By LEE MIELKE
For the Capital Press
The July federal order farm gate Class III milk price took a 64-cent dip.
The USDA announced the manufacturing grade price at $17.38 per hundredweight (cwt.), down 64 cents from June but 70 cents above July 2012, and equates to about $1.55 per gallon. That put the 2013 Class III average at $17.69, up from $16.01 at this time a year ago and $17.68 in 2011.
The Class III futures portend a turnaround in the August contract, which was trading late Friday morning at $17.91. September was at $18.52; October, $18.52; November, $17.75; and December was at $17.24.
The Class IV price is $18.90, up 2 cents from June and $4.45 above a year ago. Its 2013 average now stands at $18.27, up from $14.84 a year ago but compares to $19.38 in 2011.
The four-week, AMS-surveyed cheese price used in determining the Class milk prices averaged $1.7142 per pound, down 6.7 cents from June. Butter averaged $1.4674, down 7.5 cents. Nonfat dry milk averaged $1.7272, down 6.7 cents, and dry whey averaged 58.04 cents per pound, up 0.7 cent.
California's 4b cheese milk price was announced by the California Department of Food and Agriculture at $15.65 per cwt., including CDFA's temporary mandated price increases. The 4b price is down 26 cents from June, 47 cents above a year ago, but $1.73 below the Federal order Class III price. The 2013 4b average now stands at $15.99, up from $14.02 at this time a year ago and compares to $16.20 in 2011.
The 4a butter-powder milk price is $18.61, up 22 cents from June and $5.11 above a year ago. The 2013 4a average is now at $18.03, up from $14.55 a year ago and compares to $19.10 in 2011.
July's milk-feed ratio was unchanged from June, at 1.52, according to USDA's latest Ag Prices report, but is up from 1.34 in July 2012. Lower monthly average milk prices, with small declines in average alfalfa hay and corn prices offset a higher average soybean price and was the 28th consecutive month the milk-feed price ratio was below 2.0.
The U.S. average all-milk price was $19.10 per cwt., down from $19.50 in June but up from $16.90 a year ago. Corn, at $6.83 per bushel, was down 14 cents from June, and 31 cents less than July 2012. Soybeans averaged $15.40 per bushel, up 30 cents from June and unchanged from last year. Alfalfa hay averaged $209 per ton, down $11 from June, but $11 more than July 2012.
Cull cow prices increase
Dairy Business Update (DBU) points out that the Ag Price report shows estimated U.S. July cull cow prices -- beef and dairy combined -- averaged $81.80 per cwt., up $1.50 from June's revised estimate, and 90 cents per cwt. more than July 2012.
"The July increase ended a string of three consecutive monthly declines. The year-to-date average is $80.91 per cwt., compared to $82.99 for the same period a year ago," DBU reported.
With the Ag Prices report providing the final feed cost adjuster, USDA announced the June Milk Income Loss Contract (MILC) program payment at 21.873 cents per cwt. on eligible milk. DBU adds that, based on current and futures prices as of July 31, a small MILC payment (less than 10 cents per cwt.) is likely the last for fiscal year 2013, which ends Sept. 30, 2013.
Cheese prices gain
Cash block cheese closed the first Friday of August at $1.7750 per pound, up 1 1/4-cents on the week, the fifth consecutive week of gain, and 6 1/2-cents above a year ago. Barrel closed at $1.7725, up 1 1/4-cents on the week and 8 3/4-cents above a year ago.
Six cars of block traded hands on the week and two of barrel. AMS-surveyed block cheese averaged $1.6925 per pound across the U.S., up 0.8-cent, while barrel averaged $1.7096, up 2 cents.
Stocks of cheese remain plentiful, but cheese production is slowing as the recent heat wave across much of the country reduced milk flows and component levels, according to USDA's Dairy Market News (DMN).
"Those holding this product apparently are not as bearish as some others in the cheese business," Jerry Dryer's July 26 Dairy and Food Market Analyst said. "There has been a steady flow of cheese to the exchange, but with stocks of this magnitude there certainly was the potential for a much larger movement to market. Historically, this much inventory had cheese trading in the $1.30s."
Export aid approved
Export demand remains good, supported by programs like Cooperatives Working Together (CWT) which accepted 14 requests for export assistance this week to sell 1.2 million pounds of cheese and 947,988 pounds of butter to customers in Asia, Central America, Europe, the Middle East and North Africa.
The product will be delivered through December and raised CWT's 2013 cheese exports to 75.7 million pounds plus 61.3 million pounds of butter, 44,092 pounds of anhydrous milk fat and 218,258 pounds of whole milk powder to 34 countries.
June butter production totaled 141 million pounds, according to USDA's latest Dairy Products report, down 13.8 percent from May but 2.7 percent above June 2012. Nonfat dry milk output totaled 131 million pounds, down 13.3 percent from May and 22.5 percent below a year ago.
