U.S. milk prices are higher but so are feed costs and that could mean that MILC payments will resume next spring. To maximize those payments, dairy farmers they may need to change their payment ‘start’ dates. Dairy Profit Weekly’s, Dave Natzke, has details on tomorrow's DairyLine and Dr. Paul Chandler, has his weekly “Nutrition Update” in our second half.

IDFA Seeking Nominations For Innovative Dairy Farmer 
(September 1, 2010) The International Dairy Foods Association (IDFA) is seeking nominations for its annual Innovative Dairy Farmer of the Year award. IDFA’s Peggy Armstrong said in Wednesday’s DairyLine that many dairy farmers are modernizing their operations in order to continue to support their families and to provide consumers with high-quality dairy products but “too few farmers get the recognition they deserve for their efforts.”  

“Every year IDFA teams with Dairy Today magazine to honor an outstanding U.S. dairy producer,” Armstrong said, “We look for producers that exemplify creativity and forward thinking to achieve greater on-farm productivity and improved milk marketing,” and she invited DairyLine listeners to nominate a colleague, customer or community member. To be eligible, the nominee must be an active, U.S. dairy farm operation. Complete details and the nomination form are available online at www.idfa.org . There is no fee to enter this nomination, but the deadline for entries is Monday, September 20, 2010.

Last year’s winner is Haubenschild Dairy of Princeton, Minnesota. Honored last January, Dennis Haubenschild operates on 1,300 acres with 14 full-time employees and eleven hundred cows.  The farm was selected for its continued emphasis on innovative solutions and ideas, particularly in the areas of renewable energy and sustainability, Armstrong said. 

He was the first to sell carbon credits on the Chicago Climate Exchange and has teamed with the University of Minnesota to develop the prototype for a hydrogen-fuel cell-technology system. They hope to find ways to fuel the farm's tractors with hydrogen fuel cells made with biogas from the farm's digester, she said.

This year’s winner will receive an all-expenses-paid trip to the 2011 Dairy Forum, which will be held January 23-26, at the Doral Golf Resort in Miami, Florida.  

The CWT program has ceased its export assistance on butter. National Milk's Jim Tilison talks about it on tomorrow's DairyLine and updates us on the last herd retirement program, now that the herd audits are complete and Select Sires has its weekly "Reproductive Moment" in our second half.

California Class 4 Prices Inch Higher
(August 31, 2010) California's August 4b Cheese Milk price was announced Tuesday at $14.39 per hundredweight, up $1.02 from July, and $3.10 above August 2009. 

The 4a Butter-Powder Price is $15.69, up 7 cents from July and $5.48 above a year ago. 

(August 31, 2010) The August Milk-Feed Price Ratio is 2.36, up from July's revised estimate of 2.32, according to USDA’s “Ag Prices” report issued Friday, and compares to 1.80 in August of 2009. 
 
The All Milk Price was estimated at $16.60 per hundredweight, up 60 cents from last month's estimate, and $4.50 above a year ago. 

Corn averaged $3.65 per bushel, up 16 cents from July, and 32 cents above a year ago. The soybean price, at $10.10 per bushel, was up 31 cents from July, but 70 cents below a year ago. Alfalfa baled hay was $116.00 per ton, down $1.00 from July, and $7.00 above a year ago.

Market Analysis with Brian Gould
(August 31, 2010) With one more trading day in the month of August, the cash dairy prices were unchanged Monday, with one carload of block cheese trading hands. The University of Wisconsin’s Dr. Brian Gould said it’s a bit of concern in terms of trying to get some kind of signal from the market. He said the increase in milk production and high cheese stocks has many believing the peak has arrived.  

“We at a reasonable level in terms of cheese and butter prices, relative to recent history,” Gould said, but he’s advised dairy producers to think more seriously about risk management at this time.

One such tool is the Livestock Gross Margin Insurance program and, as of July, farmers in all of the lower 48 states can now participate. Previously, California and Idaho producers could not. The program sets a floor on your income over feed costs so it’s not locking anything but allowing for upward movement.

Other changes in the works that will make this program more palatable, according to Gould, are the insurance premiums will be subsidized and won’t be due until after the insurance contract runs its course, and their level of deductible will increase, which should decrease the cost of this insurance program. He encourages producers to take a serious look at the program, especially with the changes that are being made.  

