September 5, 2017 at 3:32 p.m.

After record cheese prices, demand erosion is a concern

By Don Wick- | Comments: 0 | Leave a comment

The cheese market reached record highs of $2.36 to start the year. Daily Dairy Report editor Mary Ledman fears the unprecedented highs will result in demand erosion at the same time farmers see gains in the milk check. "Keep in mind the January cheese market doesn't show up in a producer's milk check until mid-March into April, so I'm concerned that our farmers will be getting the signal to put the pedal to the metal when consumers are going to see the highest retail milk and cheese price in history." Ledman expects a market correction in the May-June time period.

High prices cure high prices
The milk futures trade has started the year strong. Stewart Peterson senior market advisor Brian Doherty credits tight cheese supplies, cold weather and the influence of speculative traders. Doherty does not expect this trend to continue long-term. "Dairy producers shouldn't get too comfortable with the long-term prospect that milk prices will continue going higher," said Doherty. "What we're hearing is that farmers are saying these back months aren't catching up to the front months. There's a reason for that: high prices cure high prices."

No shortage of replacement heifers
There have been reports of shortages of dairy heifer replacements. Daily Dairy Report editor Mary Ledman does not believe that is true. "I think the situation is such that the people that have the heifers aren't giving them up; they're in strong hands."

Supply/demand report forecasts an increase in milk production
In the latest USDA World Agriculture Supply/Demand Estimates, the 2014 milk production estimate was projected at 205.7 billion pounds. That's up 100 million pounds from the January estimate. The higher milk prices and lower feed costs are expected to result in herd expansion later this year. USDA said the number of dairy replacement heifers expected to calve in 2014 is up 2 percent from one year ago. The Class III milk price is now forecast to be in a range of $18.35 to $19.05 per hundredweight in 2014. Last year, the average price was $17.99 per hundredweight. Higher cheese and whey prices are credited for the bump in milk prices.

Record year for exports
U.S. dairy exports were worth $6.7 billion last year, an increase of more than 30 percent from 2012. Export records were broken for milk powder, cheese, whey products, lactose and fluid milk. Exports accounted for 15.5 percent of U.S. milk production.

President signs farm bill
While in Michigan to sign the new farm bill, President Barack Obama cited key aspects of the legislation. "It saves taxpayers' hard-earned dollars by making sure that we only support farmers when disaster strikes or prices drop; it's not automatic. It helps rural communities grow. It gives farmers some certainty. It puts in place important reforms." Obama said this bill includes a focus on crop insurance, conservation and local foods. Senate Agriculture Committee Chair Debbie Stabenow hosted Obama for the farm bill event. A small group of Democratic lawmakers, including Minnesota Senator Amy Klobuchar, were included. House Agriculture Committee Chairman Frank Lucas and Ranking Member Collin Peterson did not participate in the signing ceremony.

More than border control
A new report from World Agricultural Economic and Environmental Services said agricultural labor policy goes beyond border control. If enforcement is the only part of immigration policy, the study claims food prices would rise an additional 5-6 percent over five years. The research supports a plan that also includes a redesigned guest worker program and an opportunity for skilled workers to earn a path to legal status. This report was commissioned by the American Farm Bureau Federation.

U of M task force recommends against proposed CFANS-CBS merger
A University of Minnesota task force is advising against a new merged college. This 19-member task force was put together last fall to consider a possible merger between the College of Food, Agricultural and Natural Resource Sciences and the College of Biological Sciences. After extensive interaction with industry stakeholders, it was determined a merger could compromise the distinctive strengths of the two colleges.

4Q losses for Dean Foods
For the fourth quarter, Dean Foods reports a loss of nearly $38 million. That compares to a profit of more than $28 million one year earlier. The higher costs for raw milk supplies is shouldering some of the blame for these losses. Dean Foods, which is the largest U.S. dairy processor, is in a cost-cutting mode, closing eight plants in the past year.

Dairylea-DFA merger approved
The merger between Dairy Farmers of America and Dairylea Cooperative will become official April 1. Dairylea, which serves the northeastern portion of the country, will be combined with DFA. The merged entity indicates there will be no disruption in milk procurement in the Northeast.

Sales growth for Organic Valley
Organic Valley finished 2013 with sales of $928 million, up from $857 million in 2012. In recapping the year, Organic Valley officials cited the May 2013 fire that destroyed part of the company headquarters in La Farge, Wis. Construction is well underway and is scheduled to be wrapped up within the next couple months.

20 years for Posilac
2014 marks the 20th anniversary of Posilac. According to Elanco, more than 37 million U.S. dairy cows have been supplemented with Posilac during the past two decades.

Shutske gets temporary assignment
Former University of Minnesota Extension Safety Specialist John Shutske is the new interim provost and vice chancellor of University of Wisconsin Extension. Since 2008, Shutske has been on the Madison campus, serving as the associate dean for extension and outreach.

Canadian wins Midwest Livestock Auction competition
A Saskatchewan auctioneer won the Greater Midwest Livestock Auctioneer Contest Saturday in West Fargo. Jared Miller, who is based in Leon, Iowa was the runner-up and Mitch Barthel, Perham, Minn., was ranked third.

Top four in discussion meet
A University of Minnesota student finished in the top four of the National Collegiate Discussion meet. Kate Winslow of Fountain, Minn. was part of the American Farm Bureau Federation Young Farmer & Rancher Conference in Virginia.

Trivia Challenge
Super Bowl champion quarterback Russell Wilson played college football at the University of Wisconsin and North Carolina State University. That answers our last trivia question. For this edition, in what country did Brie cheese originate? We'll have the answer in the next edition of Dairy Star.[[In-content Ad]]


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