By LEE MIELKE

For the Capital Press

The March federal order benchmark milk price dropped $1.50 April 2 as the Agriculture Department announced the Class III manufacturing grade milk price at $12.78 per hundredweight. That's still $2.34 above the level it was a year ago but $5.22 below March 2008 and pulls the 2010 average down to $13.85. That compares to $10.18 at this time a year ago and $18.12 in 2008. The Class IV price is $12.92, up 2 cents from February, and $3.28 above a year ago.

Class III futures portend another small drop in April, which settled Thursday at $12.72. May rebounds to $13.28, June $14, and July at $14.49, with a peak of $15.08 in September before beginning the traditional seasonal decline. The NASS cheese price averaged $1.3632 per pound, down 14.8 cents from February. Butter averaged $1.4388, up 7.8 cents. Nonfat dry milk averaged $1.0454, down 3.6 cents, and dry whey averaged 37.61 cents, down 1.6 cents.

California's 4b cheese milk price is $11.13 per hundredweight, down $1.82 from February but 68 cents above a year ago and $1.65 below the comparable Federal order Class III price. The 4a butter-powder price is $12.84, unchanged from February, but $3.17 above a year ago.

Cheese prices ended March and started April on an upswing. The blocks closed April 1 at $1.43 per pound, up 10 1/2-cents on the Good Friday holiday-shortened week, and 15 cents above a year ago and that's no "April fools." The barrels closed at $1.3750, up 6 1/4-cents on the week, and 11 1/2-cents above a year ago. Only two cars of each traded hands. The NASS-surveyed U.S. average block price lost 3.3 cents, slipping to $1.3019. Barrel averaged $1.2895, down 1.2 cents.

Butter closed at $1.4950, up a half-cent on the week and 31 1/2-cents above a year ago. Seven cars were sold. NASS butter averaged $1.4511, down 0.6 cent.

Cash Grade A nonfat dry milk closed the week at $1.2250, up 7 1/2-cents on the week. Extra Grade closed at $1.1650, up 4 1/2-cents. NASS powder averaged $1.0534, up 0.9 cent. Dry whey averaged 36.89 cents, down 0.1 cent.

Green light

Alan Levitt, editor of the CME's Daily Dairy Report, said once cheese prices got down to the mid-$1.20s, it "gave buyers the green light to come back off the sidelines." He suspects they were waiting until they felt the price had bottomed out. He finds it "encouraging that the sellers are the ones who have moved off to the sidelines and the prices increased on unfilled bids."

Still, Levitt is cautious. Increases in the commodity prices and milk futures are encouraging, he said.

"It's going to take a sustained rally in the cheese market to keep futures from falling back again," he said. "The futures are priced at a premium compared to where cheese prices are."

Buyers recognize that there's a lot of cheese in storage, running about 10 percent above a year ago and "this is the time of year when you're continuing to build stocks." Spring is starting to hit in the upper Midwest, according to Levitt, with milder weather, "so we're seeing a seasonal increase in milk volume."

Buyers recognize that there's a lot of cheese in storage, running about 10 percent above a year ago and "this is the time of year when you're continuing to build stocks." Spring is starting to hit in the upper Midwest, according to Levitt, with milder weather, "so we're seeing a seasonal increase in milk volume."

Production is also trending higher in California, but Levitt said the volume is still below a year ago because they have a lot fewer cows in the herd. Other parts of the country are also seeing their spring flush so "it may be a while before we can say that things have fully turned the corner, but it's certainly encouraging."

Production

The Agriculture Department's latest Dairy Products report shows February butter production at 141.1 million pounds, down 21 million pounds or 12.9 percent from January and 4.6 million or 3.1 percent below February 2009.

Total cheese output came to 777.2 million pounds, down 64.4 million pounds or 7.7 percent from January, but 7.4 million pounds or 1 percent above a year ago.

Exports and inputs

Cooperatives Working Together announced its first acceptance of bids under its re-activated export assistance program. About 2.1 million pounds of cheddar cheese will be exported to the Middle East in April and May. Four of the bids came from Seattle-based Darigold and two were from Foremost Farms.

Several USDA reports released this week provided some good news for future dairy feed prices, according to Dairy Profit Weekly editor Dave Natzke.

"While March closed with lower milk prices, dairy farmers may find some solace in the fact feed prices may also be lower," he said.

USDA's monthly Ag Prices report issued March 30, estimated that March all milk prices averaged $15.10 per hundredweight, down 80 cents from February. That decline offset decreases in corn and soybean prices, according to Natzke, meaning the income margin over feed costs was lower.

Dairymen received better news the next day regarding feed prices from USDA's 2010 Planting Intentions report and updated monthly Grain Stocks estimates. The Planting Intentions report shows U.S. growers will plant nearly 89 million acres of corn this spring, up about 3 percent from both 2008 and 2009. In addition, this year's soybean acreage is estimated at about 78 million acres, up less than 1 percent from last year, but still the highest total on record.

