California drought affecting Pacific NW organic dairy

Even though the California drought does not stretch up into Oregon and Washington it is having an impact on organic dairy producers in the Pacific Northwest.  Washington and Oregon do not raise quite enough organic hay to meet demand, organic dairy producers are finding they have to bid against California organic dairy farmers for the hay.  Dairy Market News reports organic hay is getting up to $350 a ton, organic feed corn is near $750 per ton.

As a result, Washington and Oregaon producers are finding that like California producers, the price they get for organic milk is just not enough to cover those feed prices.  DMN says there are currently about 40 organic dairy producers in Washington, 1 recently converted to conventional, another is planning to sell-out and 2 more say they will be out of organic production by fall.  Adding to the temptation, organic cows going to slaughter are bringing up to $1.96 a pound not to mention what conventional herds will pay for milking cows.  There are indications larger organic dairies in Texas and other parts of the south are looking to expand to pick-up the slack.

Emmi Roth to expand New York yogurt capacity

Another expansion of the yogurt business in New York State.  Emmi Roth USA will expand operations in Orangeburg and Penn Yan, New York, to grow its market share in the U.S.  The Penn Yan facility produces Siggi’s yogurt as well as bag-in-box milk and creamers for foodservice dispensers.  Cheese Market News says the $11.6 million, multi-year investment will result in 50 new positions.  The State of New York is providing up to $400,000 in performance-based tax credits which are tied directly to job creation and investment commitments.

Property taxes are big topic in Nebraska

Property taxes being paid on farm and ranch land in Nebraska continue to skyrocket.  Laura Field, director of legislative affairs for Nebraska Cattlemen, says those taxes increased an average of 29 percent statewide over the past year.

Field says her group will resume its push for property tax relief in the 2015 legislative session. That task will be made more interesting with the election of a new governor and as many as 17 new state legislators this fall.

“We’ll have a new governor for the first time in ten years here in Nebraska.  Both candidates who are running for governor have made statements about property tax relief, so I think it’s something that’s on the forefront of their agendas,” Field says, “and we’ll have 17 new senators—at a minimum—and I fully expect that we’ll see some ideas come forward with those folks when they get down to the legislature.”

A move to lower the value of ag land for taxation purposes, from the current rate of 75 percent of market value to 65 percent of market, value failed to gain much traction in the last legislative session.  Field says that plan could resurface in 2015, but she expects some new proposals as well.

“I think we’ll see some discussion around should there be some caps on ag land valuations, how much can they increase every year, should they only be allowed to increase a certain amount,” she says, “and I think that we’ll see some more discussion on money that’s put into the property tax credit cash fund.  There was some additional money added this year and I think that’s a really popular idea that will come back up as well.”

Field made those comments in an interview with Brownfield at a Nebraska Cattlemen “Road Trip” meeting in Wahoo.

AUDIO: Laura Field (4:03 MP3)

Cash cheese slips below $2

Cash cheese slipped below the $2 mark on the Chicago Mercantile Exchange on Thursday.  Barrels lost 3.5 cents, blocks down 5.25 cents on 8 sales and 1 uncovered offer.  Dairy Market News reports milk production and components are declining in the Central U.S. following seasonal trends.  Spot loads of milk are bringing up to $2 over Class, cream multiples are $1.25 to $1.43.

In the Northeast and Mid-Atlantic regions milk supplies are steady to heavy.  A decline in Class I demand has made more milk available for manufacturing despite seasonal production declines.

Mild weather has prompted some increased production in the Southeast, cows are more comfortable, pastures are good and farmers are reluctant to dry cows off at these prices.  Florida exported 35 loads this week.

Out West milk production is steady to seasonally lower.

The high milk prices are prompting dairy farmers to hang-on to their cows.  USDA reports dairy cow slaughter totaled 199,000 head in June, down 11,000 from May and 21,000 below June of last year.

For the first six months of 2014, nearly 1.4 million dairy cows have been sent to slaughter under federal inspection; 176,000 less than during the January-through-June period of 2013.  The U.S. dairy herd had nearly 9.27 million cows at the end of June, 64,000 more than at the end of last year.

Cash cheese mixed, butter higher

Cash cheese barrels slipped 3.75 cents on the Chicago Mercantile Exchange on Wednesday while blocks increased another penny.  A busy day with 9 loads sold, 6 barrels and 3 blocks.  Butter gained another 4 cents on 9 sales.  The monthly Cold Storage Report on Tuesday showing that butter stocks continue to decline and are just over half what they were a year ago.

Dairy Market News says cheese supplies are so tight in the Midwest, some manufacturers are telling customers they will have to reduce their orders for August deliveries.  There is no consensus reason as to why supplies are that tight, some say heavier demand, some say less cheese being made.  Milk supplies are flat-to-reduced and spot loads are hard to come by.

In the Northeast the cheese factories says milk intakes are strong but components are down.  Demand for cheese is steady to increasing.  Out west milk production is declining as the hot weather sets-in.  Domestic demand is good but export demand has slowed.

