial use on a milk-equivalent fats basis is projected to finish 2010 at 1.4 percent above last year and forecast to rise another 1.6 percent in 2011. On a skims-solids basis, domestic commercial use is expected to finish 2010 nearly 1 percent below 2009. However, commercial use is forecast to snap back in 2011, rising nearly 2.5 percent above 2010.

The relative strength of commercial use on a fats basis is a result of strong cheese demand moving much of the added milk production to cheese production this year. Meanwhile, butter production has lagged last year’s levels every month until August when butter production edged ahead of year-earlier production.

Butter production is likely to recover into next year due to additional milk production and favorable prices.

Milk-equivalent dairy imports are projected down in 2010 to 4.1 billion pounds, fats basis, and to 4.5 billion pounds, skims-solids basis. Next year, the trend continues, as imports are likely to fall to 4.0 billion pounds, fats basis, and 4.3 billion pounds, skims-solids basis. Higher export totals are expected in 2010: 6.6 billion pounds, fats basis, up from 4.1 billion last year, and 29.3 billion pounds, skims-solids basis, up from 22.4 billion pounds in 2009. However, exports are forecast down in 2011.

Exports are projected to decline to 5.4 billion pounds on a fats basis and 28.3 billion pounds on a skims-solids basis. A gap between U.S. and international prices still favors U.S. exports and discourages imports in 2010. Next year, exports may be pressured by increased production in other exporting countries and several trade issues.

Relatively strong demand for dairy products in both 2010 and 2011 should be countered by continued rising milk production to keep milk prices near current levels into 2011. Cheese prices are expected to average $1.550 to $1.560 per pound this year. Continued firm cheese demand could strengthen prices somewhat further in 2011.

Next year, cheese prices are expected to average $1.540 to $1.630 per pound. Butter prices are expected to moderate in 2011, as increased milk production should make more milk available for butter and powder production. The butter price is expected to average $1.720 to $1.750 per pound this year and $1.505 to $1.625 per pound in 2011.

Nonfat dry milk (NDM) prices are forecast higher in 2011, as domestic demand improves and exports remain firm. NDM prices are expected to average $1.155 to $1.175 per pound in 2010, with a slightly higher average price of $1.175 to $1.245 per pound next year.

Whey prices are projected to average 36.5 to 37.5 cents per pound this year and to remain virtually unchanged next year at 35.5 to 38.5 cents per pound.

All milk prices are expected to average $16.45 to $16.55 per cwt in 2010 and remain about the same next year, averaging $16.00 to $16.90 per cwt in 2011.Class III milk prices are expected to average $14.65 to $14.75 per cwt in 2010 and climb slightly to $14.50 to $15.40 per cwt next year. Class IV prices could drop a bit, averaging $15.10 to $15.30 this year and $14.35 to $15.35 per cwt next year.