The Agriculture Department lowered its 2019 and 2020 milk production estimates in the latest World Agricultural Supply and Demand Estimates (WASDE) report based on expectations of a smaller dairy herd and slower growth in milk per cow.
    2019 production and marketings were estimated at 217.9 and 216.9 billion pounds respectively, down 300 million pounds from last month’s estimate. If realized, 2019 production would be up just 300 million pounds or 0.1% from 2018.
    2020 production and marketings were estimated at 221.4 and 220.3 billion pounds respectively, down 400 million and 500 million pounds respectively from last month’s estimates. If realized, 2020 production would be up 3.5 billion pounds or 1.6% from 2019.
    Cheese, butter and whey price forecasts for 2019 were raised. The NDM price forecast was reduced on current price weakness and slowing demand. The 2020 price forecasts for cheese, butter and NDM were lowered from the previous month, but the whey price forecast was unchanged.
    The 2019 Class III price forecast was raised on higher forecast cheese and whey prices. Look for a 2019 average of $16.30 per hundredweight (cwt.), up 25 cents from last month’s estimate and compares to $14.61 in 2018 and $16.17 in 2017. The 2020 average is put at $16.55, down a dime from last month’s estimate.
    The 2019 Class IV price forecast was reduced as the lower forecast NDM price more than offsets the higher butter price. It is now projected to average $16.30 per cwt., down 15 cents from last month’s estimate, and compares to $14.23 in 2018 and $15.16 in 2017. The 2020 average was pegged at $16.45, down 30 cents from what was expected a month ago.
    The updated Crop Production report surprised the corn and soybean markets. The report showed corn production at 13.9 billion bushels, down just 4% from 2018, a surprise considering the rains that covered so much of the planting areas of the country. Based on conditions as of Aug. 1, yields are expected to average 169.5 bushels per harvested acre, down 6.9 bushels from 2018 but 3.5 bushels above the July estimate. Farmers planted 90 million acres of corn, 1% more than last year and up from the 88 million acres analysts were expecting.
    If these estimates are realized, corn production would hit 13.9 billion bushels, up from the expected 13.2 billion. Analysts were expecting slightly lower yields. However, planted acres were estimated at 76.7 million acres, well below the average estimate of 81 million acres and 14% lower than last year.
    Soybean production was forecast at 3.68 billion bushels, down 19% from 2018 and below the expected 3.8 billion bushels. Yields are expected to average 48.5 bushels per harvested acre, down 3.1 bushels from 2018 but unchanged from the July estimate. Area harvested for beans was forecast at 75.9 million acres, down 4% from the previous forecast, and down 14% from 2018.
    Cotton production was forecast at 22.5 million 480-pound bales, up 23% from 2018. Yields are expected to average 855 pounds per harvested acre, down 9 pounds from 2018. Area harvested was forecast at 12.6 million acres, up 24% from 2018. Planted area totaled 13.9 million acres, up 1% from the previous estimate but down 1% from 2018.
    Meanwhile; the USDA’s latest Crop Progress report shows 90% of U.S. corn was silking, as of the week ending Aug. 11, up from 78% the previous week but 6% below a year ago and 7% behind the five year average. 57% of the crop is rated good to excellent, down from 70% a year ago.
    Fifty four percent of U.S. soybeans are setting pods, up from 37% the previous week, 29% behind a year ago, and 22% below the five year average; 54% are rated good to excellent, down from 66% a year ago; 56% of the cotton crop is rated good to excellent, up from 40% a year ago.
    It was a good week for cheese as traders awaited the July Milk Production report on Aug. 19. The blocks climbed to $1.8925 per pound Wednesday, highest price since Nov. 22, 2016, but closed Friday at $1.88, up 1 1/4-cents on the week and 22 1/2-cents above a year ago. The barrels finished at $1.7650, up 4 1/2-cents on the week, 9 1/2-cents above a year ago, and put the spread at 11 1/2-cents. Nine cars of block traded hands on the week and 33 of barrel.
