A monthly on-line dairy auction by Fonterra, a multinational dairy company owned by 13,000 New Zealand dairy farmers, is drawing a lot of attention in the world dairy industry, including the U.S. What is it? Downes-O'Neill dairy broker Dave Kurzawkski answers that question on tomorrow's DairyLine and John Ellsworth has his weekly "Success Strategies" program in our second half.

Goals For Innovation Center For U.S. Dairy
(May 17, 2010) Dairy Management Incorporated’s Joe Bavido was back on Monday’s “DMI Update” to talk about the Innovation Center for U.S. Dairy and its five specific goals. Health and Wellness is goal number one, according to Bavido. He said that dairy farmers have always cared about the health and welfare of kids in our nation’s schools. The goal is to insure the future health of children and of course that entails nature’s “most perfect food, dairy.”  

Product development and information is the second priority, he said, and that means “offering the right product, in the right place, at the right time, and in the right way that makes smart business sense.”

Sustainability is another strategic priority, according to Bavido, but it has to be economically viable, environmentally sound, and socially responsible.

Consumer confidence is the fourth priority. Consumer perception of dairy products “must be very high,” he said, “And in order to accomplish this, this strategic initiative addresses all consumer insights toward dairy products.”  

(May 14, 2010) Block and barrel cheese inched higher the second week of May, with the blocks ending the week 8 1/4-cents higher, at $1.4625 per pound, 33 cents above that week a year ago. Barrel closed Friday at $1.4175, up 4 1/2-cents on the week and 33 3/4-cents above a year ago. Six cars of block traded hands on the week and 15 of barrel. The lagging NASS-surveyed U.S. average block price lost 2.2 cents, slipping to $1.4040. Barrel averaged $1.3931, down 0.1 cent.

Cash butter continued to recoup some of the previous week’s loss and closed Friday at $1.6150, up a penny on the week and 35 cents above a year ago. Only one car was sold on the week. NASS butter averaged $1.5865, up 3.7 cents.

Cash Grade A nonfat dry milk closed three quarters of a cent higher on the week, at $1.3350. Extra Grade held all week at $1.30. NASS powder averaged $1.2389, up 2.2 cents, and dry whey averaged 36.07 cents, up 0.3 cent.

More on the Dairy Price Stabilization Act
(May 14, 2010) On May 12, California Democratic Congressman Jim Costa introduced the Dairy Price Stabilization Act, a bill designed to match milk supply and demand levels. Dairy Profit Weekly editor, Dave Natzke, reported details in Friday’s broadcast and said that, under the program, dairy farmers could limit annual production to a base level determined by a farmer board and USDA, or pay a market access fee to increase production beyond that base. 

Money paid into the program would be distributed to farmers who stay within their base production levels. If the bill passes, farmers would have to vote to approve the plan, and vote three years later to continue it. We'll have more on this as the bill makes its way in Congress.  

Natzke went on to discuss the development this week regarding the sale of raw milk. Federal law currently prohibits the interstate sale of raw milk to consumers, he said, but allows states to regulate those sales within their borders. Bills allowing raw milk sales advanced in several states this spring, including in Wisconsin, where Governor Jim Doyle was scheduled to sign a bill this week adding America’s Dairyland to the list of nearly 30 states allowing raw milk sales or distribution.

Both the National Milk Producers Federation and International Dairy Foods Association have criticized proponents for downplaying the food safety risks related to raw dairy products, and fear disease outbreaks related to raw milk could damage dairy’s overall healthy image.

Recently, Whole Foods, the 10th largest food and drug store in the United States, and PCC Natural Markets, the largest consumer-owned natural food retail cooperative in the United States, have ceased raw milk sales over medical liability concerns, Natzke reported.

Raw milk advocates, on the other hand, say properly managed and licensed farms provide no health risks, and that consumer interest in raw milk is growing, spurred on by what they say is greater demand for natural products and a source for locally produced food. The Second Annual International Raw Milk Symposium was held in Madison, Wisconsin, in April, attracting about 250 people from 28 states and four countries, according to Natzke.

