Archive for August, 2012

Change in Seasons Can’t Come Soon Enough

Labor Day is the unofficial end of summer, and for U.S. dairy farmers, the change of seasons probably can’t come soon enough. DairyProfit Weekly’s Dave Natzke joined us on DairyLine Friday to turn another page on the dairy calendar:
Even Congress has to come in from recess in September, and here in northcentral Wisconsin, we actually have some trees starting to turn color. After a long, hot dry summer, most dairy farmers are ready for autumn.
USDA’s monthly “Milk Cost of Production” report showed the nation’s dairy farmers likely paid more in July operating costs than at anytime in history, with feed prices leading the way. The estimates put total costs at more than $27 per hundredweight, up $2 from June and $1.75 more than previous record highs in the summer of 2008.
Hopefully, the change in season will bring better news. Schools will be back in session, and that means more demand for fluid milk for student lunches and feeding programs, and cheese demand has also been picking up. USDA announced August minimum prices farmers will receive for milk used in dairy products, and they’re all up from July. Although they remain well below last year’s price levels, prices should continue to rise through the end of the year. The question, of course, is whether the higher milk prices can keep pace with rising feed costs.
Longer term, there’s another positive sign. Dairy product manufacturers are investing in new and upgraded processing plants. Industry analysts estimate U.S. dairy product manufacturers will invest $2.2 billion over the next couple of years, with more than 75 major capital projects expected to be underway before June 2014. Additional and more efficient capacity should lead to more demand for milk, a welcome sign for dairy farmers in any season.

Farm Milk Prices Moving Higher

(August 29, 2012) Farm milk prices moved higher for the third month in a row. The Agriculture Department announced the August Federal order Class III benchmark milk price today at $17.73 per hundredweight (cwt.) up $1.05 from July but still $3.94 below August 2011, and equates to about $1.52 per gallon. That put the 2012 Class III average at $16.23, down from $18.18 at this time a year ago, and compares to $13.80 in 2010 and $10.29 in 2009.

Looking ahead; Class III futures settled Wednesday as follows: September, $19.36; October, $20.34; November, $20.55; and December, $20.41 per cwt. The August Class IV price is $15.76, up $1.31 from July but 4.38 below a year ago.

The AMS-surveyed cheese price averaged $1.7682 per pound, up 8.3 cents from July. Butter averaged $1.6859, up 14.7 cents, nonfat dry milk averaged $1.2543, up 8 cents, and dry whey averaged 53.52 cents, up 3.3 cents from July. California’s comparable 4a and 4b prices are scheduled to be announced September 4 by the California Department of Food and Agriculture.

Courtesy the Mielke Market Weekly

Farm Bill Now

(August 30, 2012) a coalition of farm groups has joined forces to create “Farm Bill Now,” to raise public awareness of theneed for Congress to pass a new farm bill before current programs expire next month. National Milk’s Chris Galen was on DairyLine today to talk about it.

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LGM-Dairy Sale is Friday

(August 29, 2012) USDA’s Risk Management Agency (RMA) is offering a Livestock Gross Margin-Dairy Insurance policy sale Friday. Brian Gould is professor at the Department of Agriculture and Applied Economics at the University of Wisconsin-Madison and spoke with DairyLine about last Friday’s announcement.

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A Reproductive Moment

(8/30/12)  Ray Nebel talks pregnancy exams as we continue to discuss shortcuts in this Reproductive Moment podcast.

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Your Bottom Line

(8/29/12)  Dairy Policy Anylist Mark Stephenson from the University of Wisconsin-Madison recently made a presentation to mid-west processors.

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Cheese Market Trading Sideways

(August 28, 2012) The CME cheese market remains quiet and could be trading sideways for a while according to Matt Mattke, market 360 advisor with Stewart-Peterson, Inc.

“The tough part right now is just how our prices are sitting relative to the world,” he said. U.S. Cheddar is pricing close to a 22-cent premium over world prices like Oceana Cheddar.

Milk and cheese futures are currently priced in the $1.90’s and the cash market is having a tough time getting to $1.90.

August has been a good month for Class III milk prices, up 80 cents to $1.00 from where we were sitting in July. It has stalled recently with fourth quarter prices getting up to $20.25 to $20.50.

October, November, and December milk of this year is currently trading at about 12 cent premiums over cash cheese, according to Mattke.

“It’s going to be hard to see where that next leg of upside is going to come unless the cash market starts to pick up momentum,” he said. “Or we see the whey market, which has been extremely quiet recently.”

Weaned Heifers…The Forgotten Age?

(8/27/12)  Dr. Dari Brown from Land o’Lakes talks about the “forgotten age” for weaned heifers.

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Mixed Results From Lawmakers

(August 24, 2012) It’s been a hot, dry summer in much of the country, and the drought has had a major impact on feed supplies and costs for dairy farmers. In addition to the drought, state and federal policies further complicate the picture, forcing dairy farmers to turn to lawmakers to ease some of the financial pressures. DairyProfit Weekly’s Dave Natzke reported on the mixed results from those requests:

“From the environment and energy to milk pricing formulas, government policies affect nearly every part of dairy farming. And, in times like this summer, those policies can’t always deal with the weather. Dairy farmers got results from two petitions requesting hearings on potential policy changes this week.

In the first, the U.S. Environmental Protection Agency (EPA) opened a 30-day comment period on a request seeking a temporary waiver of Renewable Fuel Standard (RFS) volume requirements. The standard, which mandates the amount of ethanol that must be used annually, has been seen as a driving force behind reduced corn supplies and higher prices for dairy cattle feed. Dairy, livestock and food industry representatives, joined by more than 100 members of Congress and several state governors, have requested a temporary waiver to the standard. EPA has 90 days to decide whether a waiver should be granted.

In California, the state’s Department of Food & Agriculture turned down a hearing request to consider changes to the pricing formula for milk used in cheese production, and a request for an emergency increase of 50¢ per hundredweight on all classes of milk produced in the state. Dairy farmers had sought the changes, in part as a means to help cover skyrocketing feed prices there. Instead, California’s ag secretary Karen Ross is forming a task force to look at the dairy pricing structure and come up with long-term solutions.

One other petition has surfaced, asking USDA ag secretary Tom Vilsack to use his authority to call an emergency hearing to consider raising minimum milk prices paid to farmers, as they deal with one of the worst cost-income squeezes in history.”

September Federal Order Class I: $17.59

The Agriculture Department announced the September Federal Order Class I base milk price at $17.59 per hundredweight, up $1.04 from August but still $4.19 below September 2011 and equates to about $1.51 per gallon. That brings the 2012 Class I average to $16.50, down from $19.23 at this time a year ago and compares to $14.83 in 2010 and $10.95 in 2009. 

The Class III advanced pricing factor remained the “higher of” in driving the Class I value and the University of Wisconsin’s Dr. Brian Gould does not anticipate an MILC payment to producers for the month. 

The AMS-surveyed butter price averaged $1.6877 per pound, up 16.3 cents from August. Nonfat dry milk averaged $1.2518, up 9.3 cents. Cheese averaged $1.7545, up 7.6 cents, and dry whey averaged 53.5 cents, up 4.1 cents.

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