    Cheese market tones are steady in the Midwest, according to Dairy Market News. Demand reports remain mostly positive. Cheddar, mozzarella and specialty cheese makers report strong sales, as food service upticks are coming on with schools reopening. Some cheesemakers say milk is in balance. Cheese manufacturers are not actively looking for it but milk suppliers have little to offer. Cheese stocks are in general balance regionally.
    Western cheesemakers suggest that cheese output is active. Milk supplies vary greatly, ample in the Pacific Northwest and mountain states but diminishing in the Southwest. A few manufacturers are bringing in extra loads or loads of skim milk to augment vat schedules. Some are using nonfat dry milk to fortify their vats. End users relay they have no problem getting the cheese needed even as stocks of some varieties have tightened.
    “While encouraging to American dairy interests, international sales are shying away because of the higher U.S. prices compared to world competitors,” said DMN. Contacts suggest domestic demand is adequate, but not outstanding. Food service and retail sales are slower than hoped for and manufacturers hope school startups and the football season will boost cheese consumption.
    The Agriculture Department announced that it will purchase Mozzarella, Process and Natural American Cheddar cheese for the National School Lunch Program and other Federal food assistance programs. Solicitations will be issued in September for deliveries beginning Jan. 1, 2020 through Dec. 31, 2020.
    Cash butter closed Friday at $2.34 per pound, up 2 1/2-cents on the week and 3 1/2-cents above a year ago, with 36 cars finding new homes on the week.
    Butter churning upticks were reported this week. In fact, some butter makers reported a very busy week. Cream is a little more accessible but butter makers expect to pay the freight/delivery costs from either the southern portion of the region or from the West. Some believe we have seen the market turn around and back to a range-bound status. Others believe the July Cold Storage report will be an important barometer for butter markets for the rest of 2019.
    Cream is available in the West for butter churning despite some loads moving to other regions of the U.S. Several butter processors are selling their cream to benefit from the higher cream prices. Butter manufacturing is therefore steady to a bit down. Retail sales are stable to declining, food service demand is livelier.”
    Spot Grade A nonfat dry milk closed at $1.03 per pound, up 2 1/2-cents on the week and 58 1/2-cents above a year ago. There were 6 trades on the week.
    Dry whey finished at 36 1/2-cents per pound, up a penny but 8 cents below a year ago, on 5 sales for the week at the CME.
    Checking dairy product demand, June total cheese disappearance continued higher versus prior year levels for the fifth consecutive month, according to Chicago-based HighGround Dairy (HGD). That pushed year to date disappearance up a strong 1.8% versus first half 2018.
    “The 7.2% butter disappearance decline was disappointing,” said HGD, “pulled lower by both lower export and domestic demand.”
    “Total nonfat dry milk/skim milk powder disappearance jumped higher versus prior year for just the second time this year, pushed higher driven by exceptional domestic disappearance in the month even as exports sank sharply lower.”
    And, after May’s dry whey disappearance jump higher, June total disappearance fell back lower year over year and continued to be pulled down by sharply weaker export volumes, according to HGD.
    U.S. fluid milk sales continue to falter. USDA’s latest data shows 3.4 billion pounds of packaged fluid sales in June Dairy month, down 4.1% from June 2018. Conventional product sales totaled 3.3 billion pounds, down 4.2% from a year ago. Organic products, at 197 million pounds, were down 2.5% and represented about 5.7% of total sales for the month.
    Whole milk sales totaled 1.2 billion pounds, down 1.5% from a year ago and made up 34.8% of total fluid sales in the month. Sales for the six month period totaled 7.4 billion pounds, up 0.7% from a year ago.
    Skim milk sales, at 257 million pounds, were down 11.5% and made up just 7.5% of total milk sales for the month.
