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Feed prices will fuel milk production

Lee Mielke's weekly wrap-up of dairy news.


For the Capital Press

Published on November 22, 2013 1:16PM

Lee Mielke

Lee Mielke

October milk production in the top 23 producing states totaled 15.4 billion pounds, up 1.2 percent from October 2012, according to preliminary data in USDA’s latest Milk Production report. The 50-state total, at 16.4 billion pounds, was up 1 percent. Revisions lowered the original September estimate by 13 million pounds, to 14.8 billion, up 1 percent from a year ago.

October cow numbers totaled 8.5 million head in the 23 states, down 2,000 from September but 36,000 more than a year ago. Output per cow averaged 1,806 pounds, up 14 pounds from a year ago.

California was up 1 percent despite a 15 pound per cow drop in production but cow numbers were up 3,000 head. Wisconsin was up just 0.9 percent though output per cow was up 15 pounds and cow numbers were up 1,000 head. New York was up 2.8 percent, thanks to a nice 50 pound gain per cow. Cow numbers were unchanged. Idaho was down 2.7 percent on a 30 pound loss per cow and 7,000 fewer cows. Pennsylvania was up 0.2 percent on a 5 pound gain per cow and 1,000 more cows. Minnesota was down 0.3 percent, thanks to a 5 pound loss per cow. Cow numbers were unchanged.

Other key players: Michigan was up 2.7 percent on a 15 pound gain per cow and 7,000 more cows. New Mexico was off 0.6 percent on 2,000 fewer cows. Output per cow was unchanged. Texas keeps pouring it on, up 3.8 percent on a 25 pound per cow gain and 10,000 more cows. Washington was up 2.3 percent on a 10 pound gain per cow and 5,000 more cows.

USDA estimated 276,800 culled dairy cows were slaughtered under federal inspection in October, up 18,200 from September, but 8,600 less than October 2012. The gap between 2012-2013 year-to-date cull dairy cow slaughter continues to close, reports DairyBusiness Update. The January-October 2013 total was estimated at 2.619 million head, 45,200 more than the same period in 2012. Through the second week in November, year-to-date cow slaughter was just 35,800 more than a year ago, the smallest gap since April 6.

Feed prices decrease

Feed price forecasts continue to decline, based on the most recent World Agricultural Supply and Demand Estimates report. The forecast corn price for 2013/14 was reduced in USDA’s latest Livestock, Dairy, and Poultry Outlook, to $4.10-$4.90 a bushel in November. Lower harvested acreage is more than offset by higher yield, leading to a record production forecast.

However, the soybean meal price was revised higher for 2013/14 in November to $375-$415 a ton. Soybean production forecasts for 2013/14 were raised in November based on higher yield expectations, but stronger exports of soybean meal is expected to boost prices.

The October Agricultural Prices report shows the preliminary October price for alfalfa was $193 a ton, down fractionally from September’s estimate and below a year ago. Dairy feed ration prices will likely be lower in 2014 than this year, according to USDA.

Herd size projections were resumed this month, and the National Agricultural Statistics Service estimated the U.S. herd at 9.227 million head for the July-September quarter. The herd is expected to average 9.225 million head in 2013 and increase to 9.245 million in 2014 as producers respond to improved returns. The current-year milk yield per cow is forecast at 21,865 pounds. Milk per cow is forecast at 22,170 pounds next year, based on expectations that cheaper feed and abundant forages will support improved yields.

Cheese prices mixed

Meanwhile, cash cheese prices were mixed as Thanksgiving approached. The blocks closed Nov. 22 at $1.8350 per pound, up 1 1/2-cents on the week and a penny above a year ago. Barrel finished at $1.7550, down a quarter-cent on the week, a penny above a year ago, but 8 cents below the blocks. Only two cars of each traded hands on the week. The AMS-surveyed U.S. average block price hit $1.8768, up 2 cents. Barrels averaged $1.8648, up 1.1 cent.

Buyers are attempting to make needed purchases for added seasonal demand, according to USDA’s Dairy Market News (DMN). “Timing is everything as buyers look to save on later purchases, but are pressed to acquire product in time for holiday deliveries,” DMN said. “Manufacturers are caught in a balance of trying to fill seasonal demand despite tight milk supplies,” and good export sales are adding to the supply uncertainty.

The Foreign Agriculture Service (FAS) reports that exports of cheese and curd during September totaled 56.8 million pounds, up 40 percent from September 2012. Exports for January through September totaled 507 million pounds, up 14 percent from a year ago.

Cash butter saw a fourth week of gain, closing Friday at $1.68 per pound, up 3 cents on the week but a penny below a year ago when it plunged 10 1/2 cents. Seven cars found new homes this week and the AMS butter price averaged $1.5019, up 1.9 cents.

Cream supplies are reduced from strong Class II demand, according to DMN. Demand for butter is good to strong in the U.S. and internationally and butter inventories are shrinking across the regions. FAS reports September exports of butter and milkfat totaled 25 million pounds, a nearly fivefold increase from September 2012. Exports for January through September totaled 137.2 million pounds, a 63 percent increase over a year ago.

