Archive for April, 2011

March Milk Production Up 2.4 Percent

Milk production in the 23 major States during March totaled 15.8 billion pounds, up 2.4 percent from March 2010. February revised production at 14.0 billion pounds, was up 2.3 percent from February 2010. The February revision represented a decrease of 14 million pounds or 0.1 percent from last month’s preliminary production estimate.

Production per cow in the 23 major States averaged 1,872 pounds for March, 24 pounds above March 2010.

The number of milk cows on farms in the 23 major States was 8.42 million head, 93,000 head more than March 2010, and 17,000 head more than February 2011.

January – March Milk Production up 2.2 Percent:

Milk production in the United States during the January – March quarter totaled 48.4 billion pounds, up 2.2 percent from the January – March quarter last year. The average number of milk cows in the United States during the quarter was 9.16 million head, 70,000 head more than the same period last year.

Visa Program Helps Dairy Workers

Dairy farmers would be able to utilize a federal visa program to bring foreign dairy workers to the U.S. if a bill in the Senate ever becomes law. National Milk endorses the legislation, according to Chris Galen’s Thursday report, which expands the H-2A Improvement Act. Labor issues are still a challenge for a lot of dairy farms across the country, Galen explained, and other types of agriculture use the H-2A visa program to bring in seasonal workers, primarily fruit and vegetable operations, but sheep and goat herders can also use it and this bill would allow dairy farmers to do so.

The bill was introduced last year in the Senate and didn’t go anywhere, according to Galen, but the Federation has hopes that a bipartisan group of Senators will be able to this year because this remains an important issue for National Milk as well as for the dairy industry and something needs to be done about immigration policy to make certain that the labor needs of farms are met. Milking cows is not a job that a lot of domestic workers want, despite the tough economic times with high unemployment, Galen concluded, and he emphasized that National Milk still supports comprehensive immigration reform.

He admitted it “remains a long shot given the political climate so this particular bill, which is more of a rifle shot, would represent a very significant and welcome step to addressing at least a piece of the puzzle regarding labor issues.” The March Cold Storage report is out this afternoon and USDA announces the May Federal order Class I base milk price. We will post complete details here as soon as possible.

Fly season is upon us

Flies are a pesky part of dairy farming but, unlike rising and falling milk prices, flies can be controlled and one successful method was our topic in Wednesday’s DairyLine. We talked about ClariFly, a feed through larvicide that’s put into ration supplements and fed daily to controls flies on the feed and in the manure, according to Rick Short, regional sales manager for Central Life Sciences.

ClariFly can be fed to beef and dairy cattle at all stages of life from veal calves to lactating cattle, he said, and is even included in milk replacer. The process begins 30 days before the last frost in the spring, according to Short, and is fed until 30 days after your first frost in the fall.

“The old timers used to say we need a hard frost to kill all the bugs,” Short said, but “That’s not actually an accurate statement especially where flies are concerned because, when flies hatch out, they will hatch out in the manure before it gets very cold and, when they hatch out, they will grow very very slowly and then when spring rains and warm weather comes they hatch out as adults.”

ClariFly can go in pelleted or extruded feed, Short said, it’s a very stable molecule and mainly works on house flies and stable flies. Stable flies are the blood suckers, he said, so cattle can lose blood and the flies can transmit diseases, in fact the house fly can transfer over 60 diseases so, other than just the bother of flies to people and cattle, you can also likely reduce incidences of disease. For more information, log on to www.centralflycontrol.com.

Market Correction Anticipated

A more typical block-barrel cheese price spread was restored in Mondays cash dairy market trading. Mary Ledman, Principle of Keough Ledman, and Associates, Inc. reported in Tuesdays DairyLine that cheese prices are about normal for the flush period of the year. She warned that, while it hurt to see the market tumble 40 to 50 cents in the last couple weeks, We’re getting too far away from the butter-powder price. She expects a correction in mid May or June resulting in a more narrow spread between the Class III and Class IV prices.

