It’s not the best way to end one year and start a new one but farm gate milk prices continue to slide. The Agriculture Department announced the December Federal order Class III benchmark milk price Thursday at $13.83 per hundredweight, down $1.61 from November, and $1.15 below December 2009. That pulled the 2010 average down to $14.41, up from $11.36 in 2009, but compares to $17.44 in 2008.

Looking ahead, the Class III futures were trading late Thursday morning as follows: January $13.28, February $13.84, March $14.15, and April was at $14.57, with the peak at $15.73 in October.

The December Class IV price is $15.03, down $1.65 from November, but 2 cents above December 2009.

The four-week NASS surveyed cheese price averaged $1.4606 per pound, down 15.5 cents from November. Butter averaged $1.6539, down 36.9 cents. Nonfat dry milk averaged $1.1848, down a penny, and dry whey averaged 37.89 cents, up fractionally. California’s December 4a and 4b prices will be announced Monday, January 3.

Dairy producers should seek out true friendships for your soul and your mind.

That according to Gary Sipiorski, Dairy Development Manager for Vita Plus in Madison, Wisconsin, who wraps us his list of critical management items in PDPW’s “Your Bottomline” Podcast.

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The tightening global cotton supply, coupled with a ravenous appetite for lint, could be the much needed shot in the arm for U.S. cotton growers. Tom Wedegaertner, director of cottonseed research and marketing for Cotton Incorporated, admitted in Wednesday’s broadcast that the price of cotton has “gone through the roof” but quickly adds that the news isn’t all bad for dairy producers because that will result in expanded acreages in 2011 in the U.S.

Cotton acreage has declined the past two years because there’s been an over- supply of cotton in the world market, according to Wedegaertner, resulting in declining prices to farmers and a smaller supply of cottonseed to feed dairy cows. Last year there was only about 2 million tons of cottonseed, he said, but this year, with increased acreage and good yields we should see an extra million tons or so to feed to dairy cattle and he expects an extra 2 million acres planted to cotton in 2011 to take advantage of the high prices “so cottonseed will become more and more readily available.”

Wedegaertner acknowledged that dairy farmers are caught in the middle of falling milk prices and rising feed costs. Corn is climbing, as are soybeans, he said, and “the soybean complex controls a lot of the feed market and if it comes down a little then cottonseed will also as they track together.

Hopefully, as cotton acreage increases, cottonseed will be more competitive and remain an important part of the dairy ration, he concluded. For more information, log on to www.wholecottonneed.com and if you log on to www.wholecottonseed.com/contest, you’ll learn how you can win a pocket video camera simply by voting between the two finalists in Cotton Incorporated’s cottonseed video contest. The voting ends January 31, 2011.

Cash cheese moved a little lower the last Monday of 2010. The blocks slipped a quarter-cent, to $1.32, and the barrels were down a penny, to $1.3450. Market analyst Alan Levitt said in Tuesday’s DairyLine that the pattern for most of 2010 was that, when cheese trading neared $1.40, buyers returned, but when prices got near $1.40 in December, “people had pretty much bought what they needed for the holiday season, weren’t interested in accumulating inventory going into the end of the year, and wanted to see how sales went over the holidays.” He expects buyers to return after the First, but “right now we’re in a little bit of a lull.”

When asked about the lack of reaction in the market to the November Milk Production and Cold Storage report, Levitt pointed out that cheese inventories are still well above historic levels. They dropped some in November, he said, but didn’t drop much in the fall and are still overhanging the market.

Butter stocks are at a historically low level, according to Levitt, probably only at two and a half week’s worth of use and the smallest figure in five years so that will be a factor in 2011. He added that we don’t see the immediate impacts from those reports like we used to but, going into next year, butter is going to be short again.

Weather is another topic of discussion, with rains in California and snowstorms in the Northeast. California has been getting dumped on, he said, and Tulare County received almost four inches of rain this month, more than triple the normal level, and a lot of fields are under water but farmers have got better prepared in recent years in terms of cow comfort and have done whatever they can. A lot of those farms are under cover, he said, and, while we may expect to see some impact on milk production, it probably won’t be as much as we might have seen 10 years ago.

As to the Northeast, it’s too early to tell because we’re over the holiday period and we haven’t received all of the reports yet but certainly it affects people’s ability to get out and buy milk from the stores and it will affect farm pickups.

Lactose intolerance has been a cause for the loss of milk and dairy product consumption and the dairy checkoff has taken steps to deal with it. Dairy Management Incorporated’s Joe Bavido talked about a new website that the dairy check off produced to “connect with lactose intolerant consumers.” The website is www.moovision.com and also has a Facebook page, Twitter account, and YouTube channel. 

The goal, according to Bavido, is to change the attitude and purchase behavior of millions of adults who experience real or perceived symptoms of lactose intolerance and thus avoid or restrict dairy consumption. 

“Bringing them back to dairy could result in 2.3 billion pounds of new sales annually,” Bavido said, and the goal is to use these social media in a light- hearted and novel way to converse with lactose intolerant consumers with the core objective of “changing their perception of lactose free milk, identify opportunities to increase lactose free milk consumption, and address misconceptions about lactose free milk related to its nutritional value and taste.”

