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Mielke: Dairy groups like look of 'My Plate'


By LEE MIELKE


For the Capital Press


The Obama administration is replacing USDA's 20-year-old food pyramid with a plate. First lady Michelle Obama and Agriculture Secretary Tom Vilsack unveiled the food icon makeover this week. The plate will still serve to illustrate the Agriculture Department's "ideal diet," according to the federation's Chris Galen -- though dairy has a separate round circle next to the plate.


The good news, according to Galen, is that dairy is still considered an important part of people's diets. The guidelines suggest fat-free or low-fat milk and dairy products, so "it's an evolutionary shift for dairy products."


"It's part of the effort to deal with the obesity problem and use graphics that hopefully are more relevant to people," Galen said.


Some may question dairy not being included on the actual plate, but most dairy organizations praised USDA's "MY Plate."


"We're delighted that this new education tool provides a clear, visual message that milk and other dairy products are important for a nutritious diet," said Connie Tipton, IDFA president and CEO. "The dairy industry commends USDA for highlighting how beneficial a serving of dairy at every meal can be and for educating people about dairy's role on the table and in the American diet."


In dairy politics


National Milk Producers Federation's "Foundation for the Future" proposal to manage price volatility by controlling milk supply drew comment International Dairy Foods Association chief economist Bob Yonkers. Yonkers said that IDFA has reviewed analyses of the proposal, including one by the Food and Agricultural Policy Research Institute, or FAPRI.


He stated that US dairy exports have more than doubled in the past decade due to a rapidly increasing demand for dairy products around the globe. As a result, domestic prices have been closely aligned with world market prices since 2004. Before then, U.S. dairy exports were relatively small, he said, and even those exports were often due to government export subsidies.


IDFA and the federation "seem to agree that we need to take advantage of this huge opportunity for dairy export growth," Yonkers said. "National Milk even states that one of its guiding principles is that they will not promote policies that will discourage exports."


But, Yonkers said that the federation's Dairy Market Stabilization Program would decrease exports.


A study by FAPRI "directly predicts that U.S. dairy exports would have dropped significantly if the dairy market stabilization program had triggered limits to farm milk production during the dates reviewed," Yonkers said. "The study found that during three months of March, April and May 2009, U.S. exports of nonfat dry milk would have fallen by 38 percent, butter exports by 16.4 percent, and American cheese exports by 8 percent."


Yonkers added that the FAPRI study "likely underestimates the negative impact on exports" and "a study by Informa Economics of the FAPRI impacts on dairy prices indicates that overall U.S. dairy exports would have dropped by 14 percent if the Dairy Market Stabilization Program had been in place in 2009."


Using USDA data relating exports and U.S. jobs, a 14 percent decline would result in losses of more than $300 million in dairy exports and over 2,500 jobs, according to Yonkers. The FAPRI study appendix table shows that U.S. dairy market prices would be more volatile, he said.


"When the market stabilization program triggers on, prices increase, but when the program triggers off, FAPRI predicts that some dairy prices fall lower than they would have been otherwise," he said. "It is difficult enough for the dairy industry to make plans to innovate and grow exports without the Dairy Market Stabilization Program and, if implemented, this program would create a disincentive for the industry to develop new products and seek new markets due to the uncertainty of the future farm milk supply due to this policy."


For more information, log on to www.idfa.com .


Milk prices


The nation's benchmark milk price took another temporary dip. The Agriculture Department announced the May Class III price at $16.52 per hundredweight, down 35 cents from April, but $3.14 above May 2010, and equates to about $1.42 per gallon. That put the year's average at $16.65, up from $13.57 at this time a year ago, and compares to just $10.23 in 2009 and $17.86 in 2008.


Class III futures portend a rather large recovery next month. The June contract was trading late Friday morning at $18.98. July was at $20.02, August $19.35, September $19.00, October $18.39, November $17.99, and December at $17.61. Those prices would result in a 2011 average of $17.88, up from $14.41 in 2010 and $11.36 in 2009.


The May Class IV price is $20.29, up 51 cents from April, $5 above a year ago, and the highest since November 2007. Its 2011 average now stands at $18.86, up from $13.74 a year ago.


Cheese


The four-week, National Agricultural Statistics Service surveyed cheese price averaged $1.6534 per pound, down 4.5 cents from April. Butter averaged $2.0292, up 3.2 cents. Nonfat dry milk averaged $1.6120, up 4.4 cents, and dry whey averaged 49.29 cents, up 1.2 cents from April.


California's May 4a butter-powder price is $19.94, up 49 cents from April, and $5.99 above a year ago. The 4b cheese milk price is $14.74, up 40 cents from April, $2.34 above a year ago. It's also $1.78 below the federal order Class III price though the gap narrowed. The 4b was 99 cents below the Class III in January and 8 cents below in February however the gap jumped to $2.64 in March and $2.53 in April.


