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Analysts foresee growth in milk production, pressure on prices

February 27, 2015

WASHINGTON — The U.S. dairy sector entered 2015 riding on a period of favorable returns, but the market now is facing potential pressures as larger supplies of dairy products and weaker exports are expected to pressure prices, USDA says.

Shayle D. Shagam, Livestock, Dairy and Poultry Analyst for USDA’s World Agricultural Outlook Board, presented the Outlook for U.S. Dairy Feb. 20 during USDA’s annual Agricultural Outlook Forum.

• Milk production, prices

Milk prices in 2014 were at record highs, and prices in 2013 were the third-highest on record, USDA notes.

Although producers faced relatively high feed prices in 2013, feed prices in 2014 moderated sufficiently to push milk-feed price ratios to their highest levels since the mid-2000s, USDA says. Producers responded by increasing herds; the dairy sector added more than 95,000 cows between Jan. 1, 2014, and Jan. 1, 2015.

Improvements in producer margins also encouraged productivity gains, USDA notes. In 2014, average milk per cow grew about 2 percent on a per-day basis, the fastest rate of growth since 2010. The net impact was a 2.4-percent increase in milk production.

Slow growth in production early in the year and strong growth in demand, fueled in part by continued gains in exports in the first half of the year, propelled milk prices to records for almost each month of 2014. However, as the United States has become more integrated in international markets, the impacts of changes in trade weighed more heavily on prices, USDA notes. In the second half of 2014, exports declined in response to increased competition from exporters who had expanded production and then were faced with reduced sales to a number of key countries as well as the increasing strength of the U.S. dollar.

Meanwhile, domestic demand remained firm, initially mitigating the potentially price-depressing impacts of reduced exports, but as stocks built for a number products, prices began to adjust, USDA says.

In 2015, USDA says milk production is forecast to increase to 211.5 billion pounds, nearly 2.7 percent higher than 2014.

Although concerns about declines in margins in the first part of 2015 likely will dampen the rate of increase, producers are expected to gradually increase cow numbers, and, despite lower margins than 2014, output per cow is expected to increase at faster than trend rates, USDA says.

On Jan. 1, 2015, the dairy cow herd was 1 percent higher than 2014, and producers expect to add 1 percent more heifers to the dairy herd in 2015, USDA says. The number of replacement heifers per 100 cows remains near record, but prices of dairy cows in January remained well above a year earlier, likely indicating continued demand for dairy cattle. However, prices for young dairy heifers have weakened in recent weeks, which may indicate longer-term concerns about expansion, USDA adds.

Nonetheless, the dairy herd in 2015 is expected to average 9.32 million head, 0.7 percent above 2014, USDA says. Output per cow is forecast to increase just under 2 percent in 2015, which, although slower than 2014, is above average growth (per day) for the past five years. Feed prices are expected to remain moderate through the year.

USDA notes that milk production in California has been affected by drought and to the extent forage supplies are limited, production in that state may be constrained. Lower milk prices in early 2015 may limit some producers’ ability to fully take advantage of the lower feed costs.

In his latest Dairy Situation and Outlook report released Feb. 22, Bob Cropp, professor emeritus at the University of Wisconsin Cooperative Extension, says that milk prices continue to fall in 2015.

Cropp says the February Class III milk price will be near $15.55 per hundredweight, compared to $16.18 in January. The Class III price one year ago was $23.35.

Meanwhile, the Class IV milk price in February will be near $14 per hundredweight, Cropp says, up from $13.23 in January due to some strengthening of butter prices but down from $23.46 one year earlier.

“There exists considerable uncertainty as to how milk prices will end up for the rest of the year,” Cropp says.

Cropp notes that earlier this year there were predictions for the Class III milk price to fall to the low $14.00s in the first quarter and average about $7 lower than last year. Class III futures also showed this pattern, he says.

However, dairy futures have rallied, Cropp says, and Class IV futures also have strengthened.
“The explanation for this rally is the drought in New Zealand and New Zealand’s forecast for their milk production to be 3 percent lower than in 2015,” Cropp says.

There is also anticipation that Russia will lift its ban on dairy important from the European Union (EU) by August and that China will resume imports later in the year, he adds.

• Demand

Strong international demand helped offset weakness in domestic use of dairy products in the first part of 2014, USDA says. However, as competing exporters increased production, Russia banned imports from several key exporters and China reduced imports, global supplies of dairy products increased and U.S. exports faced increased competition later in the year. As a result, the domestic market was faced with increased supplies.

With larger milk supplies in 2015, growth in domestic use is expected on both a fat and skim-solids basis, USDA says. The increase likely will be driven largely by two factors, an improved economy and lower prices. Continued economic growth and diminishing unemployment is expected to underpin gains in demand for dairy products.

With lower exports forecast for the year, lower prices will balance the markets rather than high prices rationing supplies as occurred in much of 2014, USDA adds. Domestic commercial use on a fat basis is expected to increase almost 3 percent in 2015, but a build up in fat basis stocks is expected. Growth of commercial use on a skim-solids basis is expected to increase more rapidly than on a fat basis as prices of nonfat dry milk (NDM) and cheese fall more than those for butter, encouraging increased use of those products. Skim basis ending stocks are expected to be only slightly higher than 2014.

International markets have become an increasingly important source of demand for U.S. dairy products, USDA adds. In 2005, the United States exported about 2 percent of milk production on a fat basis and about 10 percent on a skim-solids basis. By 2014, the percentages had increased to 6 percent and 19 percent, respectively. Exports grew dramatically in 2013 as reduced production in Oceania and a modest increase in EU production limited supplies from those traditional exporters. The tightness in world supplies was compounded by the emergence of China as a major buyer of milk powders. In the face of limited supplies from traditional exporters, buyers increasingly turned to the United States as a source of product.

For 2015, the United States is expected to face continued headwinds in exporting products, USDA says. Modest increases in milk production by most major exporting countries may keep competing supplies of exportable product from increasing dramatically. New Zealand is currently facing dry conditions, which may limit production growth if they persist. However, limited growth in demand and a strong dollar are expected to keep U.S. exports below a year earlier in the first half of 2015.

• Cash market, price outlook

Meanwhile, cash markets at the Chicago Mercantile Exchange (CME) have been mostly steady for cheese and NDM but have moved lower for butter throughout the month of February.

Cheddar barrels at the CME were at $1.4850 per pound Feb. 13-23 before falling a quarter cent Tuesday to $1.4825 and bumping back up to $1.4925 by Friday. Cheddar blocks have moved between $1.53 and $1.5450 per pound over the past few weeks, settling at $1.5450 Feb. 20 where they have remained as of Friday.