“The NFL’s Back to Football Friday campaign is a great way for producers to get excited about the upcoming year and NFL partnership,” Bavido said. Schools and youth across the country can show their team pride and celebrate the return of the NFL season by wearing their favorite NFL team gear and participate in NFL-themed events.

Producers should contact their local Fuel Up to Play 60 coordinator to learn more about school-focused efforts in their region and how they can participate. Producers can also participate in the Show Your Pride photo contest that the NFL is offering to its partners and sponsors, including dairy farm families. The winning dairy entry will receive a visit from an NFL player to their farm, among other prizes. Details are available at www.backtofootballcelebration.com. The deadline is September 14.  

Two trades Monday pushed the cash butter price up 7 cents, to $2.11 per pound. It closed Friday at $2.18, up 14 cents on the week, $1.01 above a year ago, and the highest since 2004.

Block cheese closed the last Friday in August at $1.6950 per pound, up 4 3/4-cents on the week, and 32 3/4-cents above that week a year ago. Barrel closed at $1.6650, up a nickel on the week, and 32 1/2-cents above a year ago. One car of block traded hands on the week and four of barrel. With two days left in the month there’s only been eight cars of cash cheese sold in August. The lagging NASS-surveyed U.S. average on block cheese hit $1.6029, up 0.6 cent. Barrel averaged $1.6076, up 1.6 cents. NASS powder averaged $1.1493, up 1.4 cents, and dry whey averaged 35.53 cents, down 0.3 cent.

CDFA Denies Request To Raise Floor Price
(August 27, 2010) California’s dairy farmers have been some of the hardest hit economically the past two years but a request to raise the minimum price there has been denied. Dairy Profit Weekly editor Dave Natzke reported Friday that the California Department of Food and Agriculture (CDFA) denied a request for an emergency public hearing on a proposal to set the California milk marketing order floor price at $14.50 per hundredweight for a minimum of two years. 

In a letter to John Rossi, of the California Floor Price Committee, Kevin Masuhara, director of CDFA’s Division of Marketing Services, said the proposal’s request “would result in prices that are not in a reasonable and sound economic relationship with the national value of manufactured milk products,” as required by the state's Food and Agricultural Code.

According to USDA, California farmers received an “all milk” price of about $11.50 per hundredweight in 2009. Through the first seven months of 2010, the California price has averaged about $14.14.

The request also proposed consideration of a program requiring milk and milk products produced outside California to be sold at a price at least equal to prices paid to California dairy producers. In his letter, Masuhara said CDFA had no authority to implement such a program, Natzke reported.

Farmers have been watching feed prices closely but there was some good news this week on that front. The Agriculture Department reports that the 2010 cotton harvest will total 18.5 million bales, up from the 18.3 million forecast in July, and a 52 percent increase from the previous season’s 12.1 million bales.

Cotton Incorporated’s Tom Wedegaertner reported in Friday’s DairyLine that last year saw a fairly small crop but this year saw additional acres planted and really good growing conditions in Texas and that will mean about twice as much cottonseed available for the dairy trade than last year.

“Last year, because it was such a short crop, people got used to the price of cottonseed being fairly high,” Wedegaertner said, “But the new crop prices, I think, are in some cases $100 a ton less than what they are right now for old crop seed so the prices will be coming down as we move into harvest but I caution dairymen to keep an eye on the weather. If we have a hurricane move into the cotton belt then everything changes over night.”

(August 26, 2010) National Milk’s Chris Galen weighed in Mexico's imposition of tariffs on some U.S. exports to that country, which include some cheeses in Thursday's DairyLine and said that, when the NAFTA agreement was signed more than 15 years ago, the U.S. agreed to allow Mexican long haul truck carriers access to the U.S. market but there hasn’t been any progress made in doing that so Mexico is permitted under the NAFTA agreement, to penalize U.S. exports to that country until the issue is resolved.

National Milk is focused on pressuring the Obama Administration to resolve the stalemate, Galen said, so we’re no longer in violation of the NAFTA agreement. The Federation is generating letters that dairy farmers can send to the White House, he said, asking for expeditious action on this matter.

