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

Minnesota milk production up 3.6 percent

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

January milk production in the top 23 states hit 14.8 billion pounds, up slightly from December, but down 0.6 percent from January 2009, according to preliminary data in USDA'S latest Milk Production report.

Revisions added 18 million pounds to the December estimate, putting the total at 14.6 billion, down 0.7 percent from December 2008. USDA also reported that 2009 annual production totaled 189 billion pounds, down 0.3 percent from 2008. Revisions to 2008 output decreased the annual total 10 million pounds. Revised 2009 production was up 61 million pounds from last month's estimate.

Production per cow in the U.S. averaged 20,576 pounds for 2009, up 181 pounds from 2008. The average annual rate of milk production per cow has increased 13.1 percent from 2000. The average number of milk cows on U.S. farms in 2009 was 9.2 million head, down 1.2 percent from 2008. There was no revision to the average number of milk cows for 2008.

January cow numbers totaled 8.3 million, up 4,000 from December, but 191,000 below a year ago. Production per cow averaged 1,782 pounds, up 30 pounds.

California's January production was down 2.4 percent from a year ago, due to 72,000 less cows but output per cow was up 30 pounds. Wisconsin was up 4.7 percent, thanks to a 70 pound gain per cow and 5,000 more cows. New York was down 1.3 percent. Cow numbers were off 14,000 but output per cow was up 15 pounds. Idaho was up 1.5 percent, despite a decline of 4,000 cows. Output per cow was up 40 pounds. Pennsylvania was down 1.7 percent on 9,000 fewer cows. Minnesota was up 3.6 percent, thanks to a 50 pound gain per cow and 2,000 more cows.

The biggest increase was in Washington State, up 5 percent, followed by Wisconsin and Minnesota. The biggest decline occurred in Colorado, down 10.4 percent on 13,000 fewer cows and 10 pounds less per cow. Missouri was down 9.5 percent with 6,000 fewer cows and a 50 pound loss per cow, and Florida followed, down 8.7 percent, on 6,000 fewer cows and 60 less pounds per cow.

Meanwhile, the Agriculture Department's latest Livestock Slaughter report shows about 232,000 cows were culled under Federal inspection in January, up 1,000 head from December and unchanged from January 2009.

Cash cheese prices lost more ground in the final week of February. The blocks closed that Friday at $1.34 per pound, down 7 1/4-cents on the week, but are still 16 1/2-cents above that week a year ago when the blocks plunged 13 1/2 cents, to $1.1750. Barrel cheese closed Friday at $1.29, down 8 3/4-cents on the week, but 11 cents above a year ago.

The losses were on top of the previous week's declines of 9 1/4 and 6 3/4-cents respectively. Thirty one loads of block traded hands on the week and 15 of barrel. The lagging NASS-surveyed U.S. average price on block cheese gained 0.4 cent, hitting $1.5059. Barrel averaged $1.5005, down 0.9 cent.

Butter closed February at $1.4050 per pound, up 4 1/2-cents on the week, and 25 1/2-cents above a year ago. Thirteen cars sold on the week and the NASS butter price averaged $1.3407, down a penny. NASS nonfat dry milk averaged $1.0697, down 7.2 cents, and dry whey averaged 39.46 cents, down 0.1 cent.

Cow numbers down, production up

The University of Wisconsin's Dr. Brian Gould pointed out in Tuesday's DairyLine that the Class III futures market has been headed down for a couple of weeks and the March to July settlements on February 19 were down an average of 39 cents from the previous Friday while the August to January contracts were down 26 cents, "reflecting the high level of cheese stocks out there but also what's going on in milk production."

Cow numbers were down 2.4 percent from January 2009 in USDA's latest Milk Production report, Gould admitted, however milk per cow was up 1.9 percent, the net result was a drop of only 0.6 percent and that's a big concern for the industry, with all those heifers out there that are available at a relatively inexpensive price. The decline in milk production may be short-lived, he warned.

Another interesting point from the data is the regional differences, according to Gould. Milk production was down in California, Colorado, Arizona, New Mexico, and Texas were all down significantly, whereas the Upper Midwest continued its dramatic increase. Wisconsin, for example, was up 4.7 percent, he said, and, while a lot of that was output per cow, there was no decrease in herd size.

Gould gave no estimate on how low cheese will go, admitting that he thought $1.49 would be but he's been shown wrong on that. He suggested listeners go to his website "Understanding Dairy Markets" at to see what the implied cheese value is, based on that day's contributing futures prices.

January butter stocks totaled 169.8 million pounds, up 36.8 million pounds or 28 percent from December but 6.7 million or 4 percent below January 2009, according to preliminary data in the USDA's latest Cold Storage report.

American cheese, at 595.3 million pounds, was up 10.3 million pounds or 2 percent from December and 61.9 million pounds or 12 percent above a year ago. December revised estimates were lowered nearly 1.8 million pounds.

Total cheese stocks amounted to 980.1 million pounds, up 14 million pounds or 1 percent from December, and 98.4 million or 11 percent above those a year ago.

Organic pasture access rule goes into affect June

Last Friday Dairy Profit Weekly's Dave Natzke reported that USDA clarified rules covering organic dairy pasture access. National Milk's Chris Galen said Thursday that this has been a struggle within the organic community for several years in terms of using pasture access as a way to define organic production.

The Agriculture Department announced that organic dairies will be required to pasture cows a minimum of 120 days per year or about four months out of the year and that 30 percent of their feed intake must include pasture grown forage.