NDM at the CME has moved around the $1.10-per-pound level throughout the month, moving lower to $1.0850 on Thursday but moving up to $1.1550 as of Friday.

CME butter reached $1.85 per pound Feb. 4 but has weakened throughout the month, settling at $1.6550 on Thursday before climbing to 1.6950 as of Friday.

As 2015 begins, wholesale product prices are under pressure from larger supplies, USDA says. For most products, further prices declines are likely during the first quarter. Butter is an exception as stocks were relatively tight coming into the year and the timing of Easter and Passover is expected to support demand in the first quarter.

Beyond the first quarter, an improving U.S. economy and increases in exports in the second half of the year should help lift product prices off their lows, USDA says. Cheese and butter prices are expected to be largely supported by gains in domestic demand as the U.S. economy improves.

For 2015, cheese prices will average $1.595 to $1.665 per pound, and butter will average $1.655 to $1.755 per pound, USDA says.

Gains in NDM prices during the first half are likely to be driven by strength in domestic demand, USDA adds. Gains in cheese and whey prices relative to those for butter and NDM may shift production toward cheese, limiting NDM production and supporting prices. However, higher cheese prices also may encourage increased demand for NDM by cheesemakers.

In the second half of the year, increased export demand is expected to provide additional support for NDM prices, USDA says. NDM prices are forecast to average $1.19 to $1.25 per pound.

Meanwhile, dairy retail prices likely will move higher in early 2015 as retail price adjustments tend to lag lower wholesale prices, USDA says. However, as wholesale prices are forecast to remain below 2014, the dairy consumer price index is expected to reflect those declines and average below 2014.

A monthly Dairy Market Report produced by the National Milk Producers Federation (NMPF) and sponsored by Dairy Management Inc. this month notes the dairy industry is moving further into the price correction that will define the first half of 2015.

“CME futures markets indicate that U.S. average milk prices will hit the year’s lowest levels in March and April, while milk-price-over-feed-cost margins will bottom out in April and May,” NMPF says.

Conflicting signals are coming from both the domestic and international dairy markets as to how low these respective bottoms will be, NMPF adds.

“But some signs, including the still-moderate domestic stock situation for butter and cheese, a temperate outlook for U.S. milk production growth and the futures themselves indicate the correction may not be as severe as it appeared a few months earlier,” NMPF says.

CMN


Dairy industry organization,
USTR promote TPA legislation

February 27, 2015

WASHINGTON — The dairy industry recently reiterated its support for U.S. Trade Promotion Authority (TPA) legislation that would facilitate the completion of trade agreements, including the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), by allowing only an up-or-down vote in Congress on the final agreement with no amendments.

A hearing that would include discussion about TPA was scheduled this week in the U.S. Senate Committee on Finance, but it has been postponed until further notice following concerns raised by Senate Finance Committee Ranking Member Ron Wyden, D-Ore., that the hearing was scheduled prematurely.

“There is no agreement on Trade Promotion Authority, or other aspects of the legislative trade agenda more broadly,” says Wyden spokesman Keith Chu. “Sen. Wyden is continuing to fight for more transparency, more oversight and provisions to ensure American workers come first in our trade policy.”

In January, the International Dairy Food Association (IDFA) urged members of Congress to quickly pass the TPA, saying that balanced free trade agreements will increase market access for U.S. dairy exports. In an update this week, IDFA stressed that TPA is an important piece of legislation that must be renewed for completed trade agreements to move through Congress. IDFA also notes that it has been working with the Trade Benefits America coalition to educate and gain support for TPA.

Meanwhile, this week U.S. Trade Representative Michael Froman rallied in Washington for support of TPA during a speech to the National Association of Counties.

“These are exciting times because the finish line for TPP negotiations is in sight,” Froman said in his remarks Monday. “And that means more good jobs and a stronger middle class here at home.

“The first step toward realizing those gains is to secure bipartisan trade promotion authority,” he adds. “The president has asked for it. The Republican leadership in Congress has indicated it’s something they want to work on with the president. It’s time to get it done.”

Others who oppose TPA say more transparency and input from Congress and the public is needed when negotiating trade agreements. National Farmers Union (NFU) President Roger Johnson this week urged members of Congress to oppose TPA.

“Trade promotion authority (“fast track”) would remove an important constitutional check on the president’s power to negotiate trade agreements,” Johnson notes in a letter sent this week to members of Congress. “Trade agreements must be fair for all parties involved and should therefore be subjected to review by Congress — not conducted secretly.”

The last informal round of TPP negotiations was held Jan. 26-Feb. 1 in New York City. Another informal round with chief negotiators will be held March 9-15 in Hawaii, and the ministerial round will be held in mid-April.

The eight round of TTIP negotiations between the United States and European Union was held Feb. 2-6 in Brussels, Belgium. Future rounds are expected in Washington in April and in Brussels in July.

CMN


January milk production rises,
2014 data revised

February 27, 2015

WASHINGTON — Milk production in the 23 major milk-producing states during January totaled 16.53 billion pounds, up 2.1 percent from January 2014, according to preliminary data from USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Milk Production chart.)

December revised production in the 23 major states, at 16.26 billion pounds, was up 3.4 percent from December 2013. The December revision represents an increase of 14 million pounds or 0.1 percent from last month’s preliminary production estimate.

For the entire United States in January, milk production is estimated at 17.64 billion pounds, 2.1 percent above January 2013. NASS revised December 2014’s total U.S. milk production up 16 million pounds to 17.33 billion pounds.

That, along with other revisions to previous months, brings U.S. milk production in 2014 to a total of 206.046 billion pounds, 52 million pounds more than in last month’s report and 2.4 percent above 2013. NASS revisions to 2013 production data increased the annual 2013 total 13 million pounds to 201.231 billion pounds.

Production per cow in the United States averaged 22,258 pounds for 2014, 442 pounds above 2013. The average annual rate of milk production per cow has increased 13.9 percent from 2005, NASS says.

The average number of milk cows on farms in the United States during 2014 was 9.26 million head, up 0.4 percent from 2013. NASS says the average number of milk cows was revised up 2,000 head for 2014.

Starting off 2015, NASS estimates there were 9.31 million milk cows on U.S. farms in January, up 9,000 head from December 2014 and 96,000 head more than in January 2014. Production per cow in the United States averaged 1,895 pounds in January, 19 pounds more than a year earlier.

In the 23 major states in January, there were 8.62 million cows, 8,000 head more than in December 2014 and 103,000 head more than in January 2014. Production per cow in the 23 major states averaged 1,918 pounds, 17 pounds more than a year earlier, NASS says.

