---

USDA's Animal and Plant Health Inspection Service (APHIS) confirmed the nation's fourth case of bovine spongiform encephalopathy (BSE) in a dairy cow from central California. Dairy Profit Weekly (DPW) reported that the carcass was being held under state authority at a rendering facility and will be destroyed. It was never presented for slaughter for human consumption, DPW reported, so did not present a risk to the food supply or human health. Milk does not transmit BSE.
Samples from the animal in question were tested at USDA's National Veterinary Services Laboratories in Ames, Iowa confirmed the animal was positive for atypical BSE, a very rare form of the disease not generally associated with an animal consuming infected feed.
FC Stone dairy economist Bill Brooks didn't expect much impact on dairy markets however warned that the news could hit beef consumption and curb cheese consumption through lower demand for cheeseburgers.
American type cheese stocks stood at 621.9 million, up 14.2 million or 2 percent from February and 10.7 million or 2 percent above a year ago, according to USDA's latest Cold Storage data. The total cheese inventory hit just over a billion pounds again (first time since October 2011), up 2 percent from February but 2 percent below a year ago. Traders said the report was pretty much as expected.
Heavier than anticipated milk production across the country continues to find its way to cheese plants, according to USDA. Mid April production levels were at or near capacity in many areas. Midwest, milk supplies were being offered to some cheese manufacturers at below class price enhancing production.
Retail demand was lower than the previous two weeks as cheese features were not as prevalent in store ads. In some cases, retail prices have increased while wholesale prices are somewhat steady. Export demand is good, according to USDA, as U.S. prices are favorable compared to current prices in Oceania.
Butter stocks are abundant compared to a year ago. The March 31 inventory stood at 210.6 million pounds, up just 5.4 million or 3 percent from February but a whopping 66.4 million pounds or 46 percent above those a year ago.
Churning schedules have eased from the Easter/Passover holiday. Cream remains plentiful and USDA reports that many churns are running at or very near capacity levels. Many butter producers are able to manage their output at this time and be selective with their additional cream purchases.
Butter demand has slowed considerably. Retail buyers are indicating that feature activity is limited, although advertised butter continues to be present in many grocery ads.
Farm milk supplies are steady to slowly declining. Florida milk exports dropped 24 percent the week of April 16 (190 loads) compared to the previous week (250 loads). Production in the Pacific Northwest, Idaho, Utah and California continues to run ahead of 2011 volumes and is holding steady. Farm milk intakes in the upper Midwest continue to surpass year ago volumes and are holding steady. Arizona production, which is decreasing, reflects the arrival of warmer weather.
Bottled demand is steady to lower. Milk handlers speculate the early arrival of warm weather in the Northern states decreased several weeks of mealtime milk consumption and pushed the calendar ahead to preferences for iced beverages. Cream demand from ice cream and ice cream mix end users hasn't moved out of the doldrums yet.
Looking "back to the futures;" after factoring in the announced Class III milk prices and the remaining futures, the average Class III milk price for the first six months of 2012 stood at $15.65 on March 2 and $15.83 on April 6. The last half of 2012 was averaging $16.20 on March 2, $16.52 on April 5, $16.26 on April 13 and $15.95 on April 20.
Cooperatives Working Together (CWT) accepted 11 requests for export assistance the final week of April to sell a total of 2.615 million pounds of cheese and 752,000 pounds of butter to customers in Africa, Asia, the Middle East and South America. The product will be delivered through July and raised 2012 CWT cheese exports to 46 million pounds plus 39.2 million of butter to 26 countries.
CWT also announced that it will begin accepting requests for export assistance for Anhydrous Milk Fat (AMF).
In dairy politics; the draft Farm Bill language released April 20 by the Senate Agriculture Committee included the key components of National Milk's "Foundation for the Future" dairy policy reform in preparation for Agriculture Committee markup. Committee Chairwoman Sen. Debbie Stabenow (D-MI), along with Ranking Member Sen. Pat Roberts (R-KS), released the provisions of the entire farm bill, including the dairy legislative language.
The Committee passed the bill April 26, 16 to 5, including the dairy reforms, and moves to the full Senate. An amendment was going be offered by Senator Michael Bennet (D-CO) that would strike the dairy market stabilization program included in the draft and replace it with a stand-alone margin insurance program for dairy producers but was withdrawn.
IDFA's Jerry Slominski applauded Bennet's amendment, saying "We fully support a margin insurance proposal without it being tied to a program that limits milk supply and manipulates prices. This amendment accomplishes the true compromise we have been urging for a long time." National Milk countered that the Bennet amendment would have cost dairy farmers more than $400 million in additional expenses.
Meanwhile; the House Agriculture Subcommittee on Livestock, Dairy and Poultry heard testimony the same day on the dairy provisions.
Part of the discussion included a new analysis of the dairy policy changes being considered by the House and Senate Agriculture Committees by Dr. Scott Brown of the University of Missouri and the Food and Agriculture Policy Research Institute (FAPRI), which was commissioned by the House Agriculture Committee.
The reforms will have a minimal effect on milk production and dairy product exports, according to a press release from the National Milk Producers Federation (NMPF).
Brown's report analyzes the Dairy Security Act (DSA), which features a voluntary margin insurance program to protect against low milk prices or high feed costs, with a basic level of coverage available to all producers for free, and a supplemental, expanded level of coverage available for farmers to purchase. If farmers enroll in the Dairy Producer Margin Protection Program, they will also be subject to the Dairy Market Stabilization Program, which asks them to reduce their milk output when margins are very low.
NMPF said "The key take-away from the FAPRI report is that the dairy reforms reduce margin volatility at the farm level, without negatively affecting the supply of milk to either domestic or international markets."
Two other national farm groups, the American Farm Bureau Federation (AFBF) and the National Council of Farmer Cooperatives (NCFC), have endorsed the plan while two Midwest producer groups, the Dairy Business Association (DBA) and the Minnesota Milk Producers Association (MMPA) gave it a thumbs-down. The DBA has been vocal in their opposition of the supply control mechanism contained in the DS Act, according to DPW, while the MMPA said the proposed legislation must remove all language referring to "Milk Stabilization."
The International Dairy Foods Association (IDFA), which also testified at the Thursday hearing, previously named other dairy leaders who called for the Senate Agriculture Committee to remove the new dairy program from the draft 2012 Farm Bill and instead focus on providing proven safety-net programs, such as revenue insurance, typically used for other commodities.
The leaders include Miriam Erickson Brown, president and CEO of Anderson Erickson Dairy; Jon Davis, president and CEO of Davisco Foods International, Inc.; and David Ahlem, vice president of dairy procurement and policy for Hilmar Cheese Company, Incorporated who joined the IDFA in opposing the milk supply management program, called Dairy Market Stabilization, charging that it would raise consumer prices, hurt exports, cost thousands of new jobs and stifle investments in new facilities.
Jerry Slominski, IDFA senior vice president for legislative and economic affairs, said "Congress has been told that they can attempt to control milk supply and demand without harming consumers and the overall dairy industry, and that is simply not true."
Erickson Brown charged that the plan "will create a chain of events which will limit the milk supply for dairies like AE and result in higher milk prices for consumers." "Last year, milk prices increased nationally on average by 11 percent, driving consumers to purchase fewer gallons of milk. A gallon of milk is the foundation for most dairies like ours."[[In-content Ad]]

---