 

National Dairy Products Sales Report for the week ending July 19th; cash cheese blocks decreased 2.2 cents to average $2.01, barrels were 1.5 cents lower at $2.04.  Butter increased 5.6 cents from the previous week to average $2.37 per pound, nonfat dry milk 1.4 cents lower at $1.87 and dry whey decreased 0.1 cent at 68.7 cents per pound.

 

The Advanced Base Class I price for August is $23.87 up 85 cents from the previous month.  Base Skim Milk Price for Class I for August is $15.22 per hundredweight up 21 cents from the previous month.

Agropur buying Davisco

Canada’s largest dairy cooperative, Agropur is buying Davisco Foods International based in Minnesota.  The deal will double Agropur’s U.S. processing operations and increase its global milk intake by 50 percent.  Target close date is August 1st, 2014.

Headquartered in Le Sueur, Minnesota, the family-owned Davisco has 900 employees and processes 3.8 billion pounds of milk a year.  The acquisition includes Davisco cheese factories in Le Sueur, Lake Norden, South Dakota and Jerome, Idaho.  The ingredients plant at Nicollet, Minnesota, sales offices in Eden Prairie, Minnesota, Shanghai, Singapore and Geneva Switzerland along with distribution centers in Rotterdam, the Netherlands and Tianjin, China.

With headquarters in Quebec, Agropur Cooperative currently has sales of $3.8 billion annually handling more than 7.4 billion pounds of milk from 3,554 dairy producers in 32 plants across Canada and the U.S.  The company has cheese plants in Hull, Iowa; Preston, Minnesota and La Crosse, Little Chute, Luxemburg and Weyauwega, Wisconsin.

Earlier this month Agropur:

  • Reached an agreement to acquire the dairy and food distribution assets of Northumberland Dairy Cooperative of New Brunswick.  That co-op has annual sales of $67 million.
  • Purchased four Canadian dairy plants in Alberta, Manitoba and British Columbia from Sobey’s with over $400 million in annual revenues.

Butter and cheese stocks down

Monthly Cold Storage Report from USDA shows total cheese in the nation’s warehouses at the end of June 1.06 billion pounds.  Unchanged from the end of May but down 8 percent from June of 2013.  American cheese stocks totaled 657 million pounds, also unchanged from May and down 7 percent from a year ago.

Butter in cold storage totaled 186 million pounds on June 30th, down 3 percent from May and 42 percent less than on June 30, 2013.

 

 

U.S. milk production up 1.9% in June

U.S. milk production in June totaled 17.2 billion pounds up 1.9 percent from June of last year.  Production per cow averaged 1,863 and the dairy herd had 9.27 million cows.  Cow numbers not available for June of 2013 due to budget cuts.

Production in the 23 major dairy states up 2 percent from a year ago at 16.2 billion pounds.  There were 11,000 more cows in those states compared to last June and production per cow was 1,888; the highest production per cow for June since they started keeping track of this in 2003.  Of the 23 major dairy states, all but Ohio had an increase in production compared to a year ago.

For the first time this year, Wisconsin milk production was above year-ago levels at 2.3 billion pounds up 0.6 percent.  1.26 million cows produced an average 1,825 pounds of milk.  California milk production increased 1.7 percent to 3.5 billion pounds.  1.8 million cows in the Golden State produced an average 1,995 pounds of milk.

May milk production estimate was revised 25 million pounds higher to 18 billion pounds up 1.5 percent from May of 2013.

For the April-through-June quarter, U.S. milk production totaled 52.8 billion pounds up 1.6 percent compared to the second quarter of 2013.  The dairy herd averaged 9.25 million head up 39,000 from a year ago.

Read the full NASS report here:

Strong finish to the week in dairy markets

Cash cheese and butter increased again on Friday on the Chicago Mercantile Exchange.  Dairy Market News says milk production has slowed across the country from a combination of hot weather and seasonal declines.  Cheese plants report spot loads are available but hard to find.  Some are using condensed skim to increase vat yields.

It was a very busy week at the CME; 21 loads of barrels sold and 19 loads of blocks.  Barrels increased 8.25 cents, blocks added 5.75 cents, and butter is up 9.75 cents while nonfat dry milk decreased 4 cents.  Class III futures for July up 11 cents on the week, August up 63 cents, September is 48 cents higher and January is unchanged.

Another day, another increase in cheese and butter

Cash cheese barrels and blocks each adding 2 cents per pound and butter jumped 6 cents on the Chicago Mercantile Exchange on Thursday.  Despite declining global prices, the monthly Livestock, Dairy and Poultry Outlook from USDA says U.S. dairy market continues to be pushed by strong demand, tight supplies and no real indication that milk production is increasing dramatically.  In fact, the latest World Agricultural Supply and Demand Estimate reduced the projected milk production for this year slightly.  Of particular note, through May, the milk increases have been in the western states while the Midwest was seeing lower production compared to a year ago due to poor forage.  That is expected to change as this year’s first crop was very good.

The high milk prices and low feed prices are expected to spur an increase in cow numbers.  The U.S. herd is forecast to total more than 9.2 million head this year and more than 9.3 million next year.  Production per cow is expected to be 22,230 this year increasing to 22,730 in 2015.