California, the nation’s top milk-producing state, experienced a production decline in the January-to-January comparison, falling 2.6 percent from a year earlier to 3.53 billion pounds. The decline was driven both by a decline in cow numbers and a decline in production per cow. The state was home to 1.78 million cows in January, down 1,000 head from a month earlier and down 2,000 head from a year earlier. Production per cow in California averaged 1,985 pounds in January 2015, down 50 pounds from January 2014. In 2014, California produced 42.34 billion pounds of milk.

Wisconsin followed with 2.40 billion pounds of milk in January, up 3.4 percent from its production a year earlier. Wisconsin was home to 1.28 million cows in January, 1,000 head more than the previous month and up 5,000 head from a year earlier. Production per cow in January averaged 1,880 pounds, up 55 pounds from a year earlier. In 2014, Wisconsin produced 27.80 billion pounds of milk.

CMN


Tentative 5-year agreement
made on Western ports

February 27, 2015

SAN FRANCISCO — The 10-month-old contract dispute between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) neared resolution last week when leaders for the two sides reached a tentative agreement. The 29 affected ports have resumed normal operations, although the congestion caused by the slowdown could take months to clear up, stakeholders say.

PMA and ILWU announced a tentative agreement on a new 5-year contract covering workers at all 29 West Coast ports. The deal was reached with assistance from U.S. Secretary of Labor Tom Perez and Federal Mediation and Conciliation Service Deputy Director Scot Beckenbaugh. The parties will not be releasing details of the agreement at this time. The agreement is subject to ratification by both parties.

“After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry,” says PMA President James McKenna and ILWU President Robert McEllrath in a joint statement. “We are also pleased that our ports can now resume full operations.”

According to news report, Perez brokered a compromise on the issue of whether the union could fire arbitrators in workplace disputes, which had held up settlement on a contract after the sides agreed on other terms. Instead of a single arbitrator, a panel now will hear grievances.

The ongoing dispute has caused increased backups at ports and in warehouses as companies were running short of places to store product. The situation also threatened U.S. companies’ supply relations with overseas customers.

“We are extremely pleased with the news that the West Coast port labor dispute is on the verge of ending,” says Peter Friedmann, executive director of the Agriculture Transportation Coalition, which represents U.S. agriculture and forest products producers — including farmers, food processors, exporters and transportation and logistics providers — that includes the International Dairy Foods Association, Northwest Food Processors Association, Organic Trade Association and U.S. Dairy Export Council, among others.

Friedmann notes that even upon ratification, clearing up the port congestion will take months.
“And ultimately, if U.S. agriculture is to recover, we will need to see West Coast ports become more efficient, more productive than they were before the contract expired and the disruption initiated,” he adds.

Friedmann notes U.S. agriculture “has taken a beating” over the past 10 months as the disruption has denied many agriculture exports access to foreign markets.

“Perishables have been knocked out of markets, and our customers overseas have been forced to find other, non-U.S. sources for their meat, fruit, hay, cotton, rice, nuts, french fries, lumber and so much more,” he says. “There is nothing that we produce in agriculture here in the U.S. that cannot be sourced elsewhere in the world. If we don’t supply dependably and affordably, we lose that business.”

Darigold Inc., Seattle, has been affected by the ongoing dispute as hundreds of containers of product — including cheese, butter and milk powders — from the cooperative have been backed up for months, and warehouse space for storing products is running thin, says Dermot Carey, senior vice president of the ingredients division at Darigold. (See “West Coast port, warehouse congestion reaching critical point in stalled contract talks” in the Jan. 23, 2015, issue of Cheese Market News.)
Following the tentative agreement announcement, Darigold says it is happy the 5-year contract has been proposed for a vote.

However, Carey notes that Darigold likely won’t see normal shipping for a month or two, although it should see improvements in a few weeks.

Annie AcMoody, director of economic analysis for Western United Dairymen, says any step toward resolution of the dispute is a positive one.

“This is a disruption that has lasted way too long already, so this tentative agreement was certainly met with a sigh of relief,” AcMoody says. “We hope port traffic resumes as quickly as possible. Dairy product shipments have been held up, and the longer they are prevented from hitting their target customers overseas, the higher the possibility for competitors elsewhere to fill the need. With declining milk prices in the U.S., this is a concern.”

Friedmann says the Agriculture Transportation Coalition will continue to push PMA and ILWU to improve West Coast port productivity and efficiency, not just restore ports to pre-contract dispute levels, but to levels that will make the ports — and products coalition members ship through them — competitive with the best ports in the world.

“We are long ways from that,” he says. “U.S. agriculture can recover, but only with a collective effort. We will keep our fingers crossed that both labor and management have learned that their actions will determine if the U.S. will continue to be the world’s leading supplier of agriculture.”

CMN


Great Lakes Cheese launches organic cheese for store brand customers

By Kate Sander

HIRAM, Ohio — Great Lakes Cheese Co. Inc., a leading private label manufacturer, will enter the organic cheese business next month with nine organic cheese products for private label customers.

“Private label organic cheese is a growth area for our retail customers,” says Lisa Schechterman, product marketing manager, Great Lakes Cheese Co.

Sales of organic cheese are growing annually at a rate of 30 percent, Schechterman notes, and while the overall category is still quite small, that kind of growth potential is significant.

Adding organic cheese is important to Great Lakes Cheese so the company can help its retail customers compete as consumer interest zeros in on fresh and natural products. Great Lakes Cheese must step up to help its retail customers not only protect their core private label cheese business but also to grow their share of the cheese case, Schechterman says.

“It’s a small niche market, but the time is now,” Schechterman says, adding that consumers — particularly Millennials — are demanding more in terms of organic products.

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New DGAC report notes health
benefits associated with dairy

February 20, 2015

WASHINGTON — The 2015 Dietary Guidelines Advisory Committee has submitted its recommendations to Health and Human Services (HHS) Secretary Sylvia Burwell and Agriculture Secretary Tom Vilsack in order to inform the 2015 edition of the Dietary Guidelines for Americans. Overall, the dairy category received strong endorsements consistent with the 2010 guidelines, stakeholders say.

The secretaries on Thursday released the advisory committee’s recommendations report online, making it available for public review and comment. HHS and USDA will consider this report, along with input from other federal agencies and comments from the public, as they develop the 2015 Dietary Guidelines for Americans to be released later this year.

“For decades, the Dietary Guidelines for Americans have been at the core of our efforts to promote the health and well-being of American families,” Burwell and Vilsack said in a joint statement. “Now that the advisory committee has completed its recommendations, HHS and USDA will review this advisory report, along with comments from the public — including other experts — and input from other federal agencies as we begin the process of updating the guidelines.”

