Tomorrow, we’ll hear from a Washington state dairy farmer who uses one of the products you hear about here on DairyLine, a new calf starter technology called Ampli-Calf and John Ellsworth has his weekly “Success Strategies” program in our second half.

Dairy Farming Today Website Spreads Positive Message 
(June 15, 2009) Moreno Valley, California dairy producer and Dairy Management Incorporated board member, Brad Scott, was back on Monday’s “DMI Update,” discussing the website www.dairyfarmingtoday.org.  Scott said the website was established by Dairy Management Incorporated as a tool for people who have questions about the dairy industry.

People can take virtual tours of dairy farms located throughout the country, according to Scott, which show various management practices and how sustainable today’s farms are in their stewardship and animal welfare. Visitors to the website can ask questions of farmers as well, he said, “So it’s a good way to spread the message to the public about the dairy industry and all the positive things we do.”

Dairy producers are also invited to visit the site because Scott says they can learn what their fellow dairy farmers are doing in other parts of the country, the challenges they face and how they address them.

2) Supply management: A discussion of Holstein Association USA’s proposed Dairy Price Stabilization Program will be held June 29, in Sacramento, Calif., during the 124th National Holstein Convention and Annual Meeting. Accountant Gary Genske, a frequent critic of the Cooperatives Working Together program, unveiled his own “36-Month Base Plan” to address the current dairy financial situation.

3) DPW Trends: USDA’s monthly World Ag Supply and Demand Estimates report lowers the U.S. milk production forecasts for 2009 and 2010. The Class III price forecast is unchanged for 2009, at $10.60-$11.00/cwt., but raised for 2010, at $14.30-$15.30/cwt. Class IV prices are forecast higher for 2009 ($10.10-$10.60/cwt.) and 2010 ($12.55-$13.65/cwt.). The all-milk price is forecast at $11.95-$12.35/cwt. for 2009; and $15.10-$16.10/cwt. for 2010.

4) DPW Numbers: Trade was down, but the United States turned in a small dairy trade surplus in April, the first in seven months. April 2009 exports were valued at $176 million, up 2% from March, but less than half the April 2008 total of $362 million. April imports were valued at $166 million, down 30% from March and $85 million less than April 2008.

5) DPW Washington:  International Dairy Foods Association and the National Milk Producers Federation again told the U.S. Food and Drug Administration that ultrafiltered milk should be allowed to be used to make cheese, without requiring a special label.

 Check in for daily Dairy Profit Weekly news updates at www.dairybusiness.com.

Dave Natzke, Editor  

(June 12, 2009) The cash dairy markets in Chicago saw little change the second week of June Dairy Month but milk futures saw heavy losses across the board. The block cheese price closed Friday at $1.15 per pound, up a quarter-cent on the week, but 89 cents below a year ago, that's when the blocks tumbled 12 cents, to $2.04. 

The barrels finished the week at $1.0925, down three quarters of a cent and $1.0575 below a year ago. Sixteen cars of block were traded on the week and nine of barrel. The lagging, NASS-surveyed, U.S. average block price was up slightly, to $1.1426, and barrel averaged $1.1092, up 1.1 cent.

Butter closed Friday at $1.2275, down 2 1/2-cents on the week, and 25 cents below a year ago. Twenty seven cars were sold on the week. NASS butter averaged $1.2276, down 2.4 cents. NASS nonfat dry milk averaged 83.84 cents, down a half-cent, and dry whey averaged 26.39 cents, up 1.9 cents on the week.

Cash Grade A nonfat dry milk closed at 90 cents per pound, down a quarter-cent on the week, while Extra Grade remained at 87.50 all week.

Price support purchases totaled 6.8 million pounds of nonfat dry milk. That raised the years cumulative total to 250.4 million. Uncle Sam has not sold the butter yet that was purchased earlier this year under the support program. 

Higher Milk Prices Coming in 2010
(June 12, 2009) Dairy Profit Weekly editor, Dave Natzke, gave us his read on USDA’s Ag Supply and Demand Estimates report in Friday’s broadcast and said it gives us a preview of what dairy producers can expect. He said the report indicates U.S. producers will reduce cow numbers and milk production per cow due to low milk prices and higher feed costs, resulting in declining annual milk production for both 2009 and 2010.

“Less milk means higher prices,” Natzke said, “And USDA forecasts higher wholesale milk, cheese and butter prices in 2010, although cheese prices will remain weaker through the end of 2009.”

USDA forecasts a Class III milk price of about $10.80 per hundredweight. for 2009, with a Class IV price of about $10.35, and an all-milk price average of about $12.15.

