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Milk production down slightly in March


By LEE MIELKE


For the Capital Press


March milk production in the 23 major producing states totaled 16.44 billion pounds, up from a revised 14.7 billion in February but down 0.1 percent from 16.46 billion in March 2012.


The preliminary administrative data is from USDA's first pared-down Milk Production report due to sequestration budget cuts so there was no data available regarding cow numbers or output per cow. The 50-state total was put at 17.663 billion pounds, down 0.3 percent from 2012.


Revisions of 15 million pounds to preliminary February data shows output down 3.3 percent from a year ago but up 0.2 percent when adjusting for the leap year. The January to March 2013 quarter production totaled 50.5 billion pounds, down 1.1 percent from the same period a year ago.


California milk output in March was down 3.3 percent from a year ago. Wisconsin was up 3 percent. New York was up 1.8 percent, Idaho up 0.5 percent, Pennsylvania up 0.3 percent and Minnesota was up 1.8 percent. Arizona was down 2.8 percent, Michigan was up 3 percent, New Mexico was down 2.9 percent and Texas was down 4.1 percent.


The latest Livestock Slaughter report shows 274,000 dairy cow were slaughtered under federal inspection in March, up 15,000 head from February but 4,000 less than a year ago. The Daily Dairy Report said March represents the first year-over-year decline in 2013.


However, the first quarter of 2013 has had the strongest start-of-the-year dairy cow slaughter during the past decade.


"Considering March 2013 milk production was just 0.3 percent below a year ago, the small year-over-year milk production difference and lower slaughter rates during the month suggests cows sent to slaughter during the month were replaced and that the milking herd may be expanding," the DDR warned.


"Given that March 2012 milk production benefited from highly favorable weather conditions and a large herd makes this year's only slightly lower numbers impressive," said Sara Dorland, managing partner at Seattle-based Ceres Dairy Risk Management LLC and an analyst for the DDR.


"Production per cow typically increases between February and March and, based on the March data, it appears that may have been a contributing factor along with an increase in the milking herd," she said. "For most of 2012 and early 2013 losses in Western states have been more than offset by gains in Midwestern states, which continued to be the case in March."


By the numbers


March butter stocks totaled 254.8 million pounds, according to USDA's latest Cold Storage report, up 7 percent or 16.5 million pounds from February and 22 percent or 46.5 million more than March 2012.


American type cheese, at 680.2 million pounds, was up 3 percent from February and 4 percent above a year ago. Total cheese stocks amounted to 1.1 billion pounds, up 3 percent from February, 5 percent above a year ago, and the highest March level ever, according to the DDR.


The DDR also pointed out that strong milk flows in the Midwest has resulted in plenty of cheese on hand while lower global milk production has meant tighter cheese supplies and thus higher prices.


The cash dairy markets in Chicago didn't like what it saw in the March Cold Storage data or the Milk Production report for that matter. Cheese prices reversed gears, ending three weeks of gain. The blocks closed the last Friday of April at $1.86 per pound, down 2 cents on the week but still 32 1/2-cents above a year ago. Barrel closed at $1.6850, down 8 1/2-cents on the week, 25 cents above a year ago, and 17 1/2-cents below the blocks. Ten cars of block traded hands on the week and 15 of barrel. The AMS-surveyed U.S. average block price hit $1.7616, up 6.8 cents, while the barrels averaged $1.7208, up 5.3 cents.


FC Stone's April 26 eDairy Insider Opening Bell said "cool spring weather has delayed the grilling season and many manufacturers acquired cheese as prices rose, so they have stocks on hand." That helps explain the block/barrel spread.


Good volumes of milk available to cheese plants are keeping production in the West seasonally heavy and on 6-7 day production schedules in the East, according to USDA's Dairy Market News.


Butter plunged 9 3/4-cents this week, closing at $1.69, still 33 cents above a year ago. Eighteen cars were sold on the week, 13 on Friday alone. AMS butter averaged $1.6948, up 3.3 cents.


Class II cream demand is diverting increasing cream volumes away from butter churns across the country, DMN reports.


Cash Grade A nonfat dry milk lost 2 1/2-cents, closing the week at $1.76. Extra Grade remained at $1.70. AMS powder averaged $1.5480, up 3.7 cents, and dry whey averaged 57.66 cents per pound, up 0.6 cent.


Export aid OK'd


Cooperatives Working Together accepted nine requests for export assistance this week to sell 965,625 pounds of cheese, and 1.3 million pounds of butter to customers in Asia, the Middle East and North Africa. The product will be delivered May through October and raised CWT's year-to-date cheese exports to 50.1 million pounds, plus 50.6 million pounds of butter, 44,092 pounds of anhydrous milkfat, and 218,258 pounds of whole milk powder to 30 countries.