The International Dairy Foods Association (IDFA) and National Milk Producers Federation (NMPF) issued a joint statement on the release of the report Thursday.

“We appreciate the commitment of the Dietary Guidelines Advisory Committee (DGAC) to help Americans build healthy eating patterns,” say Connie Tipton, president and CEO, IDFA, and Jim Mulhern, president and CEO, NMPF.

“The essential role of dairy foods, as part of dietary patterns that foster good health outcomes, is supported by the totality of the science — lowfat and fat-free milk and dairy products are a core component of the healthy dietary patterns identified by the committee,” they say.

“The good news for people across the country is that milk, cheese and yogurt not only taste great, but also are nutrient-rich, affordable, readily available and versatile, making dairy foods realistic options to help people build healthier meal plans,” IDFA and NMPF say. “Milk is the No. 1 source of nine essential nutrients in the diets of America’s children — including calcium, vitamin D and potassium, three of the four nutrients the 2015 DGAC found to be under-consumed. Dairy foods’ nutrient package can be hard to replace with other foods.”

IDFA notes the report acknowledges dairy’s health benefits, stating, “Consumption of dairy foods provides numerous health benefits, including lower risk of diabetes, metabolic syndrome, cardiovascular disease and obesity.” While no recommendations were included for the number of servings of dairy products, the report reinforces the importance of dairy in a healthy diet, which included vegetarian and Mediterranean eating patterns.

IDFA believes USDA likely will continue policies that emphasize and promote the consumption of lowfat and fat-free dairy, but it may move away from sugar-sweetened foods and products high in sodium. The report could have implications for cheese, yogurt and flavored milk, although the committee specifically noted that “sweetened flavored milks and yogurts contribute only 4 percent of total added sugars intake.”

The public may view the report and provide written comments at www.DietaryGuidelines.gov. The deadline for written comments is April 8. The public also will have an opportunity to offer oral comments at a public meeting March 24 in Bethesda, Md. Those interested in providing oral comments at the March 24 public meeting can register at www.DietaryGuidelines.gov. Capacity is limited, so participants will be accepted on a first-come, first-served basis.

The 14 experts who made up the 2015 Dietary Guidelines Advisory Committee are nationally recognized in the fields of nutrition, medicine and public health. The committee held seven public meetings over the past two years. The recommendations of the 2015 Dietary Guidelines Advisory Committee are non-binding and advisory to HHS and USDA as they draft the 2015 Dietary Guidelines for Americans.

IDFA and NMPF note they will provide science-based comments on the advisory report during the current public comment period and look forward to the release of the 2015 Dietary Guidelines for Americans policy document later this year.

CMN


Stakeholders voice concern
on progress of raw milk bills

February 20, 2015

CHEYENNE, Wyo. — The Wyoming Food Freedom Act, a bill that would exempt certain foods, including raw milk, from state license and inspection requirements, recently passed the Wyoming House of Representatives by a unanimous vote and cleared the state’s Senate agriculture committee. The bill is expected to be heard this week by the full Senate, and if passed, will be sent to the governor for signature.

Authored by Wyoming Rep. Tyler Lindholm, R-Sundance, the bill would allow the sale of homemade foods through farmers’ markets, ranches, farms and home-based producers directly to informed end consumers without any licensure, permitting, certification, inspection, packaging or labeling requirements by the state. The food would only be for home consumption and could not involve the sale of any meat products except for poultry.

“This law will take local foods off the black market,” Lindholm says. “It will no longer be illegal to buy a lemon meringue pie from your neighbor or a jar of milk from your local farm.”

In a statement on his website, Lindholm says resolving the issue of “food freedom” will allow families to decide what’s best for their children and be a tremendous benefit to agri-business through opportunities such as value-added products.

Currently, the sale of raw milk in stores or from the farm is not allowed in Wyoming, though cow/goat shares are allowed.

In Virginia, similar legislation that would exempt certain home- and farm-produced foods from state regulations also is being considered by the state’s House of Representatives.

West Virginia’s Senate this week is considering a more restrictive bill that proposes to allow herd sharing as a means for consumers to acquire raw milk. The Senate held its first reading of the bill Thursday and its second reading today. If passed, the bill will be sent to the state’s House for consideration.

Senate Bill 30, which is sponsored by West Virginia Sen. Daniel Hall, R-Wyoming, was amended this week to require physicians to report any disease related to consumption of raw milk to the local health department. It also would require shared animal ownership agreements to include a written document acknowledging the inherent dangers of consuming raw milk and agreeing not to distribute raw milk, and require reporting of herd-sharing agreements to the state’s commissioner of agriculture and commissioner of Bureau for Public Health. Additionally, it would require the herd seller to meet animal health and testing requirements established by the state veterinarian.

Meanwhile, South Dakota’s Senate late last month passed a bill that would move raw milk into its own licensing category, easing its sale to consumers in the state. The bill currently is moving through the state’s House. Selling raw milk to consumers is legal in South Dakota under an exemption to current dairy laws.

The International Dairy Foods Association (IDFA) and National Milk Producers Federation (NMPF) sent a letter to South Dakota legislators after the state Senate passage, urging them to oppose the bill. IDFA and NMPF say the bill would signal to consumers “that drinking unpasteurized milk is safe when, in fact, the opposite is true.”

The letter adds, “Another misleading claim is that testing or regulating the sale of raw milk will protect consumers from the risks of raw milk consumption. This is also unfounded. Product testing is not an adequate substitute and cannot ensure the same level of safety as pasteurization.”

IDFA and NMPF say they will continue efforts to urge South Dakota legislators to oppose the bill.

CMN


East Coast dairy industry
weathers winter storms

February 20, 2015

By Rena Archwamety

MADISON, Wis. — States up and down the East Coast faced a week of ice, snow and record-low temperatures, while several closed government offices and declared a state of emergency to prepare for the worst.

“This is not your typical North Carolina winter storm where the sunshine melts the snow and ice in a day or two,” Governor Pat McCrory said Tuesday when cautioning North Carolinians to be prepared for power outages and hazardous road conditions. “The extended low temperatures and black ice likely will make this a dangerous situations for several days. Our crews have been out in full force treating the roads, but there is not much you can do about black ice.”

Despite the challenges of icy roads and frigid temperatures, those in the dairy industry say business went on as usual.

“We had very little issues with the ice storm and cold. Of course, the care of animals is the No. 1 concern for our dairymen, who are working extra-long hours now,” says Steve Lathrop, dairy marketing specialist at the North Carolina Department of Agriculture and Consumer Services (NCDA&CS). “The big concern for us is the subzero and single-digit temperatures, which we’re not used to.”

