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Home  »  Ag Sectors

Federal Class III price increases 93 cents

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By LEE MIELKE


For the Capital Press


June Dairy Month started with a nice 93-cent increase in the May Federal order Class III milk price, announced by USDA at $18.52 per hundredweight (cwt.).


It is $3.29 above May 2012, equates to about $1.59 per gallon, and is $1.32 above the comparable California 4b cheese milk price despite the temporary price increase mandated by the California Department of Food and Agriculture (CDFA), which ends with the May prices.


The Class III price average now stands at $17.69, up from $15.96 at this time a year ago, $16.65 in 2011, and $13.57 in 2010.


The June Class III futures contract was trading late Friday morning at $18.10; July, $18.63; August, $19.06; with the peak at $19.12 for September.


The May Class IV price is $18.89, up 79 cents from April and $5.34 above a year ago. It's 2013 average now stands at $18.02, up from $15.24 a year ago, and compares to $18.86 in 2011, and $13.74 in 2010.


The AMS-surveyed U.S. average cheese price used in the May milk price calculation was $1.8274 per pound, up 9.6 cents from April. Butter averaged $1.6483, down 2.8 cents. Nonfat dry milk averaged $1.6374,up 10.6 cents, and dry whey averaged 57.65 cents, up fractionally from April.


California's May 4b cheese milk price was announced by the CDFA at $17.20 per cwt., up 28 cents from April and $3.64 above a year ago. The 4a butter-powder milk price is $18.24 per cwt., up 22 cents from May and $4.79 above a year ago.


The 2013 4b price average now stands at $16.08, up from $13.66 a year ago and $15.05 in 2011. The 4a average, at $17.84, is up from $15.04 a year ago and compares to $18.56 in 2011.


In a week of heavy trading, cash cheese saw some ups and downs the first week of Dairy Month but the blocks reversed four weeks of losses, closing Friday at $1.7475 per pound, up a quarter-cent on the week and 13 1/4-cents above a year ago. Barrel finished at $1.76, up 5 1/4-cents on the week and 23 3/4-cents a year ago. Fifty cars of block traded hands on the week and four of barrel. The lagging AMS-surveyed U.S. average block price slipped to $1.8090, down 3.3 cents on the week, and barrel averaged $1.7746, down 0.3 cent.


Cheese exports OK'd


Cheese production continues at a busy pace as extra milk found its way to cheese plants over the Memorial Day weekend, according to USDA's Dairy Market News (DMN). Lower prices continue to increase interest from international buyers, aided by the Cooperative Working Together (CWT) program, and aging programs continue to take advantage of the lower prices to build inventories, according to DMN.


CWT accepted eight requests for export assistance this week to sell 2.1 million pounds of cheese to customers in Asia and North Africa. The product will be delivered through November, and raised CWT's 2013 cheese exports to 59.2 million pounds, plus 51.7 million pounds of butter, 44,092 pounds of anhydrous milk fat and 218,258 pounds of whole milk powder to 31 countries.


Cash butter closed the week at $1.5450, up a half-cent and 12 3/4-cents above a year ago. Twenty cars were sold on the week. AMS butter averaged $1.6182, up a penny. Eyes are on the weather to see if summer heat will drive ice cream sales and draw cream away from the churn to the cone. Cream supplies over the Memorial Day weekend in all regions were heavy, according to DMN, and kept many churns operating at full schedules.


April butter production totaled 169 million pounds, down 6.9 percent from March and 0.3 percent below April 2012, according to USDA's latest Dairy Products report. Nonfat dry milk output, at 161 million pounds, was up 7 percent from March but 15.7 percent below a year ago.


American type cheese, at 373 million pounds, was down 3 percent from March but up 2.4 percent from a year ago. Total cheese production amounted to 928 million pounds, down 2.9 percent from March but 3.2 percent above a year ago.


Cash Grade A nonfat dry milk closed Friday at $1.6925, up 1 1/4-cents on the week while Extra Grade remained at $1.70. AMS powder averaged $1.6690, up 1.2 cents, and dry whey averaged 58.13 cents per pound, up 0.8 cent.


Holiday challenge


The Memorial Day holiday proved to be challenging for processors in the Northeast, yet was a busy, uneventful period at most dairy plants in other regions, according to USDA's weekly milk production update. Manufacturing milk supplies were heavy over the holiday weekend in the Northeast and Mid-Atlantic with some plants reporting milk volumes comparable to year-end holidays. Handling problems and delays were more problematic in the Northeast with some plants having to dump milk. Midwest milk handling and processing went rather well, thanks to increased processing capacity.


California milk production is mostly steady with recent weeks. Hotter weather conditions caused a dip in output for a couple of days, but levels did recover. Arizona output was steady, New Mexico production uneven. Hotter weather is impacting milk receipts with lower milkfat and solids content noted.


