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

Obama signs bill for $290 million in aid

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

President Obama has signed the appropriations bill that included $350 million in aid to dairy farmers. You'll recall $60 million will go to purchasing cheese for government feeding programs. Agriculture Secretary Tom Vilsack must decide how the remaining $290 million will be directly distributed to dairy farmers.

California milk production down over six percent

Meanwhile; September milk production slipped to 13.9 billion pounds, according to the Agriculture Department's preliminary estimate issued Tuesday. That's down 0.7 percent from September 2008. The August estimate was revised up 23 million pounds, to 14.6 billion, down 0.1 percent from a year ago.

September cow numbers fell to 8.34 million head, down 32,000 from August and 168,000 less than a year ago, reflecting some of the CWT herd removal program. Output per cow averaged 1,672 pounds, up 22 pounds from a year ago.

California cows gave 6.4 percent less milk than a year ago because there were 73,000 fewer of them and output per cow was down 45 pounds. Wisconsin was up 5.2 percent, on 5,000 more cows and a 75 pound per cow increase. New York was up 1.4 percent, despite a 9,000 cow drop. Output per cow was unchanged. Idaho was down 2.3 percent, on a 7,000 cow drop and 20 less pounds per cow. Pennsylvania was up 1 percent, thanks to a 30 pound gain per cow although cow numbers were off 6,000 head, and Minnesota was up 3.9 percent, thanks to 4,000 more cows and 45 pounds more per cow.

The biggest loss was in Arizona, down 10.8 percent, due to 18,000 fewer cows, followed by Colorado, down 7.1 percent, on 11,000 fewer cows, followed by California. The biggest gain was in Indiana, up 5.8 percent, due to a 70 pound gain per cow and 2,000 more cows, followed by Wisconsin, and then Texas, up 4.9 percent, despite a loss of 9,000 head but an increase per cow of 110 pounds.

Slaughter numbers above year ago totals

USDA's latest Livestock Slaughter report estimated 236,500 culled dairy cows were slaughtered under federal inspection in September, down 2,400 head from August, but 13,000 more than a year ago. The January-September period saw cull cow slaughter total 2.15 million head, up about 230,200 from a year ago.

Cheese trading at $1.50

Cash cheese prices started the week of October 19 on a down note but switched gears and ended Friday with the blocks trading at $1.50 per pound, up 7 cents on the week but 23 3/4-cents below a year ago. Barrel closed at $1.4925, up 6 1/4-cents on the week, but 19 1/4-cents below a year ago. Fourteen cars of block traded hands on the week and none of barrel. The lagging NASS-surveyed U.S. average block price shot up 5.4 cents, to $1.4201. Barrel averaged $1.4290, up 4 cents.

Cash butter jumped 10 3/4-cents on the week, closing Friday at $1.35, but that's still 40 cents below a year ago. Thirty four cars were sold on the week. NASS butter averaged $1.2209, down a penny.

Cash Grade A nonfat dry milk closed the week at $1.3250 and Extra Grade closed at $1.27, both were up a penny on the week. NASS powder averaged $1.0460, up 3 cents, and dry whey averaged 32.02 cents, up 0.3 cent.

Uncle Sam purchased 132,276 pounds of nonfat dry milk under the price support program this week. He's not doing holiday baking yet but is testing new bags.

Dairy Export Incentive Program bid acceptances included 1.16 million pounds of Cheddar cheese, 81,570 pounds of Mozzarella, and 2.4 million pounds of butter,

Dairy market news

Monday's cash dairy market was anticipating Tuesday's September Milk Production report but market analyst, Mary Ledman, Principal of Keough Ledman and Associates in Libertyville, Illinois, said in Tuesday's DairyLine that Thursday's Cold Storage report would likely have more significance to traders as an indicator of the market going forward.

She said she was surprised at the downturn in cheese prices but the march past $1.50 per pound was also a surprise. The tightening in nonfat dry milk, other milk powder, the whey complex, all those prices have increased, she said, and "It's difficult to imagine the cheese market under $1.40, given the strength of the powder market as well as the international markets at this point." "The recent downward breather in cheese prices may end up supporting the market longer term than if we had raced up to $1.60," she said.

Ledman predicted that culling will increase through the fourth quarter and would have done so, with or without the current CWT herd removal. What will be interesting, she said, is if CWT gets as many submitted bids as in the past, as "the strengthened markets could cause producers to stay in the business longer."

Cheese demand has been very good through this year, according to Ledman. American style cheese is up over 4 percent and other styles are approaching 2 percent but she fears a significant run up in prices could impact demand in 2010 and "we might not keep this strong demand that we've experienced in 2009."

The September Cold Storage report put butter stocks at 230.2 million pounds, down 29.4 million pounds or 11 percent from August but 43.3 million or 23 percent above September 2008. August stocks were revised down 3.6 million.

The American cheese inventory, at 607.1 million pounds, was down 12.7 million pounds or 2 percent from August but 57.5 million or 10 percent above a year ago. August stocks were revised down 1.7 million pounds.

Total cheese stocks amounted to 970.5 million pounds, down 14.4 million or 1 percent from August, but 136.3 million or 16 percent above a year ago.

USDA announced the November Federal order Class I base milk price at $12.86 per hundredweight, up 51 cents from October but $2.67 below November 2008. Market analyst, Alan Levitt predicts the November MILC payment to producers should be around 37 cents plus any feed cost adjustor.