Lathrop says he hasn’t seen many delays in milk transportation or any major issues on farms except for a few frozen water lines. He says wind chills down to -10 F are expected this week as record-cold temperatures continue. Typically, it’s around freezing at this time of year in North Carolina, he adds.
The National Weather Service has forecast another surge of arctic air for the end of this week, saying there are indications that this could be some of the coldest weather since the mid-1990s for some parts of the Southeast United States, Mid-Atlantic and central Appalachians.

Dairy Market News’ Fluid Milk and Cream Review this week said that milk production in the Mid-Atlantic is steady, as well as production in Central states. However, unseasonably colder weather has slowed field work that had started in the southern part of the Central region, which could lead to delays in planting. The northern part of this region also is dealing with snow and colder than normal temperatures. Winter storms in the east part of the Central region also led to delays in trucking.

While winter storms continue to wallop parts of the Northeast, Dairy Market News says contacts report that no major disruptions are occurring at manufacturing plants outside of areas heavily hit by the storm. This week’s report adds that winter storm Octavia, which consisted of both snow and ice, has crippled multiple milk distribution routes in the Southeast, and handlers reported a number of cases where roads were impossible to travel, prompting delays.

“Our impacts come with black ice,” says Sharon Stewart, director of the NCDA&CS Emergency Programs Division, adding that many farms worked to move feed early where appropriate, ahead of the storm.

“In some situations, they ran into ice trying to get their needs met,” she says. “We did get a transportation waiver and a state of emergency declaration. This helps with weight inspections and driver hours.”

In addition to slowing down roads, the winter weather also forced the Port of Virginia to close Tuesday in order to prepare for snow removal at the terminals. Port officials say snow accumulations on the high end of the forecast, combined with a crust of ice and very little melting, created challenges on Tuesday to the clearing operation. Slippery conditions also resulted in a slower pace of operations.

The Northeast continued to experience snowfall to record levels of accumulation, though none of the amounts have been much of a problem for milk transportation, says Doug DiMento, director of communications, Agri-Mark Inc. He notes that about another 2 feet of snow have fallen in Massachusetts since the late-January blizzard that dumped nearly 3 feet of snow in parts of the state at that time (see “East Coast blizzard forces adjustments for dairy sector” in the Jan. 30, 2015, issue of Cheese Market News).

“Milk is getting picked up, and highways are open,” DiMento says. We’re going to have record snowfall in February for Massachusetts and most of the Northeast states — record snowfall and record cold for February.”

He adds that this week’s weather has been affecting farm businesses more than plants and trucks.
“Milk is a liquid and is susceptible to freezing. Cold has caused some problems on farms,” he says. “Other than that, we are looking forward to spring!”

CMN


USDA projects long-term
milk production growth

February 20, 2015

WASHINGTON — Milk production is expected to rise through 2024, with a long-term upward trend in output per cow and favorable returns encouraging expansion of milk cow numbers through 2018, says USDA’s Economic Research Service (ERS) in the “USDA Agricultural Projections to 2014” report released last week.

The report provides projections for the agricultural sector to 2024. Projections cover agricultural commodities, agricultural trade and aggregate indicators of the sector, such as farm income. The projections are based on specific assumptions about macroeconomic conditions, policy, weather and international developments, with no domestic or external shocks to global agricultural markets. These projections were prepared during October through December 2014.

USDA says that in the near term, the agricultural sector will adjust to lower prices for most farm commodities. For crops, production response to lower prices will result in reduced acreage planted. In the livestock sector, lower feed costs will provide economic incentives for expansion.

Longer-term developments for global agriculture reflect steady world economic growth and continued global demand for biofuel feedstocks, which combine to support increases in consumption, trade, and prices of agricultural products. Thus, following reductions in 2015 and 2016, farm cash receipts grow through the remainder of the projection period, USDA says.

Although farm production expenses also increase beyond 2016, net farm income remains above its 2001-10 average, USDA adds. Similarly, the value of U.S. agricultural exports falls in 2015 due to lower crop prices but then rises over the rest of the projection period.

USDA says milk production is projected to continue rising over the projection period. Milk cow numbers are projected to rise through 2018 as high milk prices and lower feed costs provide favorable returns to producers. In later years, feed costs will begin to rise and milk cow numbers show year-to-year declines in 2020-24.

U.S. milk output per cow is projected to increase through the projection period, reflecting continued technological and genetic developments, USDA says. Domestic commercial use of dairy products increases faster than the growth in U.S. population over the next decade.

USDA says the demand for cheese is expected to rise due to greater consumption of prepared foods and increased away-from-home eating. A slow decline in per capita consumption of fluid milk products is expected to continue, however.

USDA says the United States is expected to be well-positioned to expand exports of dairy products. Commercial U.S. dairy exports are projected to increase steadily over the next decade, reaching record levels on both a fat and a skim-solids basis. Production increases in other major dairy exporting countries are expected to lag growth in global import demand.

USDA says farm-level milk prices are projected to decline through 2018 as lower feed costs encourage increased production. Prices are expected to remain flat in 2019 and 2020 and then gradually rise over the rest of the projection period as production gains slow. Declines in real prices will largely reflect efficiency gains in production, which result from technological improvements and consolidation in the sector.

Meanwhile, the value of U.S. agricultural exports is expected to decline in 2015 from the record high of 2014, as prices for major field crops fall from recent highs, USDA says. Agricultural exports then rise through the remainder of the projection period because of sustained global economic growth, strengthening agricultural demand, and a continuing low-valued U.S. dollar. Domestic economic growth is expected to boost demand for U.S. agricultural imports.

USDA says prices for many crops are projected to initially fall, reducing the value of U.S. agricultural exports in 2015. Agricultural export values are then projected to grow over the rest of the decade and surpass the 2014 record. World economic growth, particularly sustained relatively high growth in developing countries, will provide a foundation for increases in global food demand, trade and U.S. agricultural exports. Continued global demand for biofuel feedstocks also will contribute to rising commodity prices and the projected gains in export values.

In addition, although the U.S. dollar is projected to strengthen somewhat, its continued low value after the depreciation of 2002-11 remains an important factor underlying longer-term gains in U.S. export values, USDA says.

USDA says exports of high-value products (HVP) are projected to grow to nearly 73 percent of the value of total U.S. agricultural exports by 2024. Much of the growth in HVP exports is expected to be in animal products and horticultural products.