(May 13, 2010) National Milk’s Chris Galen gave DairyLine listeners a Capitol Hill update on Thursday and detailed a bill introduced Wednesday by Senator John Kerry (D-MA) and Joe Lieberman (I-CT) dealing with clean energy in an attempt to mitigate climate change.

The bill attempts to reign in carbon emissions, he said, and promotes development of clean energy and is a replacement in many respects to the cap and trade approach which passed the House last year but has no prospects in the Senate.”

The bill could provide opportunities for dairy and animal livestock producers to take advantage of the carbon offset market, according to Galen, but it depends how the Senate approaches it. He said that will be a focus of National Milk, though most people do not believe the House or Senate will pass a clean energy climate bill in 2010, with the elections a few months away. “It’s going to be a major issue,” he warned, “And it will also be affected by what’s happening right now in the Gulf of Mexico and the ramifications from that oil spill.”

In another issue that could have big ramifications for dairy farmers; the advisory committee working on government dietary guidelines also released its initial technical report on what kind of recommendations should be made to Americans.

National Milk will look for any changes in the recommended daily servings of dairy products for adults and children, Galen said, and will try to shape the discourse on this because this will affect not just what the government tells people to eat but also the types of products that are required to be served in schools and other government feeding programs.

Stick Together And Have One Voice

(May 12, 2010) Maryville, Tennessee dairy producer Mac Pate has been a dairy farmer for 61 years and has seen a lot of change in the dairy industry in that time as well as in the beef check off which has been around for about 25 of those years.

Speaking in this week’s “Beef Board Update,” Pate had some advice for fellow dairy producers; “Stick together and have one voice.” He said he believes some kind of supply management program is needed to control the milk supply. The supply/demand equation is a factor in beef as well though “it seems easier to control the supply in beef and doesn’t vary quite as fast as in the milk business.”

Pate said he has always believed in advertising and promoting and “is one of the main things we can do to increase sales of beef.” He praised the Beef checkoff and views it as a good investment for dairy producers. He said he worked hard, as a dairy producer to try to get beef promotion started and has always felt that “it is a good instrument to increase sales for beef.”

Latest World Ag Supply and Demand Estimates Released
(May 11, 2010) The Agriculture Department has again raised its 2010 milk production forecast in its latest World Agricultural Supply and Demand Estimates report issued this morning, “reflecting a slower decline in cow numbers and stronger expected growth in milk per cow.” Department analysts expect 2010 milk output to hit 190.2 billion pounds, up 300 million pounds from last month’s estimate. 2009 output was 189.3 billion pounds.  

Cheese and whey price forecasts were lowered, resulting in a lower Class III price. The report now projects a range of $13.95-$14.45 per hundredweight, down from the $14.10-$14.60 projected a month ago.

Butter and nonfat dry milk price forecasts were raised and the Class IV price increased. Look for a range of $14.15-$14.75, up from $13.40-$14.00 expected last month. The all milk price is forecast to average $15.65-$16.15 per cwt.

2011 milk output will increase, according to the report, “as producers respond to improving returns.” Cow numbers are projected lower than 2010, but the rate of decline is expected to slow, especially in the latter part of the year. Milk per cow is forecast to increase at a rate similar to 2010. 2011 milk production is projected to hit 193 billion pounds.

Commercial exports are forecast to increase as the global economy improves. Imports will also increase slightly, according to USDA. “An improving economy will support increased domestic use, reducing stocks below 2010 levels,” it says.

Cheese, nonfat dry milk, and whey prices were forecast higher in the face of improved demand and tighter supplies. However, butter prices are expected to be below 2010 levels.