USDA’s Dairy Industry Advisory Committee met last week, voting on more than 20 proposals for potential consideration as national dairy policy. Dairy Profit Weekly editor Dave Natzke reported Friday that most of the proposals garnered majority approval, including calls for stricter milk quality standards; federal milk marketing order reforms; improved dairy farmer risk management tools; and modifications to the Milk Income Loss Contract program. 

Two somewhat controversial proposals narrowly passed, according to Natzke, including a “growth management” program to control milk supplies and a call for all states to adopt California’s higher “total solids” standards for fluid milk. The committee will meet again, January 11 and 12 to finalize recommendations for possible inclusion in the 2012 Farm Bill. 

And, in a press teleconference this week, members of the National Family Farmers Coalition (NFFC) said those policy recommendations and lame duck Congress did little to address the dire economic conditions facing dairy farmers.  

Gary Genske, prominent dairy accountant, said the recommendations fail to address price discovery and import issues, and fall short of helping dairy farmers deal with low income and market volatility.  

Wisconsin dairy farmer Paul Rozwadowski said the lame duck Congress left dairy farmers with lumps of coal, especially when it comes to ethanol policy that will drive feed costs higher, at a time milk prices are declining. California dairy farmer Loren Lopes, said the latest measure of California dairy producer financial health is not profitability, but rather “equity burn.”

Company to Pay $30 Million and Purchase Raw Milk from Multiple Sources

WASHINGTON, Dec. 24, 2010 /PRNewswire/ — Today Northeast Dairy Farmers reached a settlement agreement with Dean Foods Company in their class action antitrust lawsuit against Dean, Dairy Farmers of America (DFA) and Dairy Marketing Services (DMS). The agreement will include $30 million in monetary damages and injunctive relief that calls for Dean to purchase a portion of its raw milk from multiple Northeast sources.

“This is a major win for dairy farmers in the Northeast who have been squeezed by monopolization and price-fixing,” said Benjamin Brown, an attorney at Cohen Milstein Sellers & Toll, PLLC, which represents the plaintiff dairy farmers. “We are pleased that Dean Foods is working with plaintiffs to put this practice behind them.”

The lawsuit — Alice H. Allen, et al. vs. Dairy Farmers of America — is far from resolved, however, added Kit A. Pierson of Cohen Milstein.

“The case is continuing against the remaining defendants, Dairy Farmers of America and its marketing affiliate Dairy Marketing Services,” explained Pierson. “Still at issue are charges that the DFA — the nation’s largest cooperative — monopolized a level of distribution of fluid milk in the Northeast and forced dairy farmers to join DFA or its marketing affiliate DMS to survive.”

DFA and DMS have been named in the suit for engaging in monopolization, price-fixing, and other anticompetitive conduct.

“The fact that Dean has agreed to purchase raw milk from multiple sources is a big step in the right direction,” said Robert Abrams of Howrey, LLP, which also represents the plaintiff dairy farmers. “What dairy farmers want is a choice between different bottlers. They have been living in a world that is monopolized and they pay the prices that are offered to them or they don’t sell milk. What we want is choice and competition.”

The next step is for the U.S. District Court for the District of Vermont — where the lawsuit was filed in August 2009 — to grant preliminary approval of the settlement agreement. Notice will then go out to the estimated 5,000 to 10,000 Northeast dairy farmers who could be eligible to file a claim for monetary damages.

Abrams added, “We are pleased that a settlement with Dean has been reached and look forward to a timely court approval.”

For more information, visit www.cohenmilstein.com.

The January 2011 Federal order Class I base milk price was announced this morning by the Agriculture Department at $15.20 per hundredweight, down $1.76 from December but 17 cents above January 2010. The Class IV advanced pricing factor remained the “higher of” in driving the Class I value.

The NASS-surveyed butter price averaged $1.6328 per pound, down 46.7 cents from December. Nonfat dry milk averaged $1.2148, up 2.5 cents. Cheese averaged $1.4841, down 22.2 cents, and dry whey averaged 37.83 cents, up 0.7 cent.

The lame duck session of Congress has been “pretty productive,” according to National Milk’s Chris Galen. He reported Thursday that many are surprised by how much legislation was passed and cited the estate tax specifically which was part of the bigger tax package negotiated between Republicans and President Obama. It prevented the rate from jumping to higher levels that “would have been painful for dairy farmers and others,” Galen said.

The bill exempts $5 million of a person’s estate from tax and anything above that the tax rate is 35 percent. Had this bill not become law, the rate would have reverted to a $1 million exemption and a maximum tax rate of 55 percent.

The Food Safety bill was also passed, twice, due to a procedural issue, and while Galen said that National Milk has concern that “it exempts some farms that could potentially become a food safety threat,” the Federation hopes that “it will make positive developments overall in food safety.”

Congress also passed and the President signed the Child Nutrition Act reauthorization which maintains a prominent role for dairy products in the nation’s school lunch programs. National Milk supported that, Galen concluded.

November butter stocks totaled 70 million pounds, down 38.8 million pounds or 36 percent from October and 72.7 million pounds or 51 percent below November 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon.

The November American cheese inventory, at 625.6 million pounds, was down 13.3 million pounds, or 2 percent from October, but 45.5 million pounds or 7 percent above a year ago.

Total cheese stocks amounted to over 1.062 billion pounds, was down 29.4 million pounds or 3 percent from October, but 44.5 million pounds or 5 percent above a year ago.