“What goes up, must come down,” so it’s said and so true of milk prices. The Agriculture Department announced the April Federal order Class III benchmark price this morning at $16.87 per hundredweight (cwt.), down $2.53 from March, but still $3.95 above April 2010. That pulled the 2011 average to $16.67, up from $13.62 at this time a year ago, and compares to a meager $10.33 in 2009. 

Looking ahead, the May Class III contract settled Thursday at $16.27, June $17.18, July $17.60, August $17.86, September $18.00, October $17.83, November $17.34, and December $16.96. 

The April Class IV price is $19.78, up 37 cents from March, $6.05 above a year ago, and $2.91 above the Class III price. 

The four week NASS-surveyed cheese price averaged $1.6983 per pound, down 27.4 cents from March. Butter averaged $1.9975, down 6.2 cents. Nonfat dry milk averaged $1.5680, up 7.4 cents, and dry whey averaged 48.08 cents, up 2.3 cents. 

California’s April 4a and 4b prices are scheduled for release on May 2. Downes-O’Neill dairy economist Bill Brooks looks for the 4 butter-powder price to come in at around $19.46. That would be a 46 cent gain from March and would be $5.97 above a year ago. He looks for the 4b cheese milk price to hit $14.34, down $2.42 from March, $2.04 above a year ago, and would be $2.53 below the comparable Federal order Class III price.

The National Conference on Interstate Milk Shipments (NCIMS) is considering some major changes to the Pasteurized Milk Ordinance (PMO) which sets standards for ‘Grade A’ milk production, processing and packaging, from the farm to the consumer. The NCIMS is meeting in Maryland through May 4, according to Dairy Profit Weekly editor Dave Natzke in his Friday DairyLine report. 

NCIMS includes representatives from the dairy industry, government, and educational institutions, and they will consider 91 proposals this year. Two similar proposals could have the biggest impact on dairy farmers, according to Natzke.

Both the National Milk Producers Federation and the National Mastitis Council proposed lowering the national somatic cell count (SCC) standard incrementally in 2012 and 2013, reaching 400,000 cells per milliliter in 2014. The current standard is 750,000 cells, established back in 1993.

“While most officials say the current U.S. standards pose no human health concerns,” Natzke said, “Proponents say the tighter standards will improve consumer confidence in the safety and quality of the U.S. milk supply, reduce antimicrobial and bacterial contamination risks, and improve farmer profitability.” 

NCIMS has rejected numerous attempts to tighten standards over the past two decades, Natzke said, but last year the European Union tightened guidelines for milk and dairy ingredients used in any foods it imports, and failure to meet those standards could have a negative impact on U.S. dairy exports.

If NCIMS endorses the new standards, they must still be approved by the U.S. Food and Drug Administration, Natzke concluded.

The Agriculture Department issued its annual Dairy Products report for 2010 on Wednesday.

Total cheese output hit 10.4 billion pounds, up 3.6 percent from 2009. Wisconsin was the leading state with 25 percent of U.S. cheese production. American type cheese amounted to 4.3 billion pounds, up 1.7 percent and accounted for 41 percent of total cheese output in 2010. Again, Wisconsin was the leader with 19.5 percent of the total.

U.S. butter production totaled 1.56 billion pounds, down 0.5 percent from 2009. California accounted for 35.6 percent of the total. Nonfat dry milk output hit 1.56 billion pounds, up 3.4 percent from 2009.

Another undercover video has surfaced depicting blatant animal cruelty on a Texas cattle ranch. National Milk’s Chris Galen reported in his Thursday DairyLine program that the video came from the animal rights group, “Mercy for Animals,” a group that produced videos last year from dairy farms in New York and Ohio, a veal operation, and now this ranch in west Texas which raises dairy and beef calves. 

“The scenes were disgusting and very deeply disturbing,” Galen said, “And another example of the fact that we always have to be vigilant about what happens on everyone’s operation because this is another case of a bad apple potentially spoiling the whole barrel.” 

The video was released shortly before the Easter weekend so it didn’t get a lot of air play on the major media outside of Texas, according to Galen, but he said it’s “a wakeup call for the entire industry again that we need to have good training programs in place for everyone on these farms because it only takes a few people who don’t understand what proper animal care rules are to besmirch and to despoil the image of the entire livestock sector.” 

He emphasized that this is a “deeply disturbing practice” illustrated in the video and he reminded listeners that the National Dairy Farm program, developed by National Milk, is “very clear that they don’t allow for the types of euthanasia that apparently was practiced on this farm and don’t allow animals to be struck or dragged or the variety of things certainly not acceptable that were depicted on the video.” “More importantly than just having the guidelines in place,” he concluded, “They need to be followed by everyone working on these operations.”

Conrad Kvamme, consultant with the Midwest Dairy Beef Quality Assurance Center, was back in our “Beef Board Update” Wednesday on DairyLine to continue our discussion of dairy farmer responsibility for the proper use of antibiotics on the farm. The Beef Check has creating tools for both beef and dairy producers to keep them informed of their responsibility in this regard.

Kvamme said the responsibility starts with the heifers, from day 1 and on, and he emphasized that injection sites, be it for vaccination or medication, should only be in the neck region because, if it’s given in the rump or shoulder area it will be evident for the lifetime of that animal when it comes to market.