DairyLine has heard the issue revolves around the safety of the trucks coming up from Mexico. Others charge that it’s because of union opposition and politics but Galen stated that the Mexican trucks would have to meet the same safety requirements that U.S. trucks do but “It’s no different than if Mexico was using a safety issue to bar our food exports to Mexico.”

“This has been a sore point for many years,” he concluded, “Mexico does have the right to impose tariffs on selected groups of foods exports and it’s not just dairy and cheese products, pork is included, pistachios, and last year it was another set of products so they’re going to continue to keep pressure on the U.S. to do something about this so we need to have the U.S. dairy industry put pressure on the White House to take action to resolve the issue.”

(August 25, 2010) The Pennsylvania Beef Council (PBC) recently began an innovative way to communicate to its producer members, using a monthly e-newsletter. PBC director of communications, Carrie Bomgardner, said in Wednesday’s Beef Board Update that they inform producers of coming events for its Beef Quality Assurance program (BQA) such as the latest training dates and where they will be conducted.

The newsletter also tells producers how their checkoff dollars are being spent, consumer events and retail and foodservice partnerships

The biggest surprise, according to Bomgardner, was the response they received from their producer members whenever they send out the e-newsletter. She said it’s been an effective way of getting producers to sign up for the BQA program.

Pennsylvania serves as a hub for BQA efforts in eight states in the Mid Atlantic; West Virginia, Maryland, Virginia, New York, Maine, Vermont, and New Jersey. More than 3,000 Pennsylvania producers alone are now certified.

Bomgardner’s office helps facilitate these meetings and regional meetings and encourages members to be certified, though each program has its own unique spin on the DQA but the PBC serves as a coordinator to make sure they’re all on the same page.

National Milk's Chris Galen weighs in on Mexico's new tariffs on U.S. exports to the country on tomorrow's DairyLine and Select Sires has its weekly "Reproductive Moment" in our second half.

Market Talk with Bill Brooks

(August 23, 2010) Last week we reported some bad news on the export front as the Mexican government announced that it would impose tariffs of 20-25 percent on several major categories of U.S. exports to Mexico, including many cheeses. At issue is U.S. compliance with NAFTA obligations to provide Mexico with cross-border trucking access into the U.S.

Alan Levitt, editor of the CME’s Daily Dairy Report, on Monday, said the U.S. has failed to honor its NAFTA obligations now for 15 years and Mexico finally challenged the U.S. position and won so Mexico has been imposing retaliatory tariffs since March 2009 but it is a rotating list and now cheese is taking its turn on the list.

The cheeses involved include Cheddar, Mozzarella, Gouda, Provolone, Colby, Monterey Jack, cream cheese, and others but Levitt points out that this action affects about 90 percent of the cheese we export to Mexico. Over the last three years that would be about 7 million pounds of cheese per month, according to Levitt, “a pretty significant volume,”

He adds that the U.S. had a great opportunity in Mexico. Because of NAFTA, the U.S. was able to export tariff free whereas U.S. competitors were paying higher tariffs. That gave the U.S. a competitive advantage, he said, and the U.S. had built up its market share to over 60 percent, “now it really puts us in a tough spot.”

Mexico had been the U.S. largest market for dairy exports and still is, Levitt said, and, over the last three years, about 30 percent of U.S. cheese exports went to Mexico. The U.S. had been running at record levels of cheese exports this year, Levitt reported. Some of that is due to the CWT program but Mexico is not on the CWT list, Levitt concluded, “So I believe we will continue to move cheese but we’re almost sure to see a drop in cheese exports to Mexico.”  

Downes-O'Neill dairy economist Bill Brooks analyzes the dairy markets on tomorrow's DairyLine broadcast and Dr. Alan Britten has his weekly Udder health Update in our second half.

July Cold Storage Report
(August 20, 2010) July butter stocks totaled 199.6 million pounds, up 2 million pounds or 1 percent from June but 63.2 million pounds or 24 percent below July 2009, according to preliminary data in the Agriculture Department’s latest Cold Storage report issued this afternoon.   

The July American cheese inventory, at 638.6 million pounds, was up 11.6 million pounds or 2 percent from June and 33.6 million pounds or 6 percent above a year ago. June revised estimates were lowered nearly 1.4 million pounds.