Cash Grade A nonfat dry milk slipped a penny earlier in the week but rallied Friday, closing at $1.9850 per pound, up a penny on the week. Extra Grade finished at $1.9750, up 7 1/2-cents on the week. AMS powder averaged $1.8914, up 1.1 cent, and dry whey averaged 57.74 cents, up a half-cent.

FC Stone’s Chris Hildebrand says, “Asian demand continues to be strong and demand from Mexico has picked up after faltering.” The other unknown factor is China’s change in its one child policy. Couples will be allowed to have a second child if one of the parents is an only child. Infant formula demand could jump.

Speaking of exports, the U.S. Dairy Export Council reports that September U.S. dairy product exports were equivalent to 16.6 percent of U.S. milk solids production, the fifth straight month above 16 percent, according to DBU. In the first three quarters of 2013, exports were equivalent to 15.5 percent of U.S. milk solids production. Meanwhile, imports as a percent of milk solids production were 2.6 percent in September 2013.

Conventional milk sales down

USDA reports that 4.2 billion pounds of packaged fluid milk products is estimated to have been sold in September in the U.S., down 1.2 percent from September 2012. Total conventional fluid sales decreased 1.7 percent while organic fluid sales increased 10.4 percent from a year earlier.

The December federal order Class I base milk price is $20.37 per hundredweight, up 17 cents from November but $1.02 below December 2012, and equates to about $1.75 per gallon. That put the 2013 Class I average at $18.84, up from $17.46 in 2012, and compares to $19.13 in 2011, $15.35 in 2010, and $11.48 in 2009.

Looking back to the futures, the First Quarter 2014 pack average was at $16.99 per cwt. on Nov. 1, $16.99 on Nov. 8, $17.03 on Nov. 15, and was hovering around $17.06 late morning Nov. 22.

Farmers lobby Capitol Hill

Dairy farmers representing Wisconsin, Pennsylvania, Minnesota and Ohio called on lawmakers on Capitol Hill last week, urging support of the House Dairy Title in the Farm Bill. Members of the Wisconsin Dairy Business Association (WIDBA) and the Dairy Policy Action Coalition (DPAC) also made visits to Senate offices to discuss concerns about the Dairy Market Stabilization Program (DMSP) currently in the Senate version of the Farm Bill that would require farmers to agree to reduce production to participate in a margin insurance program.

The farmers urged Senate conferees to follow the lead of the House, which rejected the controversial new dairy program to impose milk quotas on dairy farmers and replaced it with language that allows farmers to participate in a margin insurance program without being required to participate in the DMSP.

“The growing export markets are critically important to the future of the U.S. dairy industry,” explained Alan Kozak, a dairy producer from Ohio. “Quota requirements in the DMSP would harm this growth by sending the wrong message to our global trading partners.”

In other political news, the Environmental Protection Agency’s decision last week to reduce the amount of ethanol blended into fuel in 2014 has come under fire as not being enough. Reps. Bob Goodlatte, R-Va., Peter Welch, D-Vt., Jim Costa, D-Calif., and Steve Womack, R-Ark., authored the Renewable Fuel Standard Reform Act HR1462.

“While the EPA’s slight reduction of the RFS for 2014 acknowledges that the mandate is unworkable, it is not enough to provide the much-needed relief businesses, farmers, and consumers need,” Goodlatte said. “Today’s announcement makes it even clearer that it will now be up to Congress to fix this broken mandate. There is a growing appetite in Congress to reform the ethanol mandate, and I urge ... the House Energy and Commerce Committee to consider the RFS Reform Act as a legislative fix to the growing problems with the RFS.”

The Milk Producers Council’s Rob Vandenheuvel provides some interesting perspective on what’s behind the EPA’s decision in his Nov. 15 member newsletter. Read it at www.milkproducerscouncil.org/updates/111513.pdf.

Moon Cheese debuts

Whether the moon is made of cheese may remain a mystery to some but Moon Cheese has landed on planet earth, at least in the Pacific Northwest. Moon Cheese is a new cheese snack that goes crunch and the taste is out of this world.

Brent Charleton, vice president of corporate affairs for the EnWave Corp., headquartered in Vancouver, B.C., said it’s a healthy, crunchy, 100 percent natural cheese snack that is being launched in Washington State, Idaho, Oregon and Alaska via the Fred Meyer and Quality Foods. He adds that Moon Cheese is gluten-free, high in protein and calcium and “a great option for any avid snacker.”

Current production capacity limits distribution, according to Charleton, but they expect to greatly increase their capacity by the end of Second Quarter 2014 and take the product to new customers.

Charleton says the majority of cheese snacks currently available include other ingredients and fillers but Moon Cheese is natural cheese, with no additives and no preservatives. It’s available in American Cheddar, Pepper Jack or Gouda and is a puffed up, shelf stable, delicious cheese snack that, hopefully, will be in a grocery store near you. For details, log on to www.mooncheesesnacks.com.


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