Class III and Class IV prices were forecast to be higher than 2010 “as higher cheese and whey prices support the Class III price and stronger NDM prices more than offset weaker butter prices and support the Class IV price.” Look for a 2011 Class III average of $14.25-$15.25 per cwt. and a Class IV of $14.15-$15.25 per cwt. The all milk price is forecast at $15.70 to $16.70 per cwt for 2011.

California June Class I Prices Up 31 Cents
(May 11, 2010) California’s June Class I milk price was announced this afternoon at $15.68 per cwt. for the north and $15.95 for the south. Both are up 31 cents from May and $3.98 above a year ago. The June Federal order Class I base price is announced next Friday, May 21^st.

Milk production is having problems there, he said, and that’s tightening their market and so far the international markets haven’t gravitated to our more than adequately supplied cheese market here.”

You would think that U.S. cheese would be considered a bargain at current prices and brooks admitted that was so, even with transportation costs, but sometimes U.S. cheese may not meet the quality or quantity that the international markets want. He added that a lot of what’s traded on the international market  is a white Cheddar while most U.S. Cheddar is yellow so that takes away some of the market potential.

He says the U.S. is exporting a fair amount of cheese, when you look at the overall spectrum of dairy commodities, the U.S. still isn’t geared for that market yet and he’s not sure the U.S. ever will be because we are such a domestic dominated market.

Brooks looks for cheese prices to run “sideways” for a while. Price have traded in the $1.30s to the low $1.50s and are currently in the mid $1.30s and have been since mid April. He doesn’t see that changing until we get through the flush and warmer weather. Mid-summer we may start to see steady gains, he said, but he doesn’t expect the run up to levels seen in 2007 and 2008 for some time.

(May 7, 2010) The cash block cheese price closed the first Friday in May at $1.38 per pound, down three-quarters on the week, but 24 1/4-cents above a year ago. Barrel closed at $1.3725, also down three quarters, but 31 3/4-cents above a year ago when the barrels bottomed out at $1.0550. Eight cars of block traded hands on the week and 10 of barrel. The lagging NASS-surveyed U.S. average block price lost 1.3 cents, slipping to $1.4257. Barrel averaged $1.3939, down 2.7 cents.

Butter inched 2 cents higher Monday and Tuesday, plunged 6 cents Wednesday, regained 2 on Thursday, and a half-cent Friday, and closed at $1.6050, down a penny and a half, and reversed 12 weeks of gains, but it’s 36 1/2-cents above a year ago. Eight cars were sold. NASS butter averaged $1.5491, up 3.4 cents.

Cash Grade A nonfat dry milk closed at $1.3275, up 3 cents on the week. Six cars were sold. Extra Grade closed at $1.30, up a nickel. NASS powder averaged $1.2174, up 4 cents. Dry whey averaged 35.74 cents, up 0.5 cent.

Crop Planting Season Off To Record Pace
(May 7, 2010) The crop planting season is off to a record pace, according to Friday’s DairyLine. Dairy Profit Weekly editor, Dave Natzke, has been, pardon the pun, outstanding in the field, and reported that, as of May 3, nearly 70 percent of the nation’s intended corn acreage and 15 percent of the soybean acreage had been planted, which is well ahead of last year’s pace and historical averages for early May.  

About 20 percent of the corn plants had emerged, nearly double the 5-year average, he said, and most areas are reporting good soil moisture levels as crops begin to grow. In the Midwest and Northeast, there were even farmers preparing for hay harvest, a job usually associated with Memorial Day.

“All eyes will be on the weather this weekend,” he said. “We reached nearly 80 degrees here in north-central Wisconsin on Tuesday, but frost and up to 2 inches of snow are forecast for Friday evening, which could threaten emerged plants.”

Last week’s monthly USDA Ag Prices report provided a mixed bag for dairy feed prices, according to Natzke. U.S. average corn prices were down slightly in April, but soybean and hay prices were slightly higher than the previous month. Combined with a decline in milk prices, the monthly milk-feed price index was down, continuing a trend of nearly 30 months of unfavorable relationships between milk prices and feed costs, he said.