Total cheese stocks amounted to over 1.049 billion pounds, up 23.5 million pounds or 2 percent from June and 48.6 million pounds or 5 percent above a year ago. June revised estimates were lowered nearly 1.3 million pounds. 

Dairy Markets Weekly Recap
(August 20, 2010) The cash dairy market seemed to ignore the bearish milk production data. Block cheese closed Friday at $1.6475 per pound, up 2 3/4-cents on the week, and 25 3/4-cents above a year ago. Barrel closed at $1.6150, up 3 cents on the week, and 24 1/2-cents above a year ago. The gains all came on unfilled bids. No cheese was traded on the week. The NASS-surveyed U.S. average block price hit $1.5974, up 1.4 cents. Barrel averaged $1.5913, also up 1.4 cents.  

Butter stole the show, jumping eight cents on Thursday, and closed Friday at $2.04, up 121/4-cents on the week, 87 cents above a year ago, and the highest in six years. Eight cars were sold. NASS butter averaged $1.8508, up 4.8 cents.

Cash Grade A nonfat dry milk closed the week at $1.20, down a penny, while Extra Grade held all week at $1.2250. NASS powder averaged $1.1354, down 4.1 cents, and dry whey averaged 35.83 cents, down 0.1 cent.

September Class I Price Drops 27 Cents
(August 20, 2010) The September Federal order Class I base milk price was announced this morning by the Agriculture Department at $15.50 per hundredweight, down 27 cents from August, but $4.57 above September 2009. The Class IV advanced pricing factor was “the higher of” in driving the Class I value and there will be no MILC payment to producers. 

The NASS butter price averaged $1.8269 per pound, up 9.5 cents from August. Nonfat dry milk averaged $1.1542, down 7.9 cents. Cheese averaged $1.6008, up 15.1 cents, and dry whey averaged 35.86 cents, down fractionally.

2-week Product Price Averages:

Natzke said the mood was probably summed up best by Bill Bruins, dairy farmer and Wisconsin Farm Bureau president, who said the major challenges facing the U.S. dairy industry include fixing domestic policy issues, while addressing the potential of growing global markets. He described the industry, which he said has been “entrenched in regional warfare over nickels and dimes,” as moving closer to some consensus on policy issues. 

Bob Cropp, UW-Madison professor emeritus, who has participated on USDA’s Dairy Industry Advisory Committee (DIAC) since the drowning death of Rod Nilsestuen, Wisconsin Ag Secretary, said three subcommittees will issue reports at the group’s next meeting, September 23-24. U.S. Ag Secretary Tom Vilsack will make preliminary policy recommendations by December 2010, with a final report due by March of 2011, in time for 2012 Farm Bill consideration. 

Jerry Kozak, CEO and president of National Milk Producers Federation, detailed provisions of National Milk’s Foundation for the Future dairy policy proposal, stressing that, with escalating feed and production costs, the program was designed to protect producer income margins, not establish minimum milk prices. 

Processor and producer panels offered their views of the Foundation for the Future plan and other dairy policy proposals, according to Natzke, with most agreeing that current policies are no longer effective. 

Mark Stephenson, UW-Madison dairy policy specialist, described historical milk pricing patterns, noting that several economic “shocks” impacted the market in 2009. He warned forum participants not to overreact with supply management programs as a result of those shocks.  Stephenson said both the Foundation for the Future proposal and a California Milk Producers Council growth management plan would help reduce dairy market volatility, and he promised more detailed analysis in the coming weeks.

Production per cow in the 23 major States averaged 1,830 pounds for July, 59 pounds above July 2009.

The number of milk cows on farms in the 23 major States was 8.37 million head, 26,000 head less than July 2009, but 19,000 head more than June 2010.

California production was up 4.7 percent from a year ago,  with 41,000 fewer cows. However, output per cow gained 130 pounds. Wisconsin was up 2.2 percent, thanks to 6,000 more cows and 30 pounds more per cow. New York was up 2.1 percent, on 10,000 fewer cows but output per cow was up 65 pounds. Idaho was up 5.2 percent, on 17,000 more cows and a 40 pound increase per cow. Pennsylvania was up 1.7 percent. Cow numbers were down 4,000 head but output per cow was up 40 pounds. Minnesota was up 1.4 percent, due to 1,000 more cows and a 20 pound gain per cow.