Current Chicago Mercantile Exchange futures prices are slightly more bullish, according to Natzke, averaging $11.48 per cwt., about 70 cents per cwt. higher for Class III, and $10.70 or 35 cents higher for Class IV milk in 2009.

The good news, he said, is that both USDA and CME indicate higher prices in 2010. USDA forecasts a Class III average of about $14.80 per cwt. next year, and a Class IV average of about $13.10. CME futures are again more bullish, with a Class III average of $15.40 and a Class IV average of $14.78 per cwt.

There is a downside to the report related to feed costs, Natze warned. Weather-related delays in corn planting, and reduced soybean stocks due an increase in export demand, pushed both corn and soybean price forecasts higher for the 2009-10 marketing year.

Galen said the study was necessary so the Federation could present its case to policymakers, based on good data. The potential loss of foreign-born workers is important, not just to farmers themselves and their employees, Galen said, but to all of the others that supply inputs to the dairy farms, feed, veterinary services, hauling and transportation, processors, even retailers “have a stake in the health of dairy farms.”

More than 2,000 farms were surveyed last year, according to Galen, and it was determined that about 138,000 full time workers are employed on U.S. dairy farms, and 40 percent of them are foreign born.

He warned that, if we lost just half of those foreign born workers, an additional 66,000 workers in other related jobs would also be lost, due to the closure of some farms and the resulting “multiplier effect when you have fewer jobs in the other input businesses.”

“A lot of people say we have to save American jobs for Americans,” Galen argued, “But every American dairy farmer I talk to, really just wants to make certain that they can stay in business and, if they don’t have access to an available labor force, then not only do those jobs go away but so do a lot of other jobs related to dairy farming.”

USDA Lowers Milk Production Estimate Again
(June 10, 2009) The Agriculture Department has reduced its milk production forecast again in its latest World Agricultural Supply and Demand Estimates report issued this morning. Production forecasts for 2009 and 2010 were reduced “as higher feed prices further weaken producer returns and sharpen the expected contraction in cow numbers.”

Look for 2009 output to total 187.5 billion pounds, down from the 187.7 billion predicted a month ago and the 190 billion of 2008. 2010 output is now projected to fall to 186.4 billion, down from the 186.8 billion predicted last month.

Growth in milk per cow is also slowed due to higher feed costs. Commercial exports, primarily on a skim-solids basis, are forecast higher in 2009 and 2010 on tighter global dairy product supplies and a weaker U.S. dollar.

CCC removals are adjusted to reflect exports under the Dairy Export Incentive Program (DEIP).

Most product prices were forecast higher in the face of tighter supplies, but cheese prices are forecast lower for 2009.

The 2009 Class III milk price was unchanged for 2009, at $10.60-$11.00 per hundredweight, but raised for 2010, at $14.30-$15.30, up from the $13.80-$14.80 range anticipated a month ago. The 2008 average was $17.44.

Class IV prices are forecast higher for 2009, at $10.10-$10.60, up from $9.95-$10.55 predicted last month. Look for a range of $12.55-$13.65 in 2010, up from the $12.30-$13.40 range predicted in last month’s report. The 2008 average was $14.65. The all milk price is forecast at $11.95 to $12.35 per cwt for 2009 and $15.10 to $16.10 for 2010.

Dairy Outlook Conference June 17-18 in Chicago
(June 10, 2009) Wednesday’s DairyLine broadcast gave us a preview of the sixth annual Downes-O’Neill Dairy Outlook conference June 17-18 in Chicago. Broker, Dave Kurzawski, reported that it’s a chuck full program that will cover everything from global weather and energy, to grains, to the dairy market outlook and overall general economy.  

The keynote speaker is Dennis Gartman, editor of the Gartman Letter, a daily update on the political, economic, and technical events of the day.

The conference attracts producers of all sizes, according to Kurzawski, “anybody whose bottom line is sensitive to the prices of commodities,” and he expects a lot of interest, especially with the economy in the way that it is right now.

He adds that it is not a hedge recommendation or risk management kind of conference, although it will be covered briefly, but Downes-O’Neill brokers will be on hand to answer any such questions. For more information and to register, log on to www.dairy.nu and click the Outlook Conference link or call 1-800-504-5620.

(June 9, 2009) Cheese prices start the second week of June close to or below the government support price and market analyst, Mary Ledman, Principal of Keough Ledman and Associates in Libertyville, Illinois, said in Tuesday’s DairyLine that we need a “weather event “or “some significant event” that would result in lower cheese stocks and a decline in milk production before things will turn around.

