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

Cheese inventories continue to build

By Lee Mielke- | Comments: 0 | Leave a comment

Cash dairy product prices saw little change in the final full week of June Dairy Month. Cheese prices inched a little higher but are still below their respective government support levels. The 40-pound blocks closed that Friday at $1.12 per pound, up a quarter-cent on the week, but 80 cents below that week a year ago. The 500-pound barrels closed at $1.09, up 2 cents on the week, but 87 cents below a year ago. Twenty eight cars of block traded hands on the week and nine of barrel. The NASS-surveyed U.S. average block price inched up 0.2 cent, to $1.1494 and barrel averaged $1.1173, down 0.7 cent.

The cash Double A butter price held all week at $1.2050, 34 cents below a year ago. Twenty nine cars were sold on the week. The NASS butter average hit $1.2092, down 0.7 cent. NASS nonfat dry milk averaged 84.64 cents, down 0.5 cent, and dry whey averaged 27.55 cents, up 0.9 cent.

Price support purchases for the week amounted to 5.7 million pounds of nonfat dry milk, raising the cumulative total to 264 million.

As of Friday morning bids totaling 25.8 million pounds of nonfat dry milk, 167,550 pounds of Cheddar cheese, 119,000 pounds of anhydrous milkfat, and 2.9 million pounds of butter were accepted that week under the Dairy Export Incentive Program (DEIP).

University of Wisconsin Emeritus Professor, Dr. Robert Cropp, said in Tuesday's broadcast that we could start seeing cheese move Uncle Sam under the price support program if cheese prices stay very long below support, particularly the barrels. The cost to sell to the government makes some plants reluctant to do so, according to Cropp.

He warned that milk production has to fall below year ago levels before cheese prices will start to climb, due to lower domestic and world market demand. The May data showed that milk output is holding, he said, "There's plenty of cheese in storage and enough to meet current demand so buyers have to be convinced that things will get tighter as we move into the summer and fall demand period."

Cropp predicted that will happen and he expects milk production will fall below year ago levels in the next report as cow numbers fall due to CWT. That should trigger an increase in prices.

Reports continue to surface that dairy farmers will dump milk in protest of the low prices but Cropp questions the success of doing so because it's usually done by a very few farmers for a short period of time.

It would have to be national to have much impact, he said but he admitted that it does "demonstrate the depressed prices and the financial conditions that some farmers are facing."

Meanwhile; USDA's National Ag Statistics Service (NASS) estimated that 211,700 dairy cows were slaughtered under federal inspection in May, down about 3,400 head from April 2009, but 17,000 more than May 2008.

The January-May 2009 cull cow slaughter totaled about 1.2 million head, up about 110,500 head from January-May 2008. About 62 percent of year-to-date (Y-T-D) culling increases were in the Mountain and West regions.

The NASS figures are slightly lower than estimates reported in USDA's Dairy Market News. Based on last week's report, Y-T-D slaughter for the week ending May 30 was 1.223 million head, up 136,200 head from the same period in 2008.

The Agriculture Department's latest Cold Storage report put May butter stocks at 251.1 million pounds, up 11.1 million or 5 percent from April but down a bearish 18.4 million pounds or 7 percent from May 2008, according to preliminary data.

The American type cheese inventory, at 608.3 million pounds, was up 20.4 million pounds or 3 percent from April and 39.9 million or 7 percent above a year ago. Total cheese stocks amounted to 957 million pounds, up 42.5 million or 5 percent from April, and 75.7 million or 9 percent above those a year ago.

The hurting dairy economy has led National Milk's newly formed Strategic Planning Task Force to develop some short and long term solutions. Chris Galen reported in Thursday's broadcast that, while any big change in the milk pricing system is a longer term prospect, farmers can't wait that long, so the goal is to determine what can be done immediately.

The current CWT herd removal is one of those efforts, he said, and is the biggest one ever, but the Task Force is also asking if there is a role that the CWT can play in helping to augment the DEIP.

There is one more week for interested parties to apply to receive DEIP bonuses to export cheese, butterfat, and skim milk powder, Galen said, and CWT is considering ways to facilitate additional DEIP exports. The new DEIP fiscal year begins July 1 and National Milk has called on USDA to make full DEIP allocations available in the new fiscal year.

National Milk also issued a press release Friday, calling on the USDA to boost its price support program purchase prices for cheese and milk powder to "bolster the current rock-bottom milk prices that are threatening the livelihoods of thousands of dairy farmers."