The biggest increase was in Arizona, up 8.8 percent. Oregon was next, up 8.3 percent, and Washington state was third highest in milk production, at 6.2 percent. 

The biggest decline was in Missouri, down 7.8 percent, due to 8,000 fewer cows, and output per cow was down 5 pounds from a year ago. Illinois was next, down 1.2 percent with 1,000 fewer cows, and output per cow down 5 pounds. Virginia had the third biggest drop at 0.7 percent with 1,000 fewer cows, but output per cow was up 5 pounds.

(August 18, 2010) Will butter top $2.00? We posed that question to Downes-O’Neill dairy broker Dave Kurzawski on Wednesday. “The potential is there for $2.00,” he replied, “Probably even higher than that.”

Butter is still tight, Kurzawski reported, cream multiples are trading at well above normal averages right now and should the price hit $2.00, he believes that will lend some support to cheese.

“This is typically a very quiet time of the year,” Kurzawski said. The block barrel spread appears to be in balance right now but he doesn’t see that lasting for too much longer.

Will $2 butter attract imports? Kurzawski replied, “At some point you would think that should bring in some butter to our shores here but one of the reasons we’re at $2 or close to $2 is because we have seen a dramatic drop off in imports this year and I don’t expect that to change by the end of the year.” He said that some people are looking to Oceania to see if any butter will come out of that region of the world but he doesn’t expect much.

The high butter price and cheese prices at current levels is being driven more by weather than demand but Kurzawski pointed out that there is fresh demand for butter. Russia is a buyer or is going to be a buyer, according to Kurzawski, and they also import nonfat dry milk and Russia has also had its weather concerns.

“Generally weather markets fade about as quickly as they develop but in this case I do think there’s some promising sales on the retail level, there has been, and it’s good to see that U.S. buyers are staying here to buy butter and that has been the key to this butter price rally that we’ve seen so far this year and I expect it will be this way through the balance of 2010.”

As to risk management strategy, Kurzawski warns producers to be real careful about selling 2010 contracts too aggressively. He recommends buying put options for the balance of 2010 and look for places to step into profitable levels in 2011.

The structure of the Class III market right now is bullish, he said, and in what is termed “backwardation,” where you have a premium on the nearby months and the prices get cheaper as you go further out. “That is a bullish structure,” Kurzawski concluded, “So I suspect that there’s going to be a spike in prices over the next 30 to 60 days. The question is how sustainable is it?”

(August 18, 2010) Reduced cow numbers are being more than offset by increased output per cow, leading to rising milk production, according to USDA’s Livestock, Dairy, and Poultry Outlook issued this morning. Higher exports and rising domestic use will keep prices relatively firm, the report says. The immediate tightness in the butter market could be remedied by next year’s higher milk production.

The most recent USDA forecasts indicate that feed prices will likely be higher next year than in the current year. The corn price forecast is $3.50 to $4.10 per bushel for the 2010/11 crop year, a rise from current year projected prices. However, soybean meal prices are forecast slightly lower, at $250 to $290 per ton, for the 2010/11 crop year. The feed price outlook will keep the milk-feed price ratio for both the balance of this year and into next year below a level that usually signals expansion.

The most recent Milk Production report showed that although producers added cows during the first half of the year, the number of U.S. milk cows remains below 2009 on a year-over-year basis as milk per cow continues to increase. The most current USDA forecast continues the trend of lower cow numbers that has been more than offset by increased output per cow in 2010. Output per cow is expected to rise by 2.5 percent compared with 2009, pushing current-year production to 192 billion pounds. This trend is expected to continue in 2011 as cow numbers decline fractionally, and production per cow is forecast to rise by 1.5 percent. On balance, milk production in 2011 is projected to reach 194.6 billion pounds.

Milk equivalent imports on both a fats and skims-solids basis are projected to decline this year, totaling 4.2 billion pounds on a fats basis and 4.6 billion pounds on a skims-solids basis. For next year, imports are expected to remain very near 2010 levels. Higher domestic production and a slow domestic economic recovery will limit imports.