That prompted Kvamme’s next point which was drug withdrawal times. He pointed out that some drugs which are today prohibited have shown up in the tissue of 3 to 5 year old cows that was given as a calf. It will show up later.

He also underscored the importance of documentation of all treatments. Heifer growers need to provide the records to go with the calf that leaves its premises, according to Kvamme.

These efforts are important to preserve the safety and wholesomeness of milk and dairy products and the meat from dairy as well as beef cows Kvamme said our quality assurance is in the high 98, 99 percent but there can be some slip ups so we want them (producers) to be well aware so we don’t have a train wreck down the road because food safety is paramount today and better than it’s ever been but we still don’t want to have something happen.”

The cash cheese market saw few changes Monday, following the Good Friday closure. Cheese was unchanged but butter inched a quarter cent higher, to $2.0025 per pound. Some expected it to slip now that Easter is behind us. 

Downes-O’Neill dairy broker Bill Brooks told DairyLine that butter could still fall but may be in a situation right now where stocks may need some replenishing following the holiday. He admitted that he hasn’t seen much in the way of sales data but suspects sales were stronger than anticipated, considering butter prices hovering around $2 for most of the year. 

He also pointed to the higher prices on the world market and the concern where supplies will be. Last week’s Cold Storage report indicated that we built stocks in March, he said, but not by a huge amount. He believes there’s a “underlieing nervousness” about our fat supplies as we approach the summer months and milk production starts to decline. 

The April 21 Daily Dairy Report stated that American cheese inventories continued to shrink in March, and called it “an unusual development for stocks at this point in the year.” When asked what was behind that, Brooks theorizes that there has been some shifting around in when those inventories were pulled out. He recalled that, last fall we were building stocks when we would normally be pulling them out. 

“Whether we pushed some sales forward or what exactly happened I’m not positive on that,” Brooks said, “But, going into the Cold Storage report, three of the previous ten years we had pulled stocks down so it’s not anything that’s completely out of the question to see stocks decline during the month of March; it just doesn’t happen very often.” 

He said the export market’s influence, “changes in tastes and preferences, some of our seasonality is kinda getting thrown out of whack right now and it’s very difficult to hold to those normal movements we typically see,” he concluded. 

Brooks predicts the April Federal order Class III milk price will be announced Friday by USDA at $16.85 per hundredweight. That would be a drop of $2.55 from March, but would be $3.93 above April 2010. He looks for a Class IV price of $19.79, up 38 cents from March, $6.06 above a year ago, and $2.94 above the Class III price. 

California’s April 4a and 4b prices are scheduled to be announced May 2. Brooks looks for the 4a to come in at around $19.46. That would be a 46 cent gain from March and would be $5.97 above a year ago. 

He looks for a 4b price of $14.34, down $2.42 from March, $2.04 above a year ago, and $2.51 below the comparable Federal order Class III price.

Dr. Mike Hutjens, Extension Dairy Specialist at the University of Illinois, discusses sugar in the ration in this weeks Feed Facts podcast.

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Monday’s “DMI Update” began a new series on the dairy check off funded Dairy Research Institute (DRI) and its involvement in the fight again childhood obesity with its president, Dr. Greg Miller. But, I began asking Miller why we have the California Dairy Research Foundation (CDRF) as well as the DRI. He said the two are doing similar things but not the same things as the DRI is a national program and the CDRF focus is on a state and local area. He said he sits on the CDRF board because it helps build alignment between the two. 

Miller went on to report that the DRI is working hard to grow demand for U.S. dairy by working with industry, academia, government, and commercial partners to “drive pre-competitive, demand building, technical research opportunities in the nutrition end product arena” and one of the key areas they’re focused on is the obesity issue. Dairy has had to defend itself amongst a barrage of attacks regarding the fat issue and has done so successfully. Miller pointed out that the government’s recent dietary guidelines talk about the role and value of dairy products in a healthy diet and said “A lot of what they talk about relative to dairy is the result of the dairy farmer investment in research.”

 “The data that we have to bring to the table to fight for dairy in those dietary guidelines is really the result of dairy farmer’s investment in the checkoff,” he concluded, “And I’m happy to say that they continue to support three servings of dairy each day, dairy remains a food group, in fact they increased recommended intake for kids 4 to 8, from two servings a day to two and a half.”

American cheese stocks, at 614.1 million pounds, was down 1 percent from February but 2 percent above a year ago, according to USDA’s preliminary Cold Storage data issued Thursday.

The total cheese inventory remained at 1.03 billion pounds, unchanged from February and up 3 percent from a year ago.

March butter stocks stood at 144.4 million pounds, up 4 percent from February, but 26 percent below March 2010.

The Agriculture Department announced the May Federal order Class I base milk price this afternoon at $19.75 per hundredweight, up 32 cents from April, $5.95 above May 2010, and equates to about $1.70 per gallon. The 2011 Class I average now stands at $17.70, up from 14.25 a year ago.

The Class IV advanced pricing factor became the “higher of” in driving the Class I value and no MILC payment to producers is expected. The two-week, NASS-surveyed butter price averaged $1.9869 per pound, down 4.9 cents from April. Nonfat dry milk averaged $1.5698, up 9.7 cents. Cheese averaged $1.6768, down 29.7 cents, and dry whey averaged 47.75 cents, up 1.6 cents from a month ago.