The NASS-surveyed butter price averaged $1.2245 per pound, up 5.9 cents from October. Nonfat dry milk averaged $1.0299, up 7.6 cents. Cheese averaged $1.4155, up 3.5 cents, and dry whey averaged 31.86 cents, up 2.4 cents.

California wants different pricing structure

Speaking of milk prices; California's changing dynamics has prompted calls for increases in the state's minimum prices paid to farmers. The California Department of Food and Agriculture scheduled a public hearing for November 9 in response to dairy organization requests to consider adjusting state pricing formulas to boost farmer prices.

Dairy Profit Weekly editor Dave Natzke reported Friday that two proposals had been submitted so far. The Alliance of Western Milk Producers requested a permanent 50 cent per hundredweight (cwt.) increase in the Class 1 price and increases of 26 cents per cwt. for Class 2 and 3milk.

Western United Dairymen requested consideration of a uniform 50 cent per cwt. increases to class 1, 2, 3, 4a and 4b for six months, beginning January 1, 2010.

Reasons behind the requests are two-fold, according to Natzke. Low milk prices and high operating costs have resulted in severe financial losses for farmers. As a result, California cow numbers are down about 73,000 from a year ago and milk production through the first nine months of 2009 was down about 4 percent compared to the same period a year earlier.

Lower milk volumes are apparently affecting processing plants, Natzke reported. USDA's latest dairy product report showed California cheese and nonfat dry milk output down from a year earlier as milk supplies fell below plant capacity.

Changes for some dairy processors

In dairy politics; the Agriculture Department has announced a recommended decision that the International Dairy Foods Association said "made milk price regulations consistent for all dairy producers, including producer-handlers."

National Milk's Chris Galen called it a "very gratifying decision" in Thursday's DairyLine but warned that it's not yet final. The Federation had lobbied for this decision for most of 2009, according to Galen, as the issue is producer revenue.

He explained that, as farms become larger and some begin their own bottling operation, they're able to enjoy an exemption from Class I regulations so producer-handlers don't have to pay into the Class I pool which actually reduces revenue for all of the other farms in a given Federal market order.

USDA will maintain that exemption for bottlers that sell 3 million pounds per month or less, he said, but those who produce more will be treated like any other large bottler. "It's not so much about regulating farms," Galen argued, "It's about regulating bottling operations that are so large that they're only nominally farms."

There's only five or six such operations in existence, Galen admitted, but "Because farms are getting larger and processors are getting larger, the potential is there for more of these producer-handlers to spring up, if we don't change the regulations like USDA is going to do here to make certain that once they reach a certain threshold they're treated like any other large fluid bottler," he concluded. "We're just closing a loop hole and putting a more level playing field in place."

Focus on good forages

Dairy farmers are looking to be efficient in every way possible and one area easily overlooked is in the forage they grow. Pioneer took that message to attendees at the recent World Dairy expo, according to Bill Mahanna, Global Nutritional Sciences Coordinator.

In an interview recorded at Expo and broadcast Wednesday, Mahanna said Pioneer also introduced a new silage inoculant, though he admitted it may not have much application for the Midwest as it is grass based but it compliments Pioneer's corn silage fiber digestibility product.

They also wanted to communicate to producers how to monitor their corn silage for the degree of processing and he demonstrated Pioneer's infra red camera that takes thermo sensitive images of bunker silo faces to help manage them better. The goal, he said, is to "harvest as much as possible off of every acre and preserve that all the way through to the ration in the cow's mouth."

As producers contemplate spring planting, Mahanna said it's important for them to look at the data on the products they purchase, be it corn hybrids or alfalfa varieties. Examine the information, he said, the university trials, the company trials, and then consider the service that backs that up.

We're looking at more corn silage in the ration in many parts of the country," Mahanna said, and one of the things Pioneer has been talking about is using "snaplage" in the dairy ration. Snaplage results from putting a snapper head on a forage harvester to "get double use out of it and not have to pay for combining and putting it through a tub grinder for high moisture corn," he said. "Consider the number of acres you might devote to those different crops next year," he concluded, "How can we make milk the cheapest?" For more information, visit

Lactose intollerant way overstated

Dairy Management Incorporated CEO Tom Gallagher was back on Monday's "DMI Update" and discussed lactose intolerance. He pointed out that lactose intolerance is "way overstated" and that dairy farmers and those interested in increasing milk consumption have "an enormous opportunity here."

Studies that are 20 years old claim there may be 60 percent or more of the population that is lactose intolerant but the reality is it's only 8-12 percent that may be lactose intolerant or sensitive, according to Gallagher.

The dairy check off is working with a key partner, Lactaid, who has an over 80 percent market share of lactose milk sold in the U.S. to "set the record straight" on how many people are lactose intolerant and make sure they understand that lactose free milk is real milk and has all the nutrients in milk.

Many people erroneously believe that lactose free milk lacks the nutrients of "real milk," and that soy milk is just as good, but that is not true, he said, so the dairy check off will enter a three year agreement with Lactaid, that will improve milk sales for lactose free and other consumers of beverage milk, Gallagher concluded, and "We believe several billion pounds over a multiple year period can be added to consumption."[[In-content Ad]]


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