Milk equivalent exports have staged a strong recovery in 2010 from last year on both a fats and skims-solids basis. In 2010, exports are expected to reach 6.3 billion pounds on a fats basis and 28.8 billion pounds on a skims-solids basis. Next year, exports are expected to be lower as production in competing countries, notably Australia and New Zealand, is expected to increase. Also for next year, exports on a fats basis are forecast at 5.6 billion pounds and 28.0 billion pounds on a skims-solids basis. In 2011, domestic commercial use on both a fats and skims-solids basis is expected to show above-trend growth.

Domestic commercial use is forecast to reach 192.9 billion pounds, a 1.8 percent year-overyear increase on a fats basis, and reach 170.6 billion pounds, a 2.1 percent yearover-year increase on a skims-solids basis. Growth in both domestic commercial use and exports will result in tighter ending stocks this year and next on a fats basis. Ending stocks on a skims-solids basis will be near 2009 levels this year and tighten by the end of 2011.

Butter stocks have been below 2009 in the first half of 2010 and are below 5-year trend on a seasonally adjusted basis. Lower production and rising domestic commercial use have tightened stocks and sharply increased butter prices. Butter prices are forecast at $1.610 to $1.650 per pound this year.

Next year’s butter prices, expected to moderate because of greater expected milk production, are forecast at $1.435 to $1.565 per pound. Cheese prices are expected to remain relatively high for the balance of 2010 on the basis of stronger exports and competition for milk from higher butter prices.

Cheese prices are expected to average $1.500 to $1.520 per pound this year and climb slightly to $1.505 to 1.605 per pound in 2011. A stronger export forecast, as well as domestic commercial use, could offset expected greater milk production.

Nonfat dry milk (NDM) prices are sharply higher this year compared with 2009, mostly on stronger export projections. NDM prices are forecast to be $1.145 to $1.165 per pound in 2010 and rise slightly to $1.175 to $1.245 next year. Whey prices have been part of the overall recovery in dairy product prices this year and are projected to average 36.0 to 38.0 cents per pound; however whey prices are not expected to change much next year, averaging 35.5 to 38.5 cents per pound in 2011.

The tightness in the butter market has precipitated the unusual situation of the Class IV price climbing above the Class III price. The Class IV price is expected to be $14.50 to $14.80 per cwt this year, moderating slightly to $14.00 to $15.10 per cwt in 2011. The Class III price is expected to average $14.15 to $14.35 per cwt this year and rise to $14.15 to $15.15 in 2011. The Class III price is expected to rise above the Class IV price next year, restoring the more typical price relationship. The all milk price is expected to be $15.90 to $16.10 per cwt this year and to change very little next year, averaging $15.55 to $16.55 per cwt in 2011.

Dairy Has Been a Weather Market This Summer
(August 17, 2010) Dairy traders extended the weekend as there was little activity on Monday. Block cheese held at $1.62 per pound and barrel at $1.5850, with no activity. Butter held at $1.9175 with one offer AT $1.92 going uncovered. 

Market analyst Alan Levitt, editor of the CME’s Daily Dairy Report, said in Tuesday’s DairyLine that dairy has been a “weather market” this summer as cheese and butter price are up 10-15 percent since July 1 and there’s a sense that butter could move higher but he’s not sure that cheese can go much higher. 

Levitt said cheese continues to move at retail and the promotions we have seen on pizza has helped revitalize that category, boosting demand for Mozzarella in particular. Schools are starting again, he said, another avenue for Mozzarella cheese to move but cheese buyers do not need to go panic and build inventory, he said, because there’s plenty of inventory on hand and buyers are comfortable with the pipeline stocks that are already there. 

I mentioned USDA raising its 2010 milk production estimate by over 1 billion pounds and Levitt pointed out that cow numbers are coming back and he expects  July numbers, issued Wednesday, to be up 2.1 percent from a year ago in the 50 states. Cow numbers might be down a little due to the CWT culling, he said, but the trend is for more cows and production per cow “has been going gangbusters.” 

“Everybody is revising their forecast,” Levitt said, “And sexed semen may have something to do with that as well because there seems to be plenty of heifers waiting in the wings.” 

On the other hand; hot weather and humidity are doing a number of milk production and component levels. Milk production continues to decline seasonally and will until November, according to Levitt, “So we’re on the downswing of that although cheese production seasonally starts picking up in August and butter production starts picking up in September.” “The yields are definitely a concern,” he concluded. “Fat tests are running at 20 year lows so that’s definitely a concern.”