In other trade news, the U.S. Dairy Export Council testified before the Senate Finance Committee this week regarding its support of the Trans-Pacific Partnership trade agreement negotiations and the need for a "positive dairy outcome in those trade discussions."


"USDEC supports these negotiations, as it has all recent agreements that have helped expand our increasingly export-dependent sector," said USDEC President Tom Suber, who was one of four witnesses to testify at the hearing. "We are pleased that the pieces are in place that this agreement, properly negotiated, could deliver large and lasting benefits across the U.S. dairy sector. It's important to recognize, however, that if the administration brings back an unfair result, the U.S. dairy industry will have no choice but to oppose congressional approval."


The April 23 DDR reports that China continues to import huge volumes of dry dairy products, and there was no indication that New Zealand had any trouble meeting that demand last month.


Compromise dairy bill?


In dairy politics, two House Agriculture Committee members introduced a bill this week that an International Dairy Foods Association press release said "forges a bipartisan compromise approach to reforming U.S. dairy policy."


The "Dairy Freedom Act" by Representatives Bob Goodlatte, R-Va., and David Scott, D-Ga., "provides a safety net for dairy farmers that would establish a new revenue insurance program for times of low milk prices and high feed costs."


The plan would establish a new Dairy Producer Margin Insurance Program and repeals the Dairy Product Price Support Program, the Milk Income Loss Contract Program and the Dairy Export Incentive Program. The bill essentially mirrors the proposal offered in the last Congress by Representative Collin Peterson, D-Minn., but does not include the controversial supply management program called the Dairy Market Stabilization Program.


IDFA senior vice president of legislative affairs, Jerry Slominski, said the bill is a "true middle-ground approach as no one gets everything they want, and Congress should use it as a way to move the Farm Bill forward." The proposal also received an endorsement from the Dairy Business Association.


National Milk quickly shot back that "Goodlatte and Scott's misnamed Dairy Freedom Act is nothing more than an unacceptable attempt by dairy processors to assure themselves access to a sea of taxpayer-subsidized cheap milk," an National Milk Producers Federation press release argued. "Congress rejected this approach last year, and should do so again this year. What processors claim is a compromise is nothing more than a costly ruse that will hurt farmers and taxpayers alike.


"Because it features no mechanism to put the brakes on potential excess milk production, it offers dairy processors an over-abundant, cheap milk supply." That, said NMPF, "will help their corporations' bottom lines, while ensuring that farmers are underpaid for the milk they produce. Dairy processors are simply trying to have taxpayers make up the difference.


"The market stabilization program in the Dairy Security Act that was approved last year by both the House and Senate Agriculture Committees makes our program cost-effective," NMPF argued. "Creating an effective, voluntary participation program supported by dairy farmers from coast to coast most certainly is the business of the federal government. That program is the Dairy Security Act, not this dairy processor-backed Trojan Horse," NMPF concluded.


Somatic cell count


In another policy front, for the second time in two years, state public health and agriculture department officials participating in the National Conference on Interstate Milk Shipments turned down a proposal to reduce the maximum allowable level of somatic cell counts in milk.


At its meeting in Indianapolis this week, NCIMS voting delegates, a group of state regulators overseeing milk safety rules, considered a NMPF-sponsored proposal to reduce the maximum threshold of allowable somatic cells in milk at the farm level from the current 750,000 cells per milliliter, to 400,000, starting in 2015. The delegates narrowly rejected the proposal and "put the U.S. behind the curve when it comes to milk quality standards," according to NMPF's Jerry Kozak.


"Dairy farmers in the world's major milk producing regions have made great strides in reducing somatic cell count levels," he said. "Regulatory systems around the world have moved to incorporate these lower somatic cell count levels, and the U.S. needs to be on board with that process, not be left watching from the side of the road by the failure to update our standards. We continue to be perplexed by the inconsistency of those state regulators who voted to make it easier to import Grade A dairy products into the United States by outsourcing mandatory inspections, while at the same time rejecting efforts to facilitate the export of American dairy products," Kozak said.


A similar somatic cell count proposal was defeated by the NCIMS in 2011. Since then, the European Union has moved ahead with a somatic cell count limit of 400,000 for dairy products being exported by the U.S. to EU member countries.


Darigold has completed construction of its new milk powder dryer at its Lynden, Wash., processing plant and should start producing product in a couple weeks. A fire destroyed the dryer in February 2012.


DairyBusiness Update reports the new dryer measures 22 feet in diameter, is 108 feet tall, and will be able to produce 16,800 pounds of powder per hour. It will not only be able to produce condensed milk powders, such as non-fat dry milk powder and skim milk powder, but will be also be able to produce whole milk powder for domestic and export markets.



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