When asked about the strength in butter, with the price back up to $2 per pound, Ledman responded, The butter market is really a global market and that $2 a pound price level is pretty consistent with the global market for the past two years. She added that its an indication that the U.S. is a player in that market and reported that, through February about 7 1/2 percent of U.S. butterfat was exported.

Fresh from a trip to China, Ledman reported that she visited both large and small dairies as well as rural communities, and dairy farms with more than a thousand head. Milk checks are running $30-$35 per hundredweight, she said, and they investigated potential investment opportunities there.

We were told that the rent per acre would be about $800, Ledman said, So I came away recognizing that China is not a low cost producer in milk nor do I expect them to be any time soon. She believes China will be a good export market, short to mid-term and possibly long term, because she believes China will put its agricultural resources in the pork or poultry industry versus dairy.

Weighing in on America’s Future

The dairy check off-led “Fuel Up to Play 60” campaign and the Gen YOUth Foundation partnered with the Washington Post to host a childhood obesity summit on February 15. Dairy Management Incorporated Joe Bavido said in Monday’s “DMI Update” that the “Weighing in on America’s Future Childhood Obesity” summit highlighted successful programs that are working in the fight.

Some 160 health and nutrition officials attended, along with academia, media, and business leaders and provided insight on childhood obesity through panel discussions and question and answer sessions, according to Bavido, and several dairy producers attended, representing the National Dairy Council.

Chef Carla Hall, a Gen YOUth board member, prepared a school cafeteria style lunch which Bavido said, showcased how a healthy meal can meat dietary guidelines, include dairy, and do it within a school budget. The meal was prepared at a cost of $2.32 per plate, he said, and attendees thought it was “tasty and good.” To learn more about the event, log on to the Washington Post website at http://washingtonpositive.com/conferences/obesity

Exports Continue to be Bright Spot

Exports continue to be a bright spot in the U.S. dairy picture, with foreign sales of cheese and milk powders especially strong, according to Dairy Profit Weekly editor Dave Natzke.

“When the world wants dairy products, it’s finding U.S. farmers are a good source, and that’s helping the nation’s trade balance,” Natzke reported on Friday’s DairyLine. USDA’s latest dairy trade report estimates February exports at $348 million, up 4% from January and 55% more than February 2010.

In the December-February sales period, export volumes of milk powders were up 150% compared to a year ago, with sales to Southeast Asia especially strong.

Cheese exports in the first two months of 2011 totaled more than 85 million lbs., equivalent to 5% of total U.S. cheese production during that period, the highest percentage on record.

On the import side of the dairy trade ledger, February imports were estimated at $214 million, up about 2% from January, and about 8% more than a year earlier.

Through the first five months of fiscal year 2011, exports were estimated at $1.7 billion, up 55% from the same period in FY ’10, while imports were estimated at $1.2 billion, up about 9% from the same period in FY ’10. The result is a $516 million trade surplus.Looking at it another way, February dairy exports were equivalent to 13.4% of U.S. milk solids production for the month, while imports represented just 2.6% of total solids production, near historic lows.

While global dairy product sales increased, foreign sales of U.S. female dairy cattle declined. February exports were estimated at 1,322 head, down from 6,840 head in January. The two-month total, however, is still well ahead of the record-setting pace of last year. Turkey was again the leading market for U.S. dairy cattle, followed by Mexico and Canada.

Guidelines for Responsible Antibiotic Use

Our “Beef Board Updates” on DairyLine have been focused lately on dairy farmer responsibility for the proper use of antibiotics on the farm. The Beef Check off is constantly creating tools for both beef and dairy producers to keep them informed of their responsibility in this regard.

 We talked about it in Wednesday’s Beef Board Update with Conrad Kvamme, consultant with the Midwest Dairy Beef Quality Assurance Center. We focused on a printed chart entitled “Guidelines for Responsible Antibiotic Use.” 

The first principle, Kvamme said, is that antibiotics cannot replace sound management practices. When you identify animals that are not well and need to be treated, you have to use the antibiotics correctly. You need to determine what drug is needed and not over medicate. 