Several factors will impact feed prices for the remainder of 2010, according to Natzke. First, retail gasoline prices are running more than 80 cents per gallon higher than a year ago, boosting corn demand for ethanol production.

Corn export demand is also increasing, he said, but on the plus side, a strengthening U.S. dollar could slow export demand. “Based on those factors, dairy farmers who buy corn off the futures market can expect wide fluctuations as the growing season progresses,” Natzke warned.

For dairy farmers who include fish oil in their dairy rations, the oil spill in the Gulf of Mexico also spells trouble. Dairy nutritionists have told Natzke that they're already seeing a jump in fish oil prices.

(May 5, 2010) In response to the threat of increased regulation, National Milk coordinated dairy industry efforts four years ago to work with agricultural researchers to obtain the best possible data quantifying actual on-farm emissions of ammonia, particulates, hydrogen sulfide, and volatile organic compounds.

NMPF’s Chris Galen, reported in Thursday’s broadcast that dairy farms, currently, are subject to regulations from the Clean Air Act and other federal legislation however, a few years ago the EPA was poised to begin regulating farms but didn’t have reliable data, especially regarding dairy farms.  

NMPF joined other livestock organizations, using one-time funding from the National Dairy Board, to commission air researchers from land grant universities set up sophisticated monitoring equipment at five dairies across the country to conduct the National Air Emissions Study and quantify emissions.

That data collection is now complete, he reported, and the data will be given to the EPA. The EPA is not expected to determine how the findings should be applied to farms until the end of 2011, according to Galen, but the data will be analyzed and a formula developed so other farms can enter their specific data to calculate what their actual emissions are.

The goal is to prevent “any sort of heavy handed regulations of farms,” Galen said. EPA is ready to regulate farms, he said, but “we want to minimize the invasiveness of anything they do.” Once EPA makes the data available to the public, some environmental groups can be expected to interpret them in ways that make livestock operations look like major polluters, or the recipients of a lenient deal from EPA, Galen warned, but National Milk will mount an aggressive effort to counter any misinformation once the data is available.

(May 5, 2010) The International Dairy Foods Association’s Peggy Armstrong said she felt she was "preaching to the choir" in Wednesday’s DairyLine but reported results of new research about one of the health benefits of drinking milk. A study presented the last week of April at the Experimental Biology conference in Anaheim, California showed that cow’s milk and milk products are America's top source of Vitamin D.

“They found that milk supplies half of all the Vitamin D in the American diet,” Armstrong said. Using the latest national data on what more than 16,000 Americans over the age of 2 eat, researchers looked at the contribution of each food group to total Vitamin D intake. “No other food item came close to supplying the Vitamin D punch that milk and milk products provide,” she said, “In fact, for kids ages 2-18, milk provided nearly two-thirds of all vitamin D in their diet.”

The findings are important, Armstrong said, because some estimates suggest that as many a 55 percent of adolescents may be deficient in Vitamin D. This deficiency can put children and adolescents at a higher risk for broken bones now and osteoporosis later, according to Armstrong, but Vitamin D may well play a much bigger role in our health than strong bones. Emerging science suggests that Vitamin D may also help protect against diabetes, hypertension, heart disease and some cancers, and supports a healthy immune system.

“This study reinforces that it's important to get the recommended three 8 ounce glasses of milk each day,” Armstrong said, and “provides 75 percent of the dairy value of vitamin D.” Milk also provides eight other essential nutrients including calcium, potassium and Vitamin A, she said. “So, this morning, let's raise a nice cold glass of milk to continued good health,” Armstrong concluded.

This is good news at a time that milk’s nutritional value is still challenged so choir; it’s up to you to sing of milk’s goodness to the world.

In response to the threat of increased federal regulation, National Milk coordinated dairy industry efforts four years ago to work with agricultural researchers to obtain the best possible data quantifying actual on-farm emissions of ammonia, particulates, hydrogen sulfide, and volatile organic compounds.