The decision will be final in June, he said, and is the latest salvo in an on-going battle over defining certain organic practices but is really aimed at keeping larger farms from obtaining the organic status.

While there is a minimum 120 day threshold to keep cows out on pasture, Galen said, "If you live in a more temperate part of the United States like certain parts of the Southwest or California, the expectation is that the cows will be out on pasture most of the year, if not all 12 months, and that may present some management challenges, particularly during the cold, rainy months."

Organic has previously been defined to a certain extent by what it is not, Galen said. There are no antibiotics used, no growth hormones, no pesticides, etc., and now the definition is leaning toward the types of feed the cows are given, how they're handled, and where they're housed.

The organic niche has grown rapidly but Galen believes the growth has leveled off. He cited the recent USDA study of organic operations that Dave Natzke discussed last week, and reported that about 200,000 of the 9.1 million head of dairy cattle in the U.S. are considered organic producers and represent about 1.4 percent of U.S. dairy production.

"Even though the category has grown, it's still a very small niche," he concluded, "And the purpose of this rule is to exclude, often times larger farms, so that will make it hard for the organic category to continue growing at least in terms of production."

Beef quality important message for consumers

Dairy producers need to work with beef producers says Idaho dairyman, Tom Dorsey. Speaking in Wednesday's broadcast, Dorsey said dairy farmers rely on the beef market because "that's where we go with our cows that are no longer good for milk and it creates a large share of our income."

That underscores the importance of "getting the word out and communicating with the consumer about the quality and the healthiness of the product that we are producing," he said.

Dorsey called on his fellow producers to "continue on in the direction they're moving, realizing that, whether you're producing beef on the range or beef in the dairy lot we have to all realize that we're headed for the same place."

"We're really working together," he said. And "We need to continue to work together and promote our product and not have division amongst the ranks and get the word out and tell our story."

He said there are a lot of people who are interested in the humane treatment of animals and "we need to be able to tell these people that we are treating our animals with respect because, if we don't, we have no business left."

People are concerned about drug usage, Dorsey said, but he finds it interesting that "people don't mind going to the doctor or taking a child to the doctor when they're sick but, for some strange reason they think antibiotics are terrible and we shouldn't use them on animals. We need to convey our story that it is humane, that drugs are used in prescription form, and under direction of a veterinarian."

Dorsey says he's confident he's getting his money's worth in the beef checkoff and sees it as an effective way to advertise and "get our story out." It'd be very difficult to do this on an individual basis, he concluded.

Mattke responds to survey on dairy options and futures trading

Matt Mattke, Market 360 advisor at Wisconsin-based Stewart Peterson Incorporated reacted to DairyLine's recent web poll which showed respondents, by a two to one margin, rejected the use of dairy options and futures trading.

Mattke said he found the results surprising and the first question that came to his mind was why these people will not use options and futures to manage some of their price risk for 2010.

He offered three possible explanations. One is a lack of knowledge and understanding of how they work and therefore feel they could be more harmful than beneficial. Is it bad past experiences or is it the inability to get a hedge line of credit funding from the bank to do the marketing and use these tools.

One comment that was left by a producer was that we haven't seen the damage caused by 2009 yet so why lock 2010 in at a loss.

Mattke said that's one big advantage of using futures and especially options positions. "You can position yourself so that you don't have to lock in a loss," he said. "You can set yourself up to have your loss minimized in the event that the overall economic environment that we're in causes another downturn in prices."

Looking at past milk market cycles we should be on the road to recovery for 2010, Mattke reasoned, "but there's really no guarantee." "We're in an economic environment the milk market has never experienced in the 16 years it's been around," he said, "So when we make the statement that 2010 has to be better and has to offer profitable prices, that's how bad 2009 was, we're betting that because 2009 was so bad, profit levels have to return in 2010."

He added the caution "When we make a bet, one thing we all can agree on is that sometimes they pay off and sometimes they don't and, if that idea that 2010 is going to be better is wrong and doesn't pay off, it would sure be nice to have some options positions in place that hedge that bet and minimize the loss while still keeping you able to participate on the up side in the event that 2010 is a good year and we see some better opportunities than what we've seen so far." For more information, call Matt at 1-800-334-9779.

Dairy check off funds driving dairy sales

Dairy Management Incorporated's Joe Bavido was back for part III in our discussion on 2009 dairy partnerships and innovation and how they drove dairy sales for farmers and began with growing ingredient sales at foodservice.

Bavido reported that the dairy check off worked with Starbucks to facilitate a third flavor in the Vivanno Smoothie line, which uses whey protein and fluid milk. These smoothies account for more than 3.7 million pounds of whey protein and 550 million pounds of fluid milk annually, according to Bavido.

The check off also continues to work with individual processors, schools, and foodservice chains to ensure that consumers have the fluid milk products they want, when, and where they want them, according to Bavido. Today, more than 70,000 restaurants across the country and 11,000 schools offer white and flavored milk in single-serve, plastic, resealable bottles.

He also reported that the National Dairy Council, which is the nutrition education and research arm of the dairy checkoff, "maintains and grows support for dairy's nutrition and health benefits by working with health and marketplace leaders." He mentioned specifically the partnership with the NFL and the "Fuel Up to Play 60" campaign as an example of "combating childhood obesity by encouraging schools to implement physical activity and good nutrition, including dairy."[[In-content Ad]]


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