That is often a problem regarding residues in older animals, Kvamme warned, because when a farmer looks at the weight, he tends to think they are larger than they are or weigh more so then it’s over medicated.

 If another medication is used a few days later because they don’t feel the first one is working as well as it should, that prolongs the time for any withdrawal period before sending them to market, according to Kvamme. 

Having a good relationship with the local veterinarian is also very important when working with prescribed drugs, according to Kvamme, who cautioned farmers who purchase drugs over the counter at the local feed and supply stores.

Veterinarians can assist in evaluations of drugs and their effectiveness and how to use them, he concluded.

Dairy Outlook: Feed Prices to Remain High

The Agriculture Department warns in its latest Livestock, Dairy, and Poultry Outlook issued this morning that feed prices are expected to remain high throughout 2011. However, milk production is expected to continue to rise, based on slightly higher cow numbers and increased output per cow. 

Milk equivalent exports on both a fats and skims solids basis will trail last year, according to the Outlook, but are still significant enough to help support prices above 2010 levels. Forecast increases in commercial domestic use should also provide support prices as exports could weaken later in the year. 

Feed prices are also expected to remain high by historic standards. Corn prices are forecast at $5.20-$5.60 a bushel in 2010/11. Corn producers indicated intentions to plant 4 million acres more corn according to the Prospective Plantings report released last month. The forecast corn price is well below reported spot prices in central Illinois. This is because USDA forecasts reflect expected National Agricultural Statistics Service (NASS) prices received by farmers. Early season forward contracting of corn prices means the NASS farm price lags prevailing cash market prices. 

Soybean meal prices are forecast to average $340-$360 a ton for 2010/2011. Soybean acreage is expected to be down slightly this spring from last year’s record. Last month’s quarterly grain stocks report showed corn stocks down 15 percent from last year and soybean stocks also down by only 2 percent from last year. The expected expanded planting of field crops could support higher alfalfa hay prices. The outcome for dairy producers is continued high feed prices. 

The latest Milk Production report shows U.S. milk cow numbers for January and February in surveyed States above the corresponding period last year, as is milk per cow. In contrast, the Livestock Slaughter report shows dairy cow slaughter continuing ahead of a year ago, and high manufactured beef prices have increased prices for cull cows. These data suggest that replacements exceed culls nationally and that freshening of the national herd continues. The U.S. dairy herd will likely increase fractionally in 2011 to 9.165 million head, up from 9.117 million last year. 

Milk per cow is also forecast to rise this year, but by only a near-trend 1 percent compared with a 2.8 percent year-over-year increase last year. The small increases in herd size and milk per cow will move up production to 195.9 billion pounds of milk in 2011.

 Milk equivalent imports are forecast at 3.7 billion pounds for the year on a fats basis and 4.8 billion pounds on a skims-solids basis. Imports on a skims-solids basis are virtually unchanged from 2010. Milk equivalent exports on a fats basis are forecast to total 7 billion pounds for 2011; this is a decline from 2010’s totals, but the April 2011 forecast was increased from the March forecast based on stronger than expected exports of butterfat and cheese. Milk equivalent exports on a skims-solids basis are forecast at 31.3 billion pounds, a small decline from 2010.  

The April skims-solids export forecast was increased from the March forecast due to the high level of nonfat dry milk (NDM) shipments registered in January. For the second half of 2011, exports may weaken relative to the first half as increased competition from Oceania is expected to erode the competitive U.S. position. Nevertheless, the relative weakness of the U.S. dollar and strong global demand will help maintain exports at a strong pace. 

Domestic commercial use is expected to rise on both a fats and skims-solids basis in 2011. Expected continued economic recovery underpins the forecasts. Commercial use on a fats basis is forecast to rise by nearly 1.8 percent in 2011 over 2010, the strongest year-over-year rise since 2006. Skims-solids commercial use is set to rise by 2.7 percent in 2011 after falling by an equal amount in 2010, making skim-solids commercial use in 2011 the same as in 2009. 