Meanwhile, U.S. agricultural import values rise throughout the projection period to almost $165 billion by 2024, up from $116 in 2015, USDA says. These increases are boosted by expected gains in U.S. consumer incomes and demand for a large variety of foods. Strong growth in horticultural imports is assumed to continue, contributing about half of the overall increase in agricultural imports in the projection period.

USDA notes that with the value of U.S. exports initially falling, the agricultural trade balance is expected to decline from 2014’s record high of $43.3 billion to $27.5 billion in 2015. The agricultural trade surplus then falls marginally over the rest of the projection period to $23.5 billion in 2024.

To view the report, visit http://ers.usda.gov/publications/oce-usda-agricultural-projections/oce151.aspx.

CMN


U.S. dairy industry reacts to
idea of California federal order

February 13, 2015

WASHINGTON — U.S. dairy industry stakeholders were abuzz this week over the idea of California joining the federal milk marketing order (FMMO) after the state’s three largest cooperatives late last week submitted a joint proposal to begin operating under a FMMO.

California Dairies Inc. (CDI), Dairy Farmers of America Inc. (DFA) and Land O’Lakes Inc. on Feb. 5 petitioned USDA to hold a hearing to consider establishing a FMMO for California.

Under existing regulations, California dairy farmers operate under statewide milk pricing plans. The majority of farmers in other states operate under a FMMO, which provides uniform dairy prices for milk based on market prices.

• The proposal

Under proposed federal order language submitted by the cooperatives:

• California would have the same pricing formulas/system as all other federal orders for all classes of milk.

• The California quota program would continue as it is today, providing a monthly payment above the blend price to the owners of the quota.

• The transportation and fortification subsidy programs — both currently part of the California system — would continue under the proposed California federal order.

• All California plants purchasing milk from California Grade A dairy producers would be pool plants. Voluntary depooling of any class of milk would not be permitted.

• All dairy producers throughout California would receive the same blend price (notwithstanding the quota payments received by quota-holders), just as all California producers currently receive the same overbase price.

In their request for a hearing, CDI, DFA and Land O’Lakes note that if California’s milk producers adopt a federal order, the California order would be the largest federal order pool with a monthly average volume of well over 3.4 billion pounds, eclipsing Federal Order 30’s (Upper Midwest Order) average 2014 monthly pool volume of 2.7 billion pounds.

In terms of Class I volume, it would be the third-largest of the order behind Federal Order 1 (Northeast Marketing Order), approximately 755 million pounds, and Federal Order 33 (Mideast Marketing Order), approximately 517 million pounds, with an estimated monthly volume averaging 452 million pounds, the proposal says.

“In spite of its significance nationally, California has been the most important region in the country which has not been part of the FMMO system,” the proposal says.

For many decade the California Department of Food and Agriculture (CDFA) has administered a state milk marketing order that reasonably balanced industry interests, but in recent years, national uniformity of manufacturing milk values and broad regional marketing order marketwide pools have been established, the proposal notes.

Meanwhile, “the California state system has not adapted, leading to market conditions that have become increasingly difficult for California dairy farmers and the operation of the cooperatives they have built,” the proposal says.

The failure of California regulations to establish minimum prices for California producers which reflect national values for classified milk uses has cost California dairy farmers more than $1.5 billion since 2010, according to published industry estimates, the proposal continues.

“Therefore, the cooperatives and their members, representing the overwhelming majority of dairy farmers in California, are bringing this petition for a FMMO in California,” the co-ops say.
The proposal notes that the U.S. Congress in 2014 provided a necessary prerequisite for this request when it reauthorized the language in the 1996 Farm Bill which allows USDA to promulgate a California FMMO while retaining the California state quota program.

“That congressional reauthorization makes clear that a California FMMO will have all the benefits and characteristics of the 10 FMMOs, while maintaining the unique California system of sharing milk sales revenues through the state quota program,” the proposal says. “The cooperatives’ dairy farmers members have carefully studied the operations and impacts of an FMMO and have concluded that a California FMMO is imperative in order for them to have an opportunity to achieve returns that are on parity with those of other dairy farm enterprises in the country.”

• Industry reaction

Several producer groups were cautiously optimistic following the announcement of the proposal submission and hearing request.

Rob Vandenheuvel, general manager of the Milk Producers Council (MPC), notes that assuming USDA does schedule a hearing on the issue, it will be a lengthy process that includes many days or weeks of hearings and won’t likely conclude until sometime in 2016.

“While that feels like a very long time away, producers should nonetheless be very encouraged that this process is underway and that we will finally have a chance to consider a much-needed alternative to the California state system that may have worked well for many years but has refused to make the changes needed to provide a fair price for the milk you produce,” Vandenheuvel says in his weekly MPC member newsletter. “Producers will never get the $1.66 billion back we have lost due to the California discount, but this week marks the first step toward an alternative that can finally put an end to it.”

Western United Dairymen (WUD) says that, in the spirit of cooperation and the belief that the California dairy industry is much more effective when united, WUD is moving forward in support of thoughtful discussion to improve the milk pricing system.

“It’s not an easy fix by any means, but our team is working closely with other industry partners to take the right steps while also continuing to work on state pricing in the mean time,” says Tom Barcellos, president, WUD.

Following the announcement, Joe Augusto, president, California Dairy Campaign (CDC), commended the three cooperatives for introducing the proposal.

“We commend CDI, DFA and Land O’Lakes for working together to introduce a federal order proposal that will restore equity to dairy producer pricing in California,” Augusto says.
Augusto notes that more than 500 dairies have gone out of business since 2007, amounting to a more than 25 percent drop in the number of California dairies.

“For far too long, California dairy farmers have been underpaid compared to dairy farmers in the FMMO system, costing California dairy farm families more than $1.5 billion,” he says. “Given the mounting losses that dairy producers continue to suffer due to the failure of our state system to pay a fair price, now is the time for California to join the FMMO system so our prices are brought in line with prices paid around the country.”

However, David Ahlem chief operating officer for Hilmar Cheese Co., cautioned that creating a FMMO in California does not guarantee higher payouts for producers.

“The long and costly process will only perpetuate the regulatory uncertainty that has plagued California for the past several years,” Ahlem says. “Efforts should be focused on reforms that incentivize investment and value creation. Regulated milk pricing schemes only distract from real value creation and delay market-oriented investments that are needed to increase dairy producers’ milk prices and keep California’s dairy industry competitive in the future.”

Rachel Kaldor, executive director of the Dairy Institute of California, says that while the Dairy Institute does not have an official position on the proposal, the institute and its members expect to be active participants in the process as it moves forward.