    Total packaged fluid milk sales, January through June, totaled 22.9 billion pounds, down 2.1% from a year ago. Conventional products year-to-date totaled 21.7 billion pounds, down 2.0%. Organic products, at 1.2 billion, were down 4.6% and represented about 5.4% of total fluid milk sales for the period.
    The August 9 Dairy and Food Market Analyst (DFMA) reported that “IRI data showed Fairlife milk sales declined by 14% in the week following the release of the Animal Recovery Mission video showing animal abuse. During July, sales of Fairlife decreased by approximately 17% from peak sales in May.”
    You’ll recall I reported last week that Indonesia announced that it would increase tariffs on European dairy products and ask its dairy buyers to find alternative sources as a way to counter EU duties on palm biodiesel from Indonesia.
    U.S. dairy exporters could benefit from the trade spat, according to the DFMA, which stated: “If Indonesia implements the retaliatory tariffs, it will have a price supportive impact on US whey and skim milk powder markets. In 2018, Indonesia bought 194 million pounds of whey products and 111 million pounds of skim milk powder from Europe,” according to the DFMA.
    U.S. exports of whey to China have suffered due to the ongoing trade spat between the two countries and the toll African Swine Fever has taken on the pig population there.
    The DFMA reported that Chinese Ministry of Agriculture data shows the disease has not been contained. “June sow inventories were down 27% from a year earlier which followed a 23% decline in May. China’s food prices increased by 9.1% year over year in July, which is the highest increase since January 2012. Pork prices rose 27% year over year following a 21% increase in June.”
    The July herd was down 32%, according to FC Stone, which added, “Most analysts are pegging the herd down even further at 50% or more.”
    Cooperatives Working Together (CWT) member cooperatives accepted eight offers of export assistance this week from CWT to help capture sales of 1.065 million pounds of Cheddar and Monterey Jack cheese.
    The product is going to customers in Asia, delivered through December and brings CWT’s year-to-date sales to 37.4 million pounds of American-type and Swiss cheeses, 189,598 pounds of anhydrous milkfat, 4.2 million pounds of butter (82% milkfat), 3.6 million pounds of cream cheese and 37.5 million pounds of whole milk powder. The products are going to 26 countries and are the milk equivalent of 747.3 million pounds of milk on a milkfat basis.
    In dairy politics, I talked with Bob Gray, editor of the Northeast Dairy Farmers Cooperative’s newsletter, in the Aug. 19 Dairy radio Now broadcast about the importance of dairy farmers commenting on the H-2A Modernization Proposed Rule to the U.S. Department of Labor. The proposal would expand the H-2A program from a seasonal one to one that allows immigrant employees to work for a full year on dairy operations.
    Gray says the existing seasonal program works for fruit and vegetable growers for peak planting and harvesting times but there is no program that allows dairy farmers to hire workers for full time year around employment.
    He urged dairy producers to make their case to the Department of Labor, citing the workload on a dairy, which is an easy case to make because it’s a 27/7 operation. The important point to make, according to Gray, is how hard it is to find local help. Many communities have a low unemployment rate, plus the population in rural areas is aging so there’s not a lot of young people to hire.
    He added that these are not low skilled jobs so they need to be trained. “It’s expensive equipment, you have to milk the cows, its herd management, so these jobs take very important skills to perform them.”
    Dairy farmers should show advertisements they have placed in local papers and other efforts they have made to find local help, he said, and they should stress to the Department of Labor that if the H-2A program is expanded to include full time workers, that would give them another option in hiring immigrant workers. They should also point out that there is a lot of competition in hiring locally but that most dairy farms pay above or well above the minimum wage.
    Comments can be sent to http://www.regulations.gov and should include Docket No. ETA-2019-0007 RIN 1205-AB89 Temporary Agricultural Employment of H-2A Nonimmigrants in the U.S.
    And, while you’re writing your members of Congress, tell them to approve the U.S. Mexico, Canada free trade agreement (USMCA).