The gap is mostly attributed to the fact that the California Department of Food and Agriculture does not include a value on whey in its milk price calculations. That's one of the issues to be raised in a hearing scheduled for June 30-July 1 in Sacramento, but a 15-day delay has been sought by some producer and processor groups to better prepare. Others oppose the delay.


The gap is mostly attributed to the fact that the California Department of Food and Agriculture does not include a value on whey in its milk price calculations. That's one of the issues to be raised in a hearing scheduled for June 30-July 1 in Sacramento, but a 15-day delay has been sought by some producer and processor groups to better prepare. Others oppose the delay.


Another factor in the past is that CDFA uses CME dairy product prices in its calculations and USDA uses the NASS-surveyed product prices, which have a one to two week lag behind the CME prices.


CME cash cheese prices continued to climb in the Memorial Day holiday shortened week. The block price closed the first Friday of June Dairy Month at $2.05 per pound, up a dime on the day, 24 cents on the week, and 65 1/4-cents above that week a year ago. The blocks gained 42 3/4-cents in three weeks.


Barrel closed at $1.96, up 14 1/4-cents on the week, and 60 1/4-cents above a year ago. Only one car of block traded hands on the week and none of barrel. The NASS U.S. average block price hit $1.6570. The barrels averaged $1.6863. Both are up 1.8 cents.


The Cooperatives Working Together program will assist in the export of 5.7 million pounds of cheddar, Gouda, and Monterey Jack to customers of Darigold and Dairy Farmers of America in Asia, South America and the Middle East. CWT cheese exports this year now total 39.1 million pounds to 20 countries.


Cash butter reversed gears this week and closed Friday at $2.1425, down 3 3/4-cents on the week, but still 56 3/4-cents above a year ago. Nineteen cars traded hands on the week. NASS butter averaged $2.0466, up 5.2 cents.


The butter market also saw great commercial disappearance as exports claimed two thirds of the increase from a year ago, and stocks are well below a year ago. Seasonal demand could be very strong from ice cream manufacturers. But, high prices, as with cheese, could impact exports however.


Cash Grade A nonfat dry milk inched a quarter-cent higher, to $1.6425 on a sale, and Extra Grade held all week at $1.61. NASS powder averaged $1.6262, up 0.9 cent, and dry whey averaged 50.35 cents, down 0.1 cent.


Back to the futures


The Class III contract's average for the last half of 2011 was $17.64 per hundredweight on May 6, $17.49 on May 13, $18.22 on May 20, $18.39 on May 27.


April cheese production hit 882 million pounds, according to USDA's latest Dairy Products data, down 3.2 percent from March, but 2.1 percent above April 2010. Italian-type cheese output, at 385 million pounds, was down 3.7 percent from March, but 5 percent above a year ago. American-type cheese totaled 357 million, down 2.6 percent from March, and 1 percent below a year ago.


April cheese production hit 882 million pounds, according to USDA's latest Dairy Products data, down 3.2 percent from March, but 2.1 percent above April 2010. Italian-type cheese output, at 385 million pounds, was down 3.7 percent from March, but 5 percent above a year ago. American-type cheese totaled 357 million, down 2.6 percent from March, and 1 percent below a year ago.


Butter churns turned out 159 million pounds, down 3.7 percent from March, but a whopping 19.4 percent above a year ago. Nonfat dry milk production hit 146 million pounds, up 16.2 percent from March, but 4.4 percent below a year ago.


Checking the international scene


The Oceania milk production season is coming to a close, according to Dairy Market News, but the 2010-11 year is finishing strong. Production recovered nicely in New Zealand following a drought on the North Island at midseason and actually extended the season.


Milk producers and handlers project output will run about 3 percent above the previous season and possibly 4 percent. Supplies of Oceania dairy commodities however are mostly committed until the start of the new production season in August, according to the CME's Daily Dairy Report.


European milk production has started to drop. Milk production trends have been positive for the first quarter of the year but in the past month or so, output in some areas has been sharply lower. Milk producers and handlers are concerned about milk output for the future, according to DMN, and many warn that, if moisture does not arrive soon, milk production will drop.


Here at home, output in the northern tier of states is approaching peak levels while steady to trending lower across the southern tier. Weather has been milder than normal and not causing any major problems for cows.


Profits down


Dairy farm profitability was down again, based on the latest Ag Prices report. The May feed price ratio, at 1.74, was the lowest in 22 months, according to Dairy Profit Weekly's Dave Natzke, who adds that 3.0 is considered profitable. The all milk price, at $19.40 per hundredweight, was down 20 cents from April, but $4.40 above a year ago.


Alfalfa hay costs were up $31 from April, averaging a record $186 per ton, $65 more than May 2010. Corn was down 20 cents from April, at $6.15 per bushel, but $2.67 above a year ago, and soybeans were down a dime, to $13 per bushel, $3.59 above a year ago.


The cost of feed to generate 100 pounds of milk hit a record $11.15, according to the DDR, up 44 cents from April.



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