“Even while this multi-year process unfolds, we remain hopeful that California dairy producers and processors have opportunities to work toward mutually positive improvements of our state’s dairy program,” Kaldor says.

• Hearing, request for comments

USDA has not yet determined whether to conduct a hearing. Before deciding if a hearing will be held, USDA is requesting additional proposals regarding the provisions of a potential California FMMO.

USDA requests that additional proposals be submitted electronically to AMS Dairy Programs at amsdairycomments@ams.usda.gov, or mail to Deputy Administrator, USDA/AMS/Dairy Programs, STOP 0231, Room 2971, 1400 Independence Ave., S.W., Washington, DC 20250-0225. Proposals must be received by April 10, 2015.

USDA says submissions should describe the disorderly marketing conditions the proposal is intended to address and should explain how the proposal would help establish and maintain orderly marketing conditions and be in the public interest.

Information about current industry practices and the anticipated effect of the proposal on dairy farmers, handlers and consumers should be included, USDA adds. This information will be evaluated to determine if the proposal should be considered at a hearing.

Proposals amending existing FMMOs will not be accepted in conjunction with this invitation, USDA notes.

Following an internal analysis of the proposals received, USDA will decide whether a hearing will be held.

USDA says it plans to conduct a series of public outreach meetings throughout California in early May. Information regarding these meetings will be released soon.

To view the California cooperatives’ proposal and USDA’s request for additional proposals, visit www.ams.usda.gov/AMSv1.0/CAOrder.

For questions concerning the documents, contact William Francis, Order Formulation and Enforcement Division, 202-720-7183 or William.francis@ams.usda.gov.

CMN


Organic industry prepares for
organic check-off proposal

February 13, 2015

By Rena Archwamety

WASHINGTON — The U.S. organic industry is considering a first-of-its-kind organic check-off program, the Organic Research and Promotion Program (ORPP), that would help fund consumer education and marketing for organic products, as well as help fund research and draw new farmers into organic production.

While there currently are 22 national check-off programs, all are commodity-specific and benefit conventional farmers and processors more than those in organic, according to some industry members.

“While the conventional check-off promotes and researches milk, it does not research organic milk and does not promote organic milk,” says Perry Clutts, organic dairy farmer and owner of Pleasantview Farm, Circleville, Ohio. “Organic milk is different from regular milk — there is a law that tells us there is a difference. It’s governed by the National Organic Program. There are clear rules that state the difference in what it takes to be organic, so the main thing that the conventional check-off does not do for organic is to establish that difference.”

In December, USDA announced a proposal to exempt more organic farmers and handlers from paying into conventional commodity check-off programs, as directed by the 2014 Farm Bill. Currently, the exemption only applies to entities that solely produce, handle, market or import products that are certified 100 percent organic. (See “USDA proposes extension of organic assessment exemptions administered by AMS” in the Dec. 19, 2014, issue of Cheese Market News.) This could free up an extra $13.6 million for organic stakeholders to invest back into the organic industry. The comment deadline on this proposal has been extended to Feb. 17.

The 2014 Farm Bill also authorizes USDA to consider and hold a vote on an organic research and promotion check-off program if the organic sector submits an official proposal.

The Organic Trade Association (OTA) has been engaged in an extensive conversation with the organic community on such a program for more than three years now, says Laura Batcha, executive director and CEO, OTA. The association hosted six webinars and 20 town hall meetings across the country in 2012 and 2013. Three panel debates were held in Vermont, Washington and Wisconsin. Last March, OTA hosted a panel at Natural Products Expo West in Anaheim, Calif. In late spring and summer of 2014, OTA engaged in direct outreach to organic certificate holders across the United States through a direct mail brochure and postcards with information on the emerging framework for an organic research and promotion order, as well as follow-up phone surveys.

“While there are many specific questions about the proposed check-off, we are finding that the more information people get, the more supportive they are,” Batcha says. “The feedback OTA has received from organic stakeholders demonstrates an overwhelming consensus on the need for public education/promotion and research to support organic food, fiber and farming.”

She says organic stakeholders want to see promotion and research programs that will provide consumer education about the benefits of organic, provide on-farm and regional research solutions for organic producers, and ultimately increase the number of organic farmers.

Clutts says as an organic dairy farmer, he feels the ORPP could help most by providing research for organic systems.

“While we have some tools that allow us to keep animals healthy, there are certain areas in agriculture that could use help to make farmers more efficient and productive,” he says. “The money spent on organic research is a fraction of what is spent on conventional research.”

While Clutts is supportive of an organic checkoff, other producers have expressed concerns based on their previous experiences with check-offs.

“The main concerns of farmers that I hear is fund mismanagement,” Clutts says. “This issue has come up in all check-off discussions. That is why there is a 15-percent cap on administration for the life of the program. Some feel that if it is created, it will go on forever. That is why there is a mandatory referendum at seven years to make sure that it is working as intended.”

The Northeast Organic Dairy Producers Alliance (NODPA), which represents 836 organic dairy farmers in the Eastern United States, supports the exemption of all organically certified operations from paying into federal mandatory check-off programs. It also is opposed to setting up an organic check-off.

“The nature of the existing commodity programs makes it impossible for research and promotions to support the unique needs of organic production which is under 5 percent of total agricultural production,” say Liz Bawden, NODPA board chair and New York organic dairy farmer, and Ed Maltby, NODPA executive director, in comments submitted to USDA on the exemption of organic products from check-off programs. “Products produced under the USDA National Organic Program require very specific research and marketing, a high percentage of which is done by farmers and handlers direct to consumers or by research on their own farms.”

Earlier this month, The Cornucopia Institute, a nonprofit that supports organic, sustainable and family farming, issued a news release criticizing OTA’s efforts to develop and promote an organic check-off.

“It’s a hard sell because professional agriculturalists have plenty of experience with mandatory check-offs in other commodities where university research has illustrated that when there has been any economic value at all it has accrued to processors rather than farmers,” says Mark A. Kastel, senior farm policy analyst at The Cornucopia Institute.

Clutts, however, sees a check-off that supports organic research as a benefit to producers as well.
“Research helps present farmers reach higher potentials and it also gives confidence to potential organic farmers to transition,” he says. “We need more organic acres to help meet the demand of consumers. Organic products need to be available so that they will continue to purchase our products. Organic check-off funds can help not only promote growth at the retail level, but also promote growth at the production level so that those of us that are grain buyers do not have to rely on imports to meet the demand.”

Organic dairy currently is the second-biggest category of organic foods sold, behind organic fruits and vegetables. For dairy products, Batcha says an organic check-off program also could help educate consumers.