American type cheese production in the first quarter of 2009 was up 5.3 percent from a year ago, according to Ledman, “a huge number,” and as a result plenty of cheese has traded at the Chicago Mercantile Exchange.

On the bright side, she said there has been buyers and sellers but a $1.10 to $1.15 per pound cheese is a long ways from $1.30 and she warns that we’ll need at least a 2 percent drop in milk production in one of these nearby months to push the cheese price higher.

Demand is steady, Ledman reported, as there’s been a tremendous amount of promotion at the retail and some at the food service level, but “We’re countering a 5.3 percent increase in production and that’s a big increase.”

She adds that consumers are getting used to seeing these specials so the promotions “don’t necessarily have the same bang for the buck that they did perhaps in the first quarter of this year.”

Ledman attributed Monday’s 2 1/4-cent drop in the butter price in part to last week’s announcement by USDA that it was selling back the 4.6 million pounds of butter it purchased earlier this year under the price support program.

She admits that it’s more symbolic that this butter is coming back to the market but said it will be interesting to see what kind of offers they get. “That may give us an indication of where participants think this market is going through the second half of the year,” she concluded.

(June 8, 2009) Moreno Valley, California dairy producer and Dairy Management Incorporated board member, Brad Scott, had the DairyLine microphone in front of him at February’s World Ag Expo and that conversation aired in Monday’s “DMI Update.” He said he milks a thousand cows and is a fourth generation dairy farmer whose great grandfather began in Waterloo, Iowa before migrating west.

A fellow producer asked him to apply to be on the DMI board and Scott called it a “very educational experience.” He said he believes in the check off because, “when you see all the various programs, if it wasn’t for the check off trying to get more of our products in the schools, in fast food service, and showing consumers the value of different dairy products, no one else is out there promoting our product in the same fashion so, for the producers, it’s very well worth it.”

He underscored the importance of getting the nutritional message of dairy products to consumers at all times, but especially in this tough economic time. “It’s something a lot of people don’t realize,” he concluded.

Dairy Markets Weekly Recap
(June 5, 2009) The block cheese price closed the first Friday of June Dairy month at $1.1475 per pound, down a half-cent on the week, and $1.0125 below a year ago. Barrel closed at $1.10, unchanged on the week, but $1.05 below a year ago. 21 carloads of block found new homes on the week and five of barrel. The NASS-surveyed U.S. average block price slipped to $1.1425, down 0.6 cent on the week, and barrel averaged $1.0987, down 0.1 cent.

Butter closed at $1.2525, down 1 1/4-cents on the week, the first decline since mid March, and 22 3/4-cents below a year ago. Twenty nine cars were sold. NASS butter averaged $1.2519, up 1.4 cents. Nonfat dry milk averaged 84.3 cents, up 1.2 cents, and dry whey averaged 24.49 cents, up 0.6 cent.

Cash Grade A nonfat dry milk closed at 90.25 per pound, up a quarter-cent on the week, while Extra Grade held at 87.50.

Price support purchases for the week totaled 4.1 million pounds of nonfat dry milk, pushing the cumulative total to 243.6 million, compared to none a year ago.

May Federal Order Milk Price Suffers Temporary Relapse
(June 5, 2009) The May Federal order benchmark milk price has suffered a temporary relapse. The Agriculture Department announced the Class III price this morning at $9.84 per hundredweight (cwt.) down 94 cents from April, $8.34 below May 2008, but 30 cents above California’s comparable 4b cheese milk price. That pulls the 2009 average to $10.23, down from $17.86 at this time a year ago and compares to $15.30 in 2007. The Class IV price is $10.14, up 32 cents from April but $5.12 below a year ago.  

Class III futures settled Thursday, showing a small rebound, to $9.95 in June, $10.73 in July, $11.80 in August, $13.20 in September, $14.02 in October, $14.44 in November, and $14.69 in December.

The four-week NASS surveyed dairy product prices had cheese averaging $1.2159 per pound, up 4.9 cents from April. Butter averaged $1.1553, down 12.2 cents. Nonfat dry milk averaged 83.18 cents, up 1.2 cents, and dry whey averaged 23.17 cents, up 3.7 cents.

