CWT accepts more export assistance bids
Cooperatives Working Together (CWT) accepted bids from four member organizations this week totaling 22.4 million pounds of cheese, butter, and anhydrous milk fat (AMF). Delivery will run from August through January.
CWT accepted one bid from Foremost Farms and three bids from Dairy Farmers of America for a total of 1,288 metric tons (2.84 million pounds) of Cheddar cheese to Europe, Africa, and South America. CWT also accepted one bid from Land O’Lakes, three bids from the Challenge Dairy Products subsidiary of California Dairies Inc., and six bids from Dairy Farmers of America for a total of 8,879 metric tons (19.6 million pounds) of butter and AMF to Europe, Central America, and the Middle East.
Since CWT reactivated the Export Assistance program in March 18, 2010, it has assisted in export sales totaling 18,616 metric tons of cheese to 23 countries on four continents and sales of butter and AMF totaling 10,593 metric tons to seven countries on three continents.
July base milk prices higher
There will be a little more in the milk check in August. The base milk prices for July production come in at $17.10 per hundredweight for Class II milk, up $1.09 from June and $6.23 above a year ago. Class III base is $13.74, up 12 cents from June and $3.99 more than July, 2009. The Class IV base price is $15.75, up 30 cents from June and $5.60 above a year ago. Component prices per pound for July: butterfat $1.8964; protein $2.0515; nonfat solids $1.0493; other solids $.17.
Daily Dairy Report notes fat tests for July estimated at 3.51 percent, the lowest level since 1998.
Preliminary Index of Prices Received by Farmers in July puts the all milk price at $16.00, up 50 cents from June and $4.70 above a year ago. The fluid grade price was up 50 cents to $16.00 and the manufacturing grade price was 70 cents higher than the previous month at $14.20.
The corn price was up 14 cents per bushel, soybeans were 34 cents higher while hay was down $2.00 per ton. That leaves income over feed for July at $9.07 per hundredweight, up 37 cents from June.
EPA seeks to extend spill plan compliance deadline
The U.S. Environmental Protection Agency (EPA) is proposing to extend the compliance date by one year for certain facilities subject to recent amendments to the Spill Prevention Control and Countermeasure (SPCC) rule.
The 1973 rule established requirements for facilities to prevent a discharge of oil into navigable waters or adjoining shorelines. Last year, EPA amended the SPCC rule to strengthen certain provisions. Regulated facilities are required to amend and implement these changes as part of their overall SPCC plans by November 10th of this year. The proposed change would extend the deadline for compliance to November 10, 2011.
The rule also applies to milk storage because milk contains animal fat which is classified as an oil. Farms that store below 10,000 gallons of milk could self certify their plan, whereas farms that store over 10,000 gallons of milk would have to have their plans certified by an engineer. The compliance date for milk containers would be one year after EPA finalizes a rule for these facilities.
The extension would not apply to oil drilling, production or workover facilities that are offshore or that have an offshore component. That compliance deadline remains November 10, 2010.
Comments on the proposed extension will be accepted for 15 days following publication in the Federal Register.
Read the EPA proposal here:
Heat still hindering milk production
After slipping a quarter-cent on Wednesday, cash cheese held stead on the Chicago Mercantile Exchange on Thursday. USDA Ag Marketing Service reports milk production continues to slip from heat and humidity as manufacturers are looking for loads. Some report spot prices $1.00 to $3.00 over market, some cheese makers seem to be trying to get out ahead of an expected big increase in the Class III price from July to August. Futures closes on Thursday with July at $13.74 and August at $14.92.
AMS says Florida manufacturers are scrambling to find milk to fill orders as several retail milk promotions started up. They are still shipping milk out of the Sunshine state but it dropped from 131 loads last week to 38 loads this week. Milk from Texas is moving into the Southeast to help make up for the decline in production there.