FC Stone's June 4 eDairy Insider Opening Bell reported that the latest Crop Progress report showed 91percent of the corn is planted in the major producing states, up 5 points on the week but still off the five-year average of 95 percent. Soybean planting, at 57 percent, lags the five-year average of 74 percent.


"Market consensus appears to be that corn plantings may be 2 to 2.5 million acres less than expected," according to the Opening Bell, "down from last week's expectations of 5 to 6 million acres."


Demand mixed


USDA reports commercial disappearance of dairy products in the first three months of 2013 totaled 48.2 billion pounds, down 0.6 percent from the same period in 2012. Butter was up 5.4 percent; American cheese up 0.3 percent; other cheese up 0.1 percent; nonfat dry milk was down 15 percent, and fluid milk products were off 0.9 percent.


The Agriculture Department's latest Ag Prices report shows the May index at 152, up 2.0 percent from a month ago and 23 percent above May last year. The May all milk price of $19.80 per cwt. is 30 cents above last month and $3.60 higher than May 2012.


The April Milk Income Loss Contract payment (MILC) will be 69.884 cents per cwt. The University of Wisconsin's Brian Gould estimates that, based on June 4 futures prices, the May MILC payment will be about 70 cents.


The May 31 Daily Dairy Report said that, although Midwest farms are challenged with heavy rains, the fallout from last year's drought is far-reaching and continues to affect farm margins even today as evidenced by the Ag Prices report.


Western dairy state milk price over feed continues to improve while Midwestern and Eastern states' gains were modest, according to the DDR. Nationally the milk price over feed for May 2013 at $7.03 per cwt. was higher than last month, up 21cents versus April.


The DDR said that performance was mixed for the four largest dairy producing states. Idaho milk prices have been bolstered by stronger cheese and milk powder prices. Changes in milk powder markets will disproportionately influence Western states' milk prices due to high Class 4a or Class IV utilization. This coupled with mostly steady feed costs led to an improved milk price over feed for Idaho of $7.77 per cwt., $1.03 higher than last month.


The All Milk price for Wisconsin increased in May to $20.50 per cwt., 60 cents higher than last month. However, the drought-related rise in alfalfa costs of $25 per ton since April nearly eclipsed the improvement in the milk price, leading to a May 2013 milk price over feed of $6.67 per cwt. in Wisconsin, up only 14 cents.


In May, the top four milk producing states are enjoying an improvement in milk price over feed performance, a stark contrast to one year ago. Last year, the national All Milk price was $14.51 in May, $5.29 per cwt. lower than this year with comparable feed costs. This resulted in a national May 2012 milk price over feed of only $2.22, $4.81 lower than the numbers reported this month, the DDR said.


Political roundup


The National Milk Producers Federation (NMPF) praised the Senate's vote June 6 to end debate on the 2013 Farm Bill. The decision to invoke cloture "clears the way for approval of a much-needed reform of the federal dairy program," an NMPF press release stated. The Senate was expected to vote on final passage of the Farm Bill the week of June 10. NMPF stated that "Milk producers need the 2013 Farm Bill enacted as soon as possible" and to "know the details of the federal dairy safety net to make business decisions."


Meanwhile; Dairy Business Update (DBU) reported that U.S. Rep. Bob Goodlatte, R-Va., released a statement this week after a House Judiciary Committee mark-up of HR1947, the Federal Agriculture Reform and Risk Management (FARRM) Act of 2013. Goodlatte, chair of the House Judiciary Committee, introduced an amendment that would ensure regulations imposed under the FARRM Act are subject to promulgation under the Administrative Procedure Act and the Congressional Review Act, which fall under the jurisdiction of the House Judiciary Committee.


Goodlatte wants review of rules establishing the Dairy Market Stabilization Program, which is part of the Dairy Security Act, the dairy title of the proposed farm bill. The version of the bill reported by the House Agriculture Committee last month waived this requirement. Goodlatte's amendment passed the House Judiciary Committee by voice vote with bipartisan support.


National Milk called the measure "a reasonable compromise to get the reform approved," but added that the Goodlatte amendment was "another attempt to sidetrack a dairy policy proposal already approved by the House Ag Committee."


DBU reported that the International Dairy Foods Association (IDFA) has a slightly different take on the measure. IDFA said the Judiciary Committee action will "require USDA to examine the impacts of proposed dairy policy in several areas, including consumer prices, the cost of USDA nutrition programs, competitiveness within the dairy industry and the potential for dairy market growth, prior to adopting interim and final regulations."


And, a new campaign is being launched in conjunction with June Dairy Month and dairy's REAL Seal that enables consumers to learn more about the benefits of real, American-made dairy products and foods made with them, using a new Facebook page, blogger outreach, and digital advertising. Details are posted at www.facebook.com/REALSealDairy.



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