(June 5, 2009) The meltdown in global and U.S. economies has led to a sharp downturn in milk prices and dairy farmer income this year. The impact has more dairy farmers looking at ways to manage milk supply and price volatility. Dairy Profit Weekly editor, Dave Natzke, reported in Friday’s broadcast that U.S. dairy farm receipts from milk sales were estimated at about $35 billion annually for both 2007 and 2008. However, based on recent USDA forecasts, 2009 U.S. milk sales will generate nearly 35 percent less, or about $23 billion at the farm level.

Total U.S. farm receipts from the sale of milk were estimated at $35.5 billion in 2007 and $34.8 billion in 2008. However, based on recent USDA forecasts, 2009 U.S. milk marketings will generate nearly 35 percent less, with cash receipts at the farm level approaching the $22.6 billion in 2003.

“Billions" don't mean much to many, Natzke said, so he calculated the gross income from milk sales from each of the nation’s 9 million cows. Each "average" cow generated $3,880 in 2007, falling slightly to $3,755 in 2008. This year, however, each cow will earn about $2,475, down 35 percent from 2008. And remember, that's gross income, and doesn't factor in higher production costs.

Dairy prices and income have been on a real roller coaster ride in the past decade, and that kind of income fluctuation has dairy producers looking at ways to manage milk production and price volatility. The Cooperatives Working together program is in the middle of "retiring" about 103,000 cows from the nation’s total dairy herd to reduce overall milk production.

In addition, two other proposals are gaining momentum. Similar in nature, the California Milk Producers Council’s Growth Management Plan, and Holstein USA’s  Dairy Price Stabilization Program, would establish historical base milk production levels for all dairy farmers, factoring in small percentages of growth to meet increased consumer demand. Farmers who produce milk above and beyond that base level would be required to pay a market access fee on all milk. Farmers who keep production within the base level would receive payments from the pool, creating a financial incentive to limit production growth.

Tough times often cause dairy producers to question the value of the dairy check off. California dairy producer and DMI Board member, Brad Scott, talks with Bill Baker about the value of the check off, even in tough times on Monday's "DMI Update," and we have our weekly Pfizer "Vet Visit" in our second half.

April Dairy Products Report
(June 4, 2009) The Agriculture Department’s April Dairy Products report puts butter production at 144.1 million pounds, down 3.1 million pounds or 2.1 percent from March and 5.9 million pounds or 3.9 percent below April 2008.  

Nonfat dry milk output amounted to 139 million pounds, up 3.7 million or 2.8 percent from March, and 4.1 million or 3.1 percent above a year ago.

Mozzarella cheese output totaled 272.1 million pounds, down 9 million pounds or 3.2 percent from March, and 4.4 million or 1.5 percent below a year ago.

Total Italian type cheese, at 350.1 million pounds, was down 12.8 million pounds or 3.5 percent from March, but up 1.1 million or 0.3 percent above a year ago.

Cheddar production totaled 268.8 million pounds, down 4.8 million pounds or 1.7 percent from March, and 1.2 million pounds or 0.6 percent below a year ago.

American type cheese amounted to 351 million pounds, down 8 million pounds or 2.2 percent from March, but up 10.9 million pounds or 3.2 percent from a year ago.

Total cheese output came to 846.4 million pounds, down 24.4 million pounds or 2.8 percent from March, but up 26 million or 3.2 percent above a year ago. 

Do You Want One Lump or Two?
(June 4, 2009) Washington’s spend-then-tax mentality has quickened the need to raise revenue and one of the insane ideas being put forth is a federal excise tax on, of all things, flavored milk drinks that contain sugar-based sweeteners.  

National Milk and the International Dairy Foods Association have teamed up to oppose it and the Federation’s Chris Galen recalled the question in Thursday’s DairyLine, “Do you want one lump or two of sugar in your coffee?” “We think the federal government may be unwise in lumping sugar sweetened milk with other beverages which don’t have any nutrition,” he said.

He reported that they have put Senators on notice that “It’s bad nutrition policy and bad tax policy to be tie milk together with other drinks sweetened by sugar,” a beverage the government actually encourages children to consume.

When asked why this is even being considered, Galen answered, “I could give a trillion reasons,” referring to the trillion dollar deficits that Congress and administration is racking up over the next few years.

The other reason is concern over the obesity rate among adults and children, he said, so perhaps the thinking is that, “if they tax things which have sugar in them, that will take care of the problem of having fat kids.”

Research shows however that children who consume milk and dairy products, and that can include flavored milk, according to Galen, “have better body weight and appropriate body mass than kids who under consume dairy products.” Even the American Academy of Pediatrics believes flavored milk is not necessarily a problem or a bad thing, Galen said.