“A successful organic check-off program would clear up consumer misunderstanding about the various food labels in the grocery aisle and educate consumers about the organic label on organic dairy and cheese,” she says.

Batcha says the organic industry needs to act collectively to ensure its future because it can accomplish more collectively than individually. She adds the structure of the check-off might be the same as other check-off programs, but the assessment structure would differ. The assessment would be more broad and shallow than commodity check-off assessments, with all organic certificate holders throughout the supply chain paying into the program.

The OTA in December approved that it move ahead with the petition to USDA for an organic checkoff, acting on behalf of the organic industry.

“OTA is continuing to actively seek and collect feedback from organic stakeholders on an organic check-off program and is structuring a proposal to submit to USDA for its review,” Batcha says. “If USDA decides to move ahead with the proposal, it will ultimately be voted on by certified organic stakeholders. OTA will continue to engage and educate organic stakeholders about the check-off and how it would benefit their individual operations and the organic industry as a whole.”

CMN


U.S. West Coast ports undergo partial shutdown

February 13, 2015

SAN FRANCISCO — Several West Coast ports were effectively closed to cargo freighters on Thursday for the second time in less than a week under a partial shutdown imposed by shipping lines and terminal operators, says the International Longshore and Warehouse Union (ILWU). The shutdowns are part of an escalating labor dispute between the Pacific Maritime Association (PMA) and ILWU.

“Today, the Pacific Maritime Association, a consortium of international corporations, informed the International Longshore and Warehouse Union that ships will not be worked at West Coast ports four of the next five days,” said a statement issued by ILWU on Wednesday. “This action marks the second time in less than a week that employers have idled vessels.”

ILWU says the same group of companies also canceled a negotiating session scheduled for Wednesday with ILWU’s Negotiating Committee. ILWU claims the employers have not made themselves available to negotiate since last week.

“This is an effort by the employers to put economic pressure on our members and to gain leverage in contract talks,” says Robert McEllrath, president, ILWU. “The union is standing by ready to negotiate, as we have been for the past several days.”

In a release issued on Wednesday, PMA says that in light of ongoing and costly ILWU slowdowns, PMA members will temporarily suspend premium-day weekend and holiday vessel operations on four upcoming dates, while yard, gate and rail operations will continue at terminal operators’ discretion. In Southern California, terminal operators will expand daytime vessel operations on non-holiday weekends.

“Last week, PMA made a comprehensive contract offer designed to bring these talks to a conclusion,” says Wade Gates, PMA spokesman. “The ILWU responded with demands they knew we could not meet and continued slowdowns that will soon bring West Coast ports to gridlock. What they’re doing amounts to a strike with pay, and we will reduce the extend to which we pay premium rates for such a strike.” (For more on the ongoing issue and PMA offer, see “With threat of port closure, PMA makes offer to ILWU” in last week’s issue.)

The four dates affected by the suspension of vessel operations are Feb. 12, and Feb. 14-16.

Meanwhile, the U.S. Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security held a hearing this week on U.S. ports titled “Keeping Goods Moving.” However, according to the International Dairy Foods Association (IDFA), the focus of the hearing was instead on how goods are not moving at all — having a negative impact on the transportation supply chain — due to the labor negotiations affecting West Coast ports that have dragged on for more than nine months with 29 ports first shut down on Feb. 7 and 8.

All ports reopened this week before the latest closure announcement, but the stand-off is posing a threat to U.S. agricultural exports, including dairy, IDFA notes.

Last November, IDFA joined 60 business organizations in signing a letter to President Barack Obama urging him to “use all tools available to the federal government” to restore the ports to full operation while negotiations continue.

Agriculture industry members, including dairy businesses, have been experiencing delays of two to three weeks on chilled products because of backups at West Coast ports, including Long Beach and Los Angeles, two of the busiest in the country.

“We need to explore the policy options to support port growth and future volumes of freight to keep goods moving,” Subcommittee Chair Deb Fischer, R-Neb., said during the hearing, IDFA says.

Four witnesses were called to testify: Norman Bessac, vice president of international Sales for Cargill; Katie Farmer, vice president for consumer products for BNSF Railway; Walter Kemmsies, chief economist for Moffat & Nicholo; and John Greuling, a board member for the Coalition for America’s Gateways and Trade Corridors.

“Any time you disappoint a customer, it takes time to get their trust back,” Cargill’s Bessac testified, adding that some customers have already started to look elsewhere for goods. “With this delay, our Asian customers cannot count on a dependable supply of U.S. beef and pork, so they have started to cancel orders and are looking to suppliers in Chile, Australia and the European Union to meet their needs.”

CMN


USDA lowers 2015 milk production
forecast in report

February 13, 2015

WASHINGTON — The U.S. dairy herd may be growing — USDA’s “Cattle’ report estimates dairy replacement heifers expected to calve during 2015 are up about 1 percent from a year ago, while the number of milk cows on Jan. 1, 2015, was 1 percent above 2014 and the highest since 2009 — but slower growth in output per cow is more than offsetting faster herd expansion, USDA said this week in its “World Agricultural Supply and Demand Estimates” (WASDE) report.

Because of this slower growth in per-cow production, USDA lowered its 2015 milk production forecast to 211.5 billion pounds in 2015, down 200 million pounds from last month’s forecast. 2014 U.S. milk production totaled 206.0 billion pounds.

In the same WASDE report, USDA ups its product price forecasts for butter and whey due to strong demand and price strength to date. Butter now is forecast to average in the $1.655-$1.755 per pound range this year, up from last month’s forecast of $1.600-$1.710. Dry whey is forecast to average $0.560-$0.590, up from $0.550-0.580 in last month’s report.

The nonfat dry milk (NDM) price forecast is lowered from $1.270-$1.330 last month to $1.185-$1.245 this month as strong competition in export markets is expected to persist during the first half of 2015, USDA says.

The mid-point of the cheese price forecast is unchanged but the range is narrowed to $1.595-$1.665.

The Class III price forecast is increased on higher prices to $16.30-$17.00 per hundredweight. The Class IV price forecast is lowered to $15.10-$15.90 due to the lower NDM forecast more than offsetting a higher butter price forecast.

The 2015 all-milk price forecast now is $17.40-$18.10, down from $17.75-$18.55 in last month’s report.

CMN


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Today's Cheese Spot Trading
March 5, 2015


Barrels: $1.4950 (+1/4)
Blocks: $1.5600 (+1)


Click here for more market activity
Cheese Production
U.S. Total Dec.
1,003.934 mil. lbs.


Milk Production
23 State Total Jan.
16.527 bil. lbs.

Guest Columnist

Maximize your company’s value

Bob Wolter, CBS-Global.

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