Major dairy product prices are expected to go higher in 2011 compared with 2010, but 2011 price forecasts for cheese and butter were revised downward this month from the March forecast. Both cheese and butter prices have weakened recently, and cheese stocks have been relatively high. NDM prices are virtually unchanged from last month’s forecast, based on expected continued strong exports.  

Cheese prices are forecast to average $1.665-$1.715 per pound for the year, and NDM prices are projected to average $1.375-$1.415 per pound. The butter price is expected to average $1.735-$1.815 per pound for the year. 

Whey prices are forecast to average 41-44 cents per pound. High NDM prices may be providing some support for whey prices. 

Milk price forecasts will be higher this year than last, but the Class III price forecast was lowered slightly this month from March projections. The Class IV price, raised fractionally from last month based on stronger NDM prices, is estimated to average $17.05-$17.65 per cwt. This will average above the Class III price, which is expected to average $16.10-$16.60 per cwt. The all milk price is forecast to average $18.15-$18.65 per cwt in 2011.

EPA Finalizes SPCC Dairy Exemption

The U.S. Environmental Protection Agency (EPA) issued a final exemption clarifying that dairy farms don’t have to treat milk the same as petroleum products under the Spill, Prevention, Control, and Countermeasure (SPCC) regulation.

“What this means is that the EPA is not going to treat milkfat and petroleum products in the same way,” NMPF’s Chris Galen said on Thursday’s DairyLine. “From a practical standpoint, dairy farmers don’t have to come up with a spill control plan for their milk storage.”

NMPF has been working with Congress and the EPA for two years to win the exemption for dairy farmers because “Got milk? And got oil? Are two different questions and shouldn’t be lumped together in the same sentence,” he said.

 Even with the exemption of milk handling equipment, many farmers still need to have an SPCC plan. Such plans are required for farms that have an aggregate storage capacity of oil products of 1320 gallons, or more, for every storage container larger than 55 gallons.

A farm with less than 10,000 gallons of total storage capacity and no single storage greater than 5,000 gallons can self-certify their SPCC plan. Farms that do not meet this exemption must have a plan certified by a professional engineer.

NMPF has completed the development of a self-certification template tool to assist dairy producers in developing their SPCC plans that covers all fuel and oil storage on the farm. The template, developed with assistance from the U.S. Department of Agriculture’s Natural Resources Conservation Service (NRCS), is available at nmpf.org

Cash Cheese Market Shows Strength

The cash cheese market continued to show strength to start the week. Blocks were up a penny to $1.60, while the barrels inched up a quarter-cent to $1.5425.“The tone of the cheese market has shifted a little bit and we’re starting to see that play out in the futures markets as well,” Alan Levitt, editor of the CME Daily Dairy Report said.

Milk futures have hit new highs for August 2011 through January 2012. Up until now, cheese market activity has mostly been on offers. Towards the end of last week it appeared buyers became more aggressive and sellers were scarce. We didn’t see any offers at all Monday with both blocks and barrels moving up on unfilled bids.  

“I don’t want to get people too excited, but it almost feels like we’ve hit a bottom and maybe ready to turn higher,” Levitt said Monday.He added that the current prices may be a decent level for buyers to build stocks again after holding back a bit the past month.  

Levitt said another reason we may have seen the bottom is the current values for cheese, butter, nonfat, and whey. Current calculations show the Class IV at $19.50 and the Class III at $15.50.“That’s too wide of a spread, that’s never proven to be sustainable,” he said. In California, that spread is even wider, “So something has to move.”

Spot butter was unchanged yesterday, holding at $1.9725. “It’s possible the prices are going to drop after Easter…but so far the butter market seems to be pretty well supported,” he said.

Nonfat prices are fading a little bit, but there’s still steady support from an overseas market. “Maybe just like we saw cheese prices run up in January and February to try and catch up with butter, we may be on the threshold of another rally in cheese as well,” Levitt concluded.

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