Rabobank: High prices test demand

In its quarterly Agribusiness Review, Rabobank is forecasting Class III milk prices to trend lower through the rest of the year and into 2023. RaboResearch forecasts fourth quarter Class III prices to average $20.90 per hundredweight. U.S. milk production is expected to increase 1.4% year over year. Impressive dairy product exports are anticipated to prevent domestic supplies to become too burdensome.

Ag lender survey released
Volatile interest rates are the top concern for ag lenders going into 2023. According to the annual agricultural lender survey from the American Bankers Association and Farmer Mac, most ag lenders said farm profitability was up this year. However, more than half of the lenders believe conditions will deteriorate next year. Eighty percent of those surveyed said land prices went up this past year, and 60% believe that trend will begin to slow down. Inflation, liquidity and farm income were the top three producer concerns cited by the lenders.  

Interest rate bumped another .75 basis points
As expected, the Federal Reserve Bank bumped interest rates by .75 basis points. Fed Chairman Jerome Powell offered comments after the central bank meeting. Powell said it will be appropriate to slow the pace of interest rate increases at some point. “Even so, we have some ways to go,” Powell said. “Incoming data since our last meeting suggest that the ultimate level of interest rates will be higher than previously expected.” Powell said he would rather increase interest rates too much rather than not enough.

Diesel inventory at 40-year low
The U.S. supply of distillates, which includes diesel and heating oil, totaled 106.8 million barrels for the week ending Oct. 28. That’s nearly 20% below the five-year average and the lowest on record for this time of the year. “These really high summer prices limited the ability to accumulate inventories, and now we’re coming into the winter months hoping it’s not going to be a cold winter,” said Altin Kalo, chief economist, Steiner Consulting.

Federal order reform endorsed
The National Milk Producers Federation leadership has unanimously endorsed a proposal to modernize Federal Milk Marketing Orders. NMPF has led more than 100 meetings over the past year to develop these recommendations.

IDFA speaks out for dairy exporters
The International Dairy Foods Association has submitted comments to the Federal Maritime Commission in response to the rulemaking process for the Ocean Shipping Reform Act. During the pandemic and supply chain disruptions, foreign-owned ocean carriers would often leave U.S. ports empty and refused to negotiate shipping space to exporters. IDFA described this practice as “unacceptable” and asked for stronger rules.

Keep the railroads moving
More than 300 trade organizations signed off on a letter to President Joe Biden, asking the federal government to intervene in the dispute between railroads and its workers. The letter said the U.S. economy would see a major economic loss if a rail shutdown happens. The leadership of 12 rail unions approved a tentative agreement, but two of those unions refused to ratify the deal.

Boozman seeks details on COVID relief
Congress allocated $11 billion in COVID-related support for agriculture in 2021. Senate Agriculture Committee Ranking Member John Boozman now wants to see how that money was spent. In a letter to Agriculture Secretary Tom Vilsack, Boozman said he is satisfied with the way the U.S. Department of Agriculture implemented most of the programs. However, Boozman believes USDA is using the remaining funds for projects unrelated to the pandemic.

DMI looks to the future
Dairy Management Inc. CEO Barbara O’Brien outlined a new three-year strategy for the dairy checkoff program. This plan includes doing more with less, by making programs simpler and more focused. The emphasis will be on projects that can deliver the biggest impact for the dairy industry. The dairy checkoff plan also included a “doubling down” on research with a renewed investment in health and wellness.

Cub recognizes dairy checkoff program
The grocery store chain, Cub, awarded Midwest Dairy with its Vendor of the Year Award. Midwest Dairy was recognized for its June Dairy Month activities. In early June, Princess Kay of the Milky Way and Minnesota dairy ambassadors hosted an ice cream social at a recently rebuilt Cub in Minneapolis after it had been damaged due to civil unrest.

HSUS to participate in COP27 Climate Change Conference
For the first time, the United Nations Climate Change Conference will consider food systems and the impact on the climate. The Humane Society of the United States is hosting three events during the conference in Egypt, promoting a transition away from animal proteins. The animal rights activist group claims a shift to plant-based diets can reduce greenhouse gas emissions from the food system by nearly 50%.

Kraft launches NotCheese
A non-dairy version of the familiar Kraft cheese singles will be rolled out in 2023. Kraft NotCheese is made from coconut oil, modified starch, water and chickpea protein and is available in American, cheddar and provolone flavors. Kraft officials claim the plant-based product tastes, smells and melts like real dairy cheese.

MMPA contracts with Edge Co-op
The Minnesota Milk Producers Association has contracted with Wisconsin-based Edge Dairy Farmer Cooperative for administrative and program services. Previously, Midwest Dairy handled the administrative duties for MMPA. Lucas Sjostrom will remain as the MMPA executive director as part of the Edge Dairy Farmer Cooperative staff.

Minnesota FFA flocks to national convention
Minnesota had a large delegation in Indianapolis for the FFA convention. “We have almost 16,000 students involved in FFA and over 1,000 of them are at convention,” said Minnesota FFA interim executive director Lavyne Rada. The convention is a life-long highlight for many FFA members. “It’s one of my favorite things to watch the student’s first time in the arena when they see blue corduroy jackets just wall to wall,” Rada said.

Trivia challenge
October Co-op Month has been recognized nationally since 1964. That answers our last trivia question. For this week’s trivia, what is the name of the youth wellness program created by dairy checkoff and the National Football League? We will have the answer in the next edition of Dairy Star.
    Don Wick is owner/broadcaster for the Red River Farm Network, based in Grand Forks, North Dakota. Wick has been recognized as the National Farm Broadcaster of the Year and served as president of the National Association of Farm Broadcasting. Don and his wife, Kolleen, have two adult sons, Tony and Sam, and five grandchildren, Aiden, Piper, Adrienne, Aurora and Sterling.