Looking at grain remaining in storage from 2009, USDA estimated there were about 7.7 billion bushels of corn and 1.3 billion bushels of soybeans stored in all locations as of March 1. Those estimates put the corn inventory up 11 percent from a year ago, but the soybean inventory down about 2 percent.

Reaction to all this information on the Chicago Mercantile Exchange pushed both corn and soybean futures prices lower through the end of 2012, Natzke reported, "providing good news for dairy farmers who must buy feed."

The Planting Intentions report indicated 2010 U.S. hay acreage will be up about 1 percent from last year. And, for dairy farmers looking to feed cottonseed, cotton acreage is expected to be up 15 percent from a year ago, he said, concluding with the caveat, "Of course, Mother Nature still has lots to say regarding the 2010 crop harvest, but for now, the news appears better for dairy farmers."

Prices

The March Milk-Feed Price Ratio is 2.26, down from February's revised estimate of 2.35, according to USDA's Ag Prices report, and compares to 1.56 in March of 2009. The all-milk price was estimated at $15.10 per hundredweight, down 80 cents from last month's estimate, but $3.30 above a year ago.

Corn averaged $3.49 per bushel, down 6 cents from February, and 36 cents below a year ago. The soybean price, at $9.16 per bushel, was down 25 cents from February, but 4 cents above a year ago. Alfalfa baled hay was $111 per ton, unchanged from February, but $27 below a year ago.

Global warming

New research challenges assumptions regarding animal agriculture and global warming. This is an important topic that could have far reaching ramifications for farmers everywhere, according to National Milk's Chris Galen. He said it's an issue that has been used to "beat up" production agriculture, particularly producers of milk, meat and eggs as being major contributors to greenhouse gas emissions and potentially global warming.

A report from the United Nations a few years ago claimed that 18 percent of all greenhouse gases around the world were caused by livestock, Galen reported, but "fortunately the pendulum is finally swinging." He cited a researcher at the University of California-Davis, Frank Mitloehner, who has data showing that the study others cite as the reason to become vegetarians has miscalculated livestock's contribution to global green house gas emissions.

U.N. researchers had calculated everything that goes into livestock production, Galen said, including fertilizer, cropping, and transportation but when they looked at utilities and automobiles, they didn't look at steel, mining, oil refining and all the things that contribute to greenhouse gases when you drive a car or use other forms of transportation.

"They were really comparing apples to oranges," Galen said. "We in livestock were aware of this, but didn't necessarily have the same bully pulpit. ... Now we have a respected researcher who is basically saying, while the emperor may not have no clothes, his clothes are a lot different than what the United Nations has said."

The other good thing, according to Galen, is that the UN researchers have admitted that their study is flawed.

"This will give us good ammunition to shoot back at some of the critics who cite livestock production as a major source of environmental evil and a major contributor to green house gases," Galen said. "Now we have a different perspective coming from the main scientific body that was trying to get everyone to go vegetarian in the first place."

"This will give us good ammunition to shoot back at some of the critics who cite livestock production as a major source of environmental evil and a major contributor to green house gases," Galen said. "Now we have a different perspective coming from the main scientific body that was trying to get everyone to go vegetarian in the first place."

Conference

The FC Stone/Downes-O'Neill annual Outlook Conference takes place June 9-10 in Chicago with the theme "Make Mine With Everything." Dairy broker Dave Kurzawski said the theme sums up what the conference will be about.

"In our increasingly interconnected world, the price of commodities is dependent upon a wider range of factors than ever before," Kurzawski said. The conference therefore will address dairy, feed grains, meats, livestock, soft commodities, interest rates, currencies, precious metals, global weather patterns, and upcoming legislation and regulations that will influence agriculture.

The conference will have a wide reaching range of information, he said, plus some focused presentations on risk management. Attendees will include everyone from dairy producers to multinational food corporations. For more information, log on to www.dairy.nu and click on the Outlook Conference 2010 link.

Promotion

Washington state dairy producer and DMI Board member Liz Anderson talked about the dairy checkoff's "Fuel Up to Play 60" program at the recent World Ag Expo. Anderson pointed out that all 32 NFL teams are partnering with the National Dairy Council in the program.

Dairy farmers promote good health, nutrition and eating right, Anderson said. The NFL brings excitement and activity to the program, she said, so it "seems like the perfect marriage."

The program has two parts: fueling and playing. Anderson says you have to fuel your body correctly, likening it to putting gas in the car so it runs and the activity part is kid-activated.

"They do the things (activities) themselves," she said. "They come up with the ideas with what they can do to improve the nutrition in the schools by adding a smoothie bar or something or getting a new flavored milk in there, and then they have to come up with some kind of physical activity."

Assemblies are held at the end of the school year for the winning schools that participated in the program, according to Anderson, and that's where a lot of the excitement comes in because the schools bring in the NFL players.