September 5, 2017 at 3:32 p.m.
Cheese plants worried about milk supplies
Many churning operations continue to capitalize on the good returns for cream by selling at least some of their cream intakes and take advantage of the current opportunities, reports USDA, and butter churning is steady to lower. The impact of hot weather continues to affect the volume and fat content of milk in the West. Butter holdings are adequate for current and future needs, according to USDA, but butter is being pulled out of storage to service accounts. Retail and club store demand for print butter remains good. Food service demand is fair to good.
DMN reports that milk production continues to be impacted by weather across wide areas of the U.S. Class I demand is beginning to increase as schools start in some areas of the country and demand will build over the next month.
The Northeast and Midwest are seeing milk output leveling off and areas are receiving much-needed rainfall for crop and pasture growth. Southeast and Florida milk output is at seasonal low levels and manufacturing is also at low levels. Southwest milk output is trending lower.
Checking demand; USDA reports that commercial disappearance of dairy products during the first five months of 2012 totaled 83.1 billion pounds, up 1.8 percent from the same period in 2011. Butter was off 0.2 percent; American cheese, was up 1.7 percent; other cheese, up 1.4 percent; NDM, up a whopping 36 percent; but fluid milk products were down 2.9 percent.
Cooperatives Working Together (CWT) accepted seven requests for export assistance this week to sell 2 million pounds of cheese and 597,453 pounds of butter, to customers in Asia, Central America and the Middle East. The product will be delivered through January 2013 and raises CWT's 2012 cheese exports to 73.5 million pounds plus 56 million pounds of butter and anhydrous milk fat.
The September Federal order Class I base price is announced by USDA on August 22.
Looking "back to the futures;" the last half 2012 Federal order Class III milk prices were averaging $15.96 per cwt. on June 1, $16.53 on June 8, $16.59 on June 15, $17.01 on June 22, $17.40 on June 29, $17.49 on July 6, $18.29 on July 13, $18.48 on July 20, $18.10 on July 27. Looking at the remaining five months of 2012, it averaged $18.80 on August 3.
National Milk is calling on members of Congress to meet with their dairy farmer constituents over the August recess to discuss the "perilous economic conditions affecting farmers and the urgent need to pass a new farm bill in 2012."
"NMPF believes this type of one-on-one dialogue will enable members in both the House and the Senate to see firsthand the need for passing a five-year farm bill, including the vital reforms to the nation's dairy policy in the form of the Dairy Security Act (DSA)," said NMPF President and CEO Jerry Kozak. He warned that "We are approaching a crisis comparable to or worse than 2009, when dairy farmers lost $20 billion in equity and thousands of farmers went out of business."
Meanwhile; opponents argue that "Dairy producers want tools that will limit risk, that are easy to navigate, and which are not tied to supply management." A Dairy Business Association (DBA) press release this week reported that was the message from Dr. Eric Erba, Chief Strategy Officer at California Dairies, Inc.
Erba joined Dr. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin's College of Agricultural and Life Sciences at a briefing attended by dairy farmer and Wisconsin DBA vice president John Pagel of Pagel's Ponderosa Dairy in Kewaunee, along with nearly 50 House and Ag Committee staffers.
Rep. Tom Petri (R-WI), Rep. Devin Nunes (R-CA) and Rep. Ron Kind (D-WI), members of the U.S. House of Representatives Dairy Farmers Caucus, sponsored today's briefing which was offered to present an alternative view point to that presented at a session last week on the Dairy Security Act.
Dr. Stephenson's presentation on "Dairy Options for the Farm Bill" called attention to the "Unintended Consequences" of the Dairy Market Stabilization Program, including the speed at which circumstances change in the dairy industry, and the fact that the current drought situation has moved the dairy industry into concern about not having enough milk.
A national class action lawsuit alleging false reporting of nonfat dry milk (NFDM) prices to USDA, resulting in lower milk prices to producers, will be allowed to proceed. The 9th U.S. Circuit Court of Appeals overturned a February 2010 U.S. District Court ruling dismissing the case, according to Dairy Profit Weekly's Dave Natzke in Friday's DairyLine.
The suit, Carlin et al v. DairyAmerica Inc. et al, was originally filed in California Eastern District Court, March 6, 2009. Court documents name DairyAmerica, the nation's largest marketer of NFDM, and dairy processor California Dairies Inc. (CDI) as defendants. Filing the lawsuit were dairy farmers Gerald Carlin, Pennsylvania; Paul Rozwadowski, Wisconsin; Bryan Wolfe, Ohio; and John Rahm, Ohio. (Wolfe died as the result of a farming accident, Aug. 7, 2012.)
The lawsuit, filed on behalf of approximately 50,000 dairy farmers who sold milk from 2002 to 2007, charges DairyAmerica, the largest marketer of nonfat dry milk, and dairy processor California Dairies Inc. (CDI), for misreporting information used by USDA to set farmer milk prices under the federal milk marketing order system.
Under the complex federal order system, large dairy product manufacturers and marketers are required to report weekly sales volumes and wholesale prices for cheese, butter, nonfat dry milk and dry whey. That information is then used to determine the minimum milk prices paid to dairy farmers. The reporting requirement prohibits inclusion of prices for long-term contracts, which might not represent current market conditions.
However, a USDA audit found some reports included the contract prices, and the lawsuit alleges the reporting errors started in 2002. At its peak, in 2006 and 2007, it is estimated nonfat dry milk prices were underreported by about 4 cents per pound.
"That may sound like pennies," Natzke said, "But those pennies add up. A 1-cent increase in the nonfat dry milk price raises the minimum price paid to dairy farmers by about 9 cents per hundredweight, and USDA's Ag Marketing Service estimates dairy farmers lost about $50 million due to the errors."
"However, under USDA policy, prices can only be adjusted for the previous three weeks, so there was no mechanism for farmers to receive back payments. That prompted the class action lawsuit, which was filed in 2009, and now has new life," Nazke concluded.
USDA is a large customer for U.S. cheese, according to the August 8 Daily Dairy Report (DDR). Based on purchase awards issued last fall, the U.S. government is scheduled to procure up to 266 million pounds of cheese for delivery in 2012, equal to 2.5 percent of 2011's total U.S. cheese production, according to the DDR.
Dairy Management Incorporated reports that cheese used on burgers in 2009 accounted for approximately 566 million pounds, which makes USDA's 2012 estimated cheese purchases equivalent to 47 percent of all of the cheese put on burgers, "a rather significant buy."
The awards are assigned to 14 cheese manufacturers with 45 percent of the allotment committed to Mozzarella and the remaining 55 percent evenly split between processed and American cheese. Through June, USDA's Farm Service Agency (FSA) has issued purchase orders for more than 108 million pounds of cheese, nearly 3 percent of Mozzarella and 2.5 percent of American cheese produced so far in 2012, according to a FOIA request by the DDR. To subscribe to the daily update, log on to www.dailydairyreport.com. A weekly interview with the editors is a free download at the site as well.[[In-content Ad]]
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