DMI Update
(August 16, 2010) The U.S. dairy industry is a step closer to making ingredient sales for food aid a commercial reality. Margaret Speich, of the U.S. Dairy Export Council (USDEC), talked about it in Monday’s “DMI Update.” She said that, for several years, the USDEC has been reaching out to see that dairy proteins are recognized in food aid programs, not donations of U.S. surplus stocks, but commercial sales at commercial prices.  

In early July, the Office of Food for Peace approved USDEC’s application for whey protein concentrate (WPC) 34 and 80 to be used in programs administered by the United States Agency for International Development, Speich reported. That means WPCs will soon be included in the list of ingredients that private voluntary organizations that implement those programs can purchase using USAID Food for Peace funds.

“The dairy industry knows all about the nutritional and functional value of dairy proteins,” Speich said, “But the key was convincing food aid agencies and, to gain preliminary approval, USDEC collected information on the nutritional value of whey and proof of its viability in treating childhood malnutrition in developing countries.”

USDEC is also preparing further applications for sweet whey and whey protein isolates (WPI), sweet whey as a source of proteins and energy in supplementary foods, WPI as a source of proteins in nutritional situations where low lactose and protein concentration are key.

“Ultimately this development, funded by the dairy farmer checkoff, is a win-win,” Speich concluded. “It should lead to a profitable, sustainable commercial outlet for U.S. dairy solids and it allows U.S. dairy farmers to feed hungry people around the world.”

Dairy Market Weekly Recap
High temperatures and humidity are driving dairy prices higher. School pipelines are refilling and making less milk available for the churn or the vat. The block cheese price closed Friday the 13^th at $1.62 per pound, up 1 3/4-cents on the week, and 25 3/4-cents above a year ago. The barrels closed at $1.5850, also up 1 3/4-cents on the week, and 24 1/2-cents above a year ago. Two cars of block traded hands on the week and one of barrel. The NASS-surveyed U.S. average block price hit $1.5834, up 3.7 cents. Barrel averaged $1.5779, up 2.3 cents.

Butter closed Friday at $1.9175, up 6 3/4-cents on the week, 69 3/4-cents above a year ago, and the highest in over five years. Only one car was sold on the week. NASS butter averaged $1.8025, up 3.2 cents. NASS powder averaged $1.1766, up 0.2 cent, and dry whey averaged 35.9 cents, up 0.6 cent.

Dairy Profit Weekly Update with Dave Natzke
(August 13, 2010) The impact of drought and fires in Russia was felt all the way back to U.S. dairy farms this week on news that Russia will ban all exports of wheat through the end of the year, sending grain prices higher.  

Now that the "smoke has cleared," sort of speak. Dairy Profit Weekly editor Dave Natzke reported Friday that the news sent wheat futures to spike earlier in the week and pulled other grain prices higher, creating fears of skyrocketing feed prices for U.S. dairy and livestock farmers. Thankfully, grain prices moderated somewhat later in the week, Natzke said.

Helping relieve some of the concern, USDA’s crop production report, released on Thursday, estimated both 2010 U.S. corn and soybean crops to be the largest on record. The corn crop is forecast at a record high 13.4 billion bushels, with yields expected to average a record high 165.0 bushels per acre, and soybean production was forecast at a record high 3.43 billion bushels, with yields expected to equal last year’s record of 44.0 bushels per acre. 

With the record U.S. crops, USDA projects larger supplies of feed grains, Natzke reported, although strong export demand will eat up much of that supply.

Heavy global demand caused USDA to raise its season-average price forecasts slightly. Farm-level corn prices are now expected in a range of $3.50-$4.10 per bushel, up a nickel on each end; and soybean price projections were raised 40 cents on each end, to a range of $8.50-$10.00 per bushel.

USDA’s weekly crop/weather report says U.S. corn and soybean crops are advancing well ahead of schedule. And, despite widespread heavy rains, more than two-thirds of both corn and soybean crops are rated; good to excellent.

USDA adds that abundant moisture is helping produce record or near-record high yields of alfalfa and other hay, as well.