NMPF requested that USDA raise the purchase price for block cheese from $1.13 per pound to $1.19, barrel cheese from $1.10 to $1.16, and raise the nonfat dry milk price from 80 cents to 84 cents per pound.

The Task Force will meet with other farm groups in July to discuss other steps to take to help dairy producers, not just with the challenge of the low milk prices but also the high input costs, but he warned that it's not just the economic feasibility that has to be considered. The political viability must also be considered, he said.

When asked if dumping of milk was considered, Galen responded, "I don't think dumping milk is a viable economic option." He it's a it's a "protest the Europeans seem to be pretty good at but, at the end of the day, if you're paying to feed the cows and to keep the cows healthy, only to dump their output, that's not something that's going to be useful in terms of a longer term or nationwide effort."

Speaking of the DEIP; Dairy Profit Weekly editor, Dave Natzke, explained in Friday's DairyLine broadcast that the program pays cash bonuses to exporting companies, subsidizing the sale of U.S. dairy products to foreign buyers at prices less than cost, and enables U.S. companies to compete in global markets where other countries may be subsidizing their own dairy product sales.

DEIP has been in place since the mid 1980s, Natzke said, but has been dormant the past several years. At the urging of the U.S. dairy industry, USDA reopened the program last month, setting allocations that could help move about 1.5 billion pounds of milk to the export market.

Natzke said it's difficult to put an exact total on the volume of milk exported under the program because, in the case of skim milk powder for example, the milk fat has been removed before the product is exported.

Natzke also reported that USDA's weekly Weather and Crop Bulletin shows that, after a slow start, corn and soybean crops are approaching near normal conditions and about two-thirds of both crops are rated good to excellent in the most recent survey.

Next week, USDA will provide a clearer picture of the dairy feed situation, according to Natzke, updating grain stocks and planted acreage estimates. We'll also get the monthly Ag Prices report, which will set final May grain prices and the feed adjuster used in May's Milk Income Loss Contract program payment.

The Cattlemen's Beef Board via the beef checkoff has begun a series of DairyLine programs over the next few months because dairy producers are also beef producers, according to Lucinda Williams, Hatfield, Massachusetts dairy producer and chair person of the Beef Board.

Speaking in Wednesday's broadcast Williams said dairy producers need to know what the beef checkoff does for them. She reported that 13 dairy producers serve on the Beef Board and that 20 percent of the beef supply comes from dairy cows.

Beef may make up only 6-8 percent of a dairy's annual income, she said, but dairy plays an important role in the beef industry. Dairy cull cows and bull calves eventually go into the beef supply chain, she said, and dairy producers need to be aware of all the great things their beef checkoff dollars are accomplishing.

Dairy beef is more than just ground beef, according to Williams, and research shows that 44 percent of the muscle from dairy animals is used for steaks, roasts, filets and strips. Since 1998, more than 2,500 new products have been created, she said, such as the Flat Iron Steak which quite often uses dairy beef.

Checkoff-funded foreign marketing efforts also help build beef demand overseas, according to Williams, where 94 percent of the population lives. "Producers can't be everywhere," Williams concluded, "But your beef checkoff can."

Speaking of check offs; Dairy Management Incorporated (DMI) is encouraging dairy producers to tell their story to local news media, churches, neighbors, schools, and service clubs so consumers know what they do and how they take care of their animals and their land. The point was made in a discussion with Moreno Valley, California dairy producer and DMI board member, Brad Scott, in Monday's "DMI Update."

He said dairy producers are "the best ambassadors for the industry," but many people making false accusations against dairy farms so dairy farmers are "the best messengers and their actions and their words are probably what's going to do the best to convey the message what positive role dairy farming families play in America."

Scott says he practices what he preaches because he's concerned how his farm looks. He educates his employees to be aware of what they're doing, their actions and protocol concerning animal husbandry practices and to "be aware of people who park near the driveway taking pictures."

"There are activists and you never know what they're up to," Scott warned, "So being aware of your surroundings, making sure that the presentation that you give the person just driving by on their way to town is always a positive image."

Resources are available from DMI to help in the check off's "Telling Your Story," program. Just contact DMI, he said. "You don't have to be an expert in media. It's talking, just like you do to your neighbor in telling your story as far as what you do." That, he said, goes a long way, coming from an individual farmer in the community, "contrary to some of the negative things you hear in the press.[[In-content Ad]]


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