The University of Wisconsin's Brian Gould said people are trying to catch their breath after recent dramatic changes. He believes the market will closely watch what's happening in the European Union because of the elimination of export subsidies on skim milk powder, which used to be about 13 cents per pound. The whole milk powder subsidy was halved and is now just 10 cents per pound. The butter subsidy was reduced from 44 cents to 26 cents, a drop of 18 cents.

That's good news for U.S. producers, he said, as it makes U.S. dairy products more competitive. The U.S. dollar also is falling in value relative to the euro, New Zealand dollar and most major currencies. "Our exports are getting cheaper," he said.

It could also mean a reduction in the use of the Dairy Export Incentive Program by the U.S., Gould said. The program has been very active from July onward, and significant tonnage has been subsidized and exported.

A year ago U.S. dairy exports were on fire, and that situation could return. Gould pointed out that in June and July there was significant improvement in U.S. dairy exports and, in the second quarter of 2009, the U.S. was a net dairy exporter.

That slowed in August for some commodities, he said, but skim milk powder and lactose exports remained strong.

"Things are looking up in terms of exports, and that's good news for U.S. dairy producers," he said.

Capitol Hill

Another hearing on Capitol Hill regarding the dairy crisis by a Senate Agriculture Subcommittee was denounced by the National Family Farm Coalition for "failing to spotlight the voices of real family dairy farmers and instead relying on the same corporate processors and giant dairy cooperatives that have created the current economic disaster."

A press release said the coalition was "disheartened that very little mention was made by the senators regarding the lack of competition in the dairy markets and the Department of Justice's previous and upcoming investigations into antitrust abuses on the part of dairy cooperatives and processors."

National Milk's representative told lawmakers that existing federal safety nets for dairy farmers have not made up for the billions lost in 2009 revenue and that the federal order program has not effectively helped stabilize prices.

Lee Mielke is a syndicated columnist and farm broadcaster based in Lynden, Wash. For more Dairyline go to capitalpress.com.

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