September 5, 2017 at 3:32 p.m.
Milk production continues to rise
January cow numbers in the 23 states totaled 8.5 million head, up 13,000 from December and 93,000 above a year ago. Output per cow averaged 1,857 pounds, up 46 from a year ago.
California was up a whopping 6.6 percent from a year ago, thanks to 29,000 more cows and a 95 pound gain per cow. Wisconsin was up 3.7 percent, on a 65 pound gain per cow but cow numbers were unchanged. Idaho was up 4.7 percent on 8,000 more cows and 60 pounds more each. New York was up just 0.3 percent on a 5 pound gain per cow but cow numbers were unchanged. Pennsylvania was up 0.6 percent on a 20 pound gain per cow but cow numbers were down 3,000 head. Minnesota was up a half percent, thanks to a 25 pound gain per cow. Cow numbers were down 5,000 head.
The biggest gains were again seen in the west. Arizona was up 7 percent on an 85 pound gain per cow and 5,000 more cows. Texas was up 3.8 percent on a 25 pound gain per cow and 10,000 more cows. Washington State saw a 5.4 percent increase on 11,000 more cows and a 20 pound gain per cow.
Vermont was the only state in the top 23 showing a decline, off a half percent but New Mexico's rate of gain slowed in January despite a 12,000 cow increase, up just 0.7 percent. Output per cow plunged 60 pounds.
FC Stone dairy economist Bill Brooks called the report "bearish" on butter but indicates strong pizza sales on the cheese side.
USDA's Dairy Market News reports that cheese production remains at above expected levels as increased milk supplies are available and offered at discounts in some cases. Buyers are attempting to determine if this is the "bottom" for the near term and whether to increase orders or wait for lower prices. This wait-and-see attitude is increasing inventories at some cheese plants.
Churning schedules across the country remain seasonally strong as cream remains readily available, according to USDA and continues to move from one region to another to find churning capacity or willing buyers. Often, current churning activity is surpassing demand, thus clearances to inventory continue.
The Agriculture Department's latest Cold Storage report showed January butter stocks soared 60 percent, hitting 171.2 million pounds, up 44 percent from January 2011.
American type cheese, at 612.5 million pounds, was unchanged from December but 4 percent below a year ago. Total cheese stocks declined 1 percent during January to 977.8 million pounds, 7 percent below a year ago.
Milk production trends across the country are generally more enhanced this year than in previous years for this time of the season, according to USDA's weekly update. As pointed out last week, much of the strength is attributed to a fairly mild winter and the increasing milk volumes are being met with challenges as some milk and components are having a hard time finding available capacity.
Class I sales are typical for this time of the month although some stronger demand occurred in the Central region where late winter storms sent consumers to stores for bottled milk and food staples. Cream markets are weak as surplus volumes move from one region to another to find processing or buyers. Often this cream ends up in the churn as Class II demand remains low, USDA said.
A quick update from my report last week; just as Seattle-based Northwest Dairy Association announced a "base" program for April through September, its processor arm, Darigold, experienced a major fire this week in one of its two dryers at its Lynden, Washington plant. Capacity was reduced to just 60 percent at an operation that normally dries some 4 million pounds of milk per day.
On a brighter note, Dairy Profit Weekly Dave Natzke reported in Friday's DairyLine broadcast that the Food & Drug Administration's annual report on milk drug residue testing results contained some good news. The number of milk samples testing "positive" for drug residues was a record low in 2011.
Of nearly 3.8 million milk samples analyzed, just 1,079 (28 one-thousandth of 1%) tested positive for drug residues, and none of those positives were found in pasteurized milk and dairy products headed to consumers.
On the down side, he reported that consumers are getting less milk in fluid form. Based on government estimates, less than 28 percent of all milk marketed in 2011 was sold in gallon jugs and other packaged fluid products. "With dairy consumption inching upward, that means U.S. consumers are purchasing more cheese, butter, yogurt, dairy protein foods and other dairy products," Natzke said.
Looking "back to the futures;" the average Class III milk price for the first six months of 2012 stood at $17.60 per hundredweight (cwt.) on January 6, $17.28 on January 13, $16.81 on January 20, $16.85 on January 27, $16.35 on February 3, (after factoring in the announced January Class III milk price) $16.19 on February 10 and $16.08 on February 17.
Speaking of milk prices; Dairy Profit Weekly reports that Vermont's congressional delegation has introduced legislation to extend the Milk Income Loss Contract (MILC) program beyond its expiration date at the end of fiscal year 2012. The MILC Continuation Act of 2012 would extend MILC for one year at current levels.
You'll recall that the MILC payments are triggered when the Class I price in Boston falls below $16.94 per hundredweight (cwt.). Currently, the base payment rate is any positive difference between $16.94 and the Class I milk price at Boston, times 45 percent. There is also a "feed cost adjuster," increasing the payment when the price of a cwt. of dairy feed rises above its target of $7.35/cwt.
Set to expire September 30, 2012, the potential payment total also takes a significant hit in its final month (Sept. 2012), when payments drop from 45 percent to 34 percent of the difference in the $16.94/cwt. trigger and the actual Boston Class I price. Payments under the program are limited by production. Currently, producers are eligible to receive payments on up to 2.985 million pounds per fiscal year.
Meanwhile, Brian Gould, associate professor, University of Wisconsin-Madison, updated his MILC payment projections. Based on February 17 closing futures prices and Class I base price announcements, he projects producer payments of 8 cents per cwt. for February; 44.1 cents for March, 76.5 cents for April,83.9 cents for May, 72.4 cents for June, 68.9 cents for July, 45.5 cents for August, 22 cents for September, 8.8 cents for October, 1.3 cents for November, and none for December.
Cooperatives Working Together (CWT) accepted 17 requests for export assistance this week to sell a total of 1.3 million pounds of cheese and just under a million pounds of butter to customers in Asia, Central America, the Middle East and North Africa.
The product will be delivered through June 2012 and raised 2012 CWT cheese sales to 24.5 million pounds and 19.9 million of butter to 16 countries.
In dairy politics; California's Milk Producers Council (MPC) took IDFA's Connie Tipton to task in its February 17 newsletter for comments she made last week on Capitol Hill and which I reported here last week. MPC's Rob Vandenheuvel wrote that he agreed with Tipton that our pricing system addresses a problem that existed many years ago but "disagrees with anyone that tries to argue that our fundamental problem no longer exists."
The problem, according to Vandenheuvel, is that dairy farmers "produce a highly-perishable product that must be sold every day to a group of buyers (the processors) that don't have to buy every day, and don't have to buy from any specific dairy." "That fundamental reality, which IDFA may want to sweep under the rug, still impacts our dairy farms just as it did 100 years ago, puts our dairy farmers at an immediate disadvantage when coming to the negotiating table."
"In response to this fundamental imbalance, our industry has enlisted the government, whether that's the Federal government (Federal Orders) or a State government (such as California) to act as a "referee" in establishing at least a minimum price that those buyers of milk (including IDFA's members) must pay for the milk they purchase," he wrote, "And it's that government function that IDFA is trying to eliminate."[[In-content Ad]]
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