Corn and soy complex futures were higher after USDA’s Thursday reports, despite the higher-than-expected corn and soybean production estimates. Strong domestic and global use was cited, Natzke concluded.

Producers continue to add cows and milk per cow has increased, says USDA. Look for 2010 output to reach 192 billion pounds, up 800 million pounds from last month’s estimate. The 2011 estimate is now 194.6 billion, up 1.1 billion pounds. Output in 2009 totaled 189.3 billion.

Exports for 2010 and 2011 were raised sharply as June numbers were strong, global supplies remain relatively tight, and demand in a number of markets is expected to support higher than previously forecast sales. However, sales in 2011 will be dampened by increased competition, according to USDA.

Strong demand for butter and cheese resulted in higher forecast prices for 2010 but prices for nonfat dry milk (NDM) and whey were lowered from last month. For 2011, cheese, NDM, and whey price forecasts were reduced but butter was raised.

The Class III milk price forecast for 2010 was raised as the higher cheese price more than offset the lower whey price, but the Class IV price forecast was reduced as the lower NDM price more than offset the higher butter price.

Look for the 2010 Class III price to range $14.15-$14.35 per hundredweight, up from the $13.80-$14.10 projected a month ago. The 2011 average is now projected at $14.15-$15.15, down from last month’s estimate of $14.40-$15.40. The 2009 average was $11.36.

The 2010 Class IV price will range $14.50-$14.80, down from $14.65-$15.05 expected last month, and the 2011 average is now predicted at $14.00-$15.10, down from $14.40-$15.59 projected a month ago. The 2009 average was $10.89. The all milk price is forecast to average $15.90-$16.10 for 2010 and $15.55-$16.55 for 2011.

Federal Child Nutrition Programs Get Additional Funding
(August 12, 2010) The U.S. Senate approved the Healthy, Hunger-free Kids Act before adjourning for the August recess. The measure aims to provide an additional $4.5 billion over 10 years to federal child nutrition programs. National Milk was involved in crafting the final piece of legislation.  

Chris Galen reported in Thursday’s DairyLine that “this is a high stakes game” because the legislation also reauthorizes the Child Nutrition Act which governs the type of products served to students in schools.

A significant portion of fluid milk, cheese, and yogurt sales happens in schools, he said, so this is a “big deal to dairy farmers” as to how lawmakers decide to fund the program and the types of products they allow.

National Milk was successful in securing a variety of milk types to be offered in school feeding programs, according to Galen, and it will be real, cow’s milk, and National Milk was able to maintain nutrient standards for substitute beverages so schools can’t just offer something like a soy beverage unless it has the same nutrient availability as real milk. This prevents schools from watering down nutrition standards, he said.

This underscores the importance of National Milk and the beef industry to be involved in this process so the vegetative agenda doesn’t rule. Galen said “There’s going to be continued competition from people who are promoting vegetarian offerings and even though those products often cost a lot more, there is still a strong philosophical push on the part of some organizations to get those into the school lunch lines so we just continue having to fight this battle.”

The House of Representatives will likely vote on this when they return in September, Galen concluded, but the Senate has passed it and it has the support of the White House “so in all likelihood we’ll get this done before fall.”

(August 11, 2010) One of my favorite exhibits at World dairy Expo is the Wisconsin Beef Council (WBC). Don’t tell anyone but they serve beef samples and Angie Horkan, WBC director of marketing, said in Wednesday’s DairyLine that they love exhibiting at Expo because the dairy industry is an extremely vital part of the WBC.

She reported that about 80 percent of Wisconsin checkoff dollars come directly from the dairy industry so WBC likes to have a large presence at Expo and they are located in the foyer of the forum building.

Horkan says they use the opportunity to educate farmers what the beef checkoff does plus make recipes and nutrition information available and the beef samplings are usually new products or new ideas and recipes that were created by the checkoff.

“The dairy industry doers heavily invest in the beef industry,” Horkan said, “And all of our dairy cattle turn into beef, especially ground beef so when we’re there we like to feature what we’re doing with ground beef, how we’re adding value, we’re taking ground beef from the chuck and turning it into different cuts like the beef value cuts the flat iron and the shoulder tender and the Denver cut. These new cuts that are adding value that gets back to dairy producers,” she concluded.