American type cheese, at 364 million pounds, was down 6.2 percent from May but 1.2 percent above a year ago. Total cheese production amounted to 914 million pounds, down 3.9 percent from May and 1.4 percent above a year ago.
High Ground dairy broker Eric Meyer says cheese and butter output were lower than expected and nonfat dry milk was sharply lower but USDA posted a major downward revision to May production. The "lost" powder did not disappear from ending stocks, he said, and was actually higher than May. He views the report as "somewhat bullish for both cheese and butter, neutral for whey products and potentially bearish to the NDM market."
FC Stone broker Dave Kurzawski says the report seems to indicate there might not have been as much milk produced in June as preliminary data showed.
Recent hot weather reduced cow comfort and pushed butterfat components seasonally lower in most areas of the country, according to DMN. With the recent downturn in butterfat components, some balancing plants indicate they have few cream loads available for clearing to the spot market. Based on cream availability, cream sales into ice cream and soft serve mix operations are active.
But, some of that heat has since diminished and FC Stone's July 29 Insider Opening Bell stated, "Cool weather throughout much of the country, heavy cheese and butter stocks, and strong milk production have weighed on the market, while weak global production and low world dairy product stocks, particularly in Oceania, have been trying to pull prices higher. The market is in an over-reactive state. When it moves, it makes big moves. It is locked in a struggle between bullish and bearish fundamentals. The market will likely remain choppy until it gets a more definitive direction."
It later warned that "Large corn and soybean crops and falling feed costs are expected to improve on-farm margins leading to strong milk production later this year and early next. Oceania's production season is also expected to get off to a decent start in the next month or so. Expectations for stronger production here and in Oceania have sent Class III spiraling lower."
USDA's Crop Progress report showed 71 percent of the nation's corn is silking, compared with only 43 percent the previous week and a five-year average of 75 percent. Corn condition was steady, with all but 11 percent of the crop rated fair to excellent. All but 9 percent of the soybean crop was rated as fair to excellent.
Butter closed Friday at $1.44, up 1 1/4-cents, but 25 cents below a year ago. Five cars were sold on the week. AMS butter averaged $1.4544, up a penny.
Butter production is declining, according to DMN. Interest in retail packaging is emerging at some churning operations. Some butter producers noted an uptick in retail interest the week of July 22.
Jerry Dryer warns that there's a lot of butter in storage and not much of it is export-ready.
"That's unfortunate," he said, "because there is at least a modest appetite overseas given tight supplies in Europe and Oceania."
Cash Grade A nonfat dry milk closed Friday at $1.7825, up a quarter-cent on the week. Extra Grade remained at $1.73. AMS powder averaged $1.7479, up 1.2 cents, and dry whey averaged 57.91 cents, down 0.3 cent.
Milk production continues to be impacted by weather across the U.S. In the Southwest and Northwest, high temperatures were causing milk declines at the farm. Some areas of the Pacific Northwest were seeing temperatures in the triple digits, 6-19 degrees above normal. Utah and Idaho saw daytime highs above 100 degrees, affecting production and conception rates.
Central Valley, California saw lower nighttime temperatures resulting in increased milk flow. Localized heavy rains were common in Arizona, interrupting transportation to and from plants. The Upper Midwest experienced a reprieve from hot and humid conditions, seeing milk production increases following declines of 8-10 percent the prior week. Heat and humidity eased in the Northeast, but plants were still seeing lower milk receipts, as much as 10 percent in some areas, according to DMN.
Farm bill front quiet
Updating things on the Farm Bill as Congress heads into its August recess, National Milk's Chris Galen reported that "There's been no visible progress in trying to bring leaders from the House and Senate to negotiate a compromise Farm Bill."
He said it's up to dairy farmers, in the next four to five weeks to let their elected official know that "failure is not an option" to get a bill passed before the end of September, which is the end of the fiscal year and some farm programs expire.
He suggested farmers visit lawmakers at local fairs and meetings and log on to the NMPF website, www.nmpf.org, and use the "Write to Congress" feature.
Uncle Sam sure likes yogurt. DairyBusiness Update (DBU) reports that USDA purchased nearly 200,000 pounds of high-protein yogurt from Chobani as part of a new pilot program for schools in four states. The strawberry, vanilla, blueberry and plain yogurt will be delivered between September and November, with the total contract priced at $279,720 or $1.40 per pound.
The deadline to enter the 30th World Forage Analysis Superbowl for standard and brown midrib corn silage categories is Aug. 15. All other samples, including dairy hay, haylage, baleage, commercial hay and grass hay, must be submitted by Sept. 5. Over $22,000 will be awarded to the best forages from around the country. Call 920-336-4521 or visit www.foragesuperbowl.org for the entry form and further details. Winning entries will be on display in the Arena Building at World Dairy Expo. Finalists will be notified in September.