Taxing flavored milk because it has a small amount of sugar in it is what the Federation calls, “penny wise and pound foolish,” Galen concluded. “Raising a few pennies in taxes to get rid of a few pounds on children may actually hurt their nutritional consumption, both in the short term and the long term.”

The agriculture department will issue its April Dairy Products report this afternoon. Please check here for complete details.

May Federal order milk prices are announced tomorrow morning. The benchmark Class III price will suffer a temporary relapse, following three months of gain.

Market analyst, Alan Levitt, predicts it will drop to $9.85 per hundredweight, that would be a loss of 93 cents from April and would be $8.33 below a year ago. Aganin, we will post the official prices here as soon as possible.

(June 3, 2009) Vivian Godfrey is the new CEO of the dairy processor’s MILKPEP program and said in Wednesday’s broadcast that she’s excited to head up MilkPEP and its Milk Mustache “got milk” Campaign.

She grew up in London, England and after living briefly in France, Germany and Canada, moved to Minneapolis, Minnesota in 1992. She worked for the Pillsbury Company for nine years including four years as CEO of Haagen-Dazs ice cream.

“Every single person that I've met over the past few weeks has given me a warm welcome,” Godfrey said, and dairy farmers who are involved with DMI such as Paul Rove in Arizona and Les Hardesty in Colorado have invited her to their farms. I’ve also been touring dairy processing operations in California, Colorado and Massachusetts and have visits planned to Illinois, Texas and Florida.

Producers and processors are sharing great ideas, Godfrey said, and she shares things she already knows about the program. She said it’s clear to her that the Milk Mustache program has “significantly improved milk’s image and market position over the years.” “Year after year, the program effectively moves the needle and helps drive incremental milk sales.”

She pointed to the various celebrities that have donned the Milk Mustache as a “tremendous asset,” people from all walks of life including sports, actors, business, and musicians to “remind consumers about the benefits of milk.”

“People today are looking for foods that are naturally nutrient-rich,” Godfrey concluded, and “Nothing tops milk in that regard.” “I think in these tough economic times it’s even more important that MilkPEP remind Americans that milk is number one when it comes to providing value.  Milk packs a huge nutritional punch and is a great choice for families on a tight budget.”

(June 2, 2009) The low cheese prices have made buyers more aggressive but the prices are still close to support, according to Alan Levitt, editor of the CME’s Daily Dairy Report in Tuesday’s DairyLine broadcast. There are plenty of bids, he said, but sellers have countered, production is seasonally heavy, and inventories are building. He doesn’t see that changing in the short term.

He doesn’t think USDA’s decision to sell back the 4.9 million pounds of butter it purchased under the price support program will affect the market as it’s not that big of a volume and the market has seen good support as people see value in butter at current prices. He said that “People know that at some point this market is going to overcorrect and we will get into a short situation. Butter is one of the first things to go and nobody wants to pay $2.20 a pound for butter like they have in the past.”

Commenting on the latest milk feed ratio, Levitt warned that “the worst is still to come,” because feed costs are still going up. July corn futures jumped into the $4.40s Monday morning for the first time since early January, according to Levitt, and corn prices were up about 80 cents in the last three months.

July soybean futures broke $12 Monday, for the first time since last September, Levitt reported, up about $3.70 in three months. The June and July ratios will be “pitiful,” Levitt said, “even lowered than what we’re seen and that’s when it’s really going to hit and we’ll start to see this supply correction, when farmers are dealing with that for months on end.”

Understanding More About the Components of Milk

(June 1 ,2009) Joe O’Donnell, director of the California Dairy Research Foundation, turned his attention to milk in Monday’s “DMI Update” and pointed out that the culturing of milk to make yogurt and cheese has gone on for decades but now we’re understanding more about the components of milk, specifically the carbohydrates in milk, and how important they are in promoting proper bacteria development in human GI tracts.

This concept is being marketed by some yogurt manufacturers, according to O’Donnell, but it’s relatively new, due to new technology that is unlocking this information and “These carbohydrates are very important for the good bacteria that live in our GI tract. Without them they just don’t survive as well and they contribute to our good health.”

“Again, milk in ways we never knew before,” O’Donnell said, “We’re now finding out promotes good health.” Telling this story is very important to the dairy industry, according to O’Donnell, as “It’s all about good health and that’s the key for dairy products.” “That’s one thing we have above every other product is that we are there to deliver nutrition and health.”

One of the key components, he said, is turning out to be the carbohydrates that are in milk. Not just lactose but others that we weren’t even aware that were there, he concluded, but “now we have the technology to tell us about it.”