Using one-time funding provided by the National Dairy Board, air researchers set up sophisticated monitoring equipment at five dairies across the country to conduct the national air emissions study.  

(May 4, 2010) The first day of trading in May saw cheese hold and butter inch a penny higher. Mary Ledman, Principal of Keough Ledman, Associates Incorporated in Libertyville, Illinois, said in Tuesday’s DairyLine that “Everybody seems to want to be holding butter in anticipation of further price increases in the second half of the year.” She added that butter stocks and production are down from a year ago and global demand is good and “Until the EU (European Union) does anything with its couple hundred thousand metric tons of butter that it has in storage there’s an opportunity for butter prices to continue to rise.”

Ledman believes the bottom is in on cheese and she expects prices to climb as butter and powder pull Class IV milk prices higher. Class II prices are being pulled higher and even Class I being driven off of butter-powder values, she said, “So cheese will come along for a ride,” but she warns Class III markets may lag $1.00-$1.50 versus the Class IV markets in the near future.

“I hope summertime grilling helps pull demand higher for cheese,” Ledman said and she said the block-barrel spread could be more positive to barrel. “It’s the flush in the Upper Midwest and I think there’s going to be plenty of milk around and plenty of cheese.”

Reacting to China’s agreement to give the U.S. 30 days to work with authorities to secure an agreement on a new health certificate for food-grade dairy exports to China; Ledman said the dispute claims that the U.S. does not have a health certificate in place to meet China’s regulations for food grade dairy products.

Some of the more cynical people believe the amount of time it takes to renegotiate this agreement will reveal whether this is a global monetary policy issue or really a food safety issue, according to Ledman. Some believe this is being dictated by monetary policy rather than food safety, she concluded.

(May 3, 2010) The Agriculture Department’s March Dairy Products report puts butter production at 141.1 million pounds, unchanged from February but 6.2 million pounds or 4.3 percent below March 2009.  

Mozzarella cheese output totaled 300.4 million pounds, up 41.3 million pounds or 16 percent from February, and 20.4 million or 7.3 percent above a year ago.

Total Italian type cheese, at 380.4 million pounds, was up 50 million pounds or 15.1 percent from February, and 21 million or 5.8 percent above a year ago.

Cheddar production totaled 281.6 million pounds, up 37.2 million pounds or 15.2 percent from February, and up 2.3 million pounds or 0.8 percent from a year ago.

American type cheese amounted to 362.3 million pounds, up 41.9 million pounds or 13.1 percent from February, but down 2.1 million pounds or 0.6 percent from a year ago.

Total cheese output came to 890.1 million pounds, up 114.8 million pounds or 14.8 percent from February, and 19.6 million pounds or 2.3 percent above a year ago. 

Nonfat dry milk output, at 137.5 million pounds, was up 16.8 percent from February and 0.2 percent above a year ago.

California Class 4 Prices Announced
(May 3, 2010) California’s April 4b cheese milk price was announced this morning by the California Department of Food and Agriculture at $12.30 per hundredweight, up $1.17 from March, $1.89 above April 2009, but 62 cents below the comparable Federal order Class III price. The Golden State's 4a butter-powder price is $13.49, up 65 cents from March and $3.70 above a year ago.  

The process included a comprehensive Life Cycle Assessment (LCA) for fluid milk in conjunction with the Innovation Center for U.S. Dairy and the University of Arkansas, according to Bavido. The LCA has been recognized for its important contribution to greenhouse gas science, he said.

“The U.S. dairy industry is following the International Organization for Standardization standards which are widely supported by environmental scientists, Bavido reported. He said the LCA is important because research shows that consumers want to know that producers of the products they buy care about the environment. He said that, “When consumers believe that dairy is not only nutritious, delicious, and delivered at a good value, it is also environmentally friendly, they tend to purchase more dairy products.” “This,” he concluded, “Is the goal of the check off program, namely to increase sales.”