Meanwhile, production in the Southwest seems to have leveled off at what looks like the seasonal lows. Reporters in Arizona and New Mexico say cows seem to have gotten used to the weather although humidities are still high. The Pacific Northwest seems to be the only region where cows are comfortable and production is running above year-ago levels.
CWT expands export assistance program
Citing the fact the U.S. butter and anhydrous milkfat price is now above the world price, CWT has decided to offer the export assistance program for those two products in an effort to retain market share. As a result, CWT accepted four bids from Dairy Farmers of America and three bids from Land O’Lakes for 1,714 metric tons (3,778,724 pounds) of butter and AMF to Europe, the Caribbean, South America, and the Middle East. Delivery will take place from July through November.
CWT also accepted two bids from Dairy Farmers of America for 97 metric tons (213,848 pounds) of Cheddar cheese to Europe and Asia. This product will be delivered from August through November 2010.
Since CWT reactivated the Export Assistance program on March 18, 2010, it has assisted members in making export sales of Cheddar, Monterey Jack, and Gouda cheese totaling 17,330 metric tons (38.2 million pounds) to 23 countries on four continents.
More dairy replacements in the pipeline
Cash cheese prices held steady for the second day in a row on Friday. Barrels closed at $1.56 and blocks at $1.6025 on the Chicago Mercantile Exchange. Also for the second consecutive day, no bids unfilled; there were seven loads sold and one offer uncovered. Cash butter also held steady at $1.80 with no activity in the market.
USDA July 1 Cattle Inventory Report on Friday showing the nation’s dairy herd at 9.1 million head, down 1 percent from a year ago. The report shows an increase in dairy replacements in the pipeline, 4.05 million head as of the end of June, the most since 1994. That works out to 44.5 replacements for every 100 dairy cows in the milking line right now, last year that number was 42.9 replacements per 100.
Meanwhile, 214,000 dairy cows went to slaughter in June, 6,000 more than in May but 42,000 less than June of last year. National Ag Satistics Service reports dairy cow slaughter for the first six months of the year totaled 1.369 million head, 76,000 head less than the first half of 2009.
Has cash cheese found the top?
Have we found the top of the dairy market? For the first time in a long time, no unfilled bids on the Chicago Mercantile cash cheese market on Thursday. There were seven sales with prices holding steady, barrels at $1.56, and blocks at $1.6025.
June cold storage numbers out from the National Ag Statistics Service. Total cheese stocks continue to climb, 1 billion-26.6 million pounds in storage as of the end of June, up nearly 10 million from May and 39.2 million more than a year ago. All of the increase was in American type cheese stocks which increased 13.5 million from May to nearly 628.4 million pounds.
Butter stocks were down 7 percent from May and 25 percent below a year ago. Cash butter on the CME finally reached that $1.80 mark eliminating that one uncovered offer that has been out there for weeks.
Monthly Livestock, Dairy and Poultry Outlook from USDA projects that despite increases in production per cow and overall milk production estimates for this year and next, dairy product stocks are expected to decline as export demand picks up. Production is now estimated at 191.2 billion pounds this year and 193.5 billion next year.
Cheese prices are projected at $1.465 to $1495 this year, $1.59 to $1.62 in 2011. Butter prices are expected to average $1.53 o $1.59 this year, $1.40 to $1.53 next year. Nonfat dry milk $1.195 to $1.225 per pound in 2010, $1.235 to $1.305 in 2011. Whey prices are forecast to average 36.5 to 38.5 cents this year, 37.5 to 40.5 cents next year.
Class IV milk prices should be $14.65 to $15.05 in 2010, $14.40 to $15.50 in 2011. Class III average price projected to be $13.80 to $14.10 per hundred this year, $14.40 to $15.40 next year putting the all milk price at $15.80 to $16.10 this year, $15.90 to $16.90 in 2011.
U.S. milk production up 2.4 percent in June
Milk production in United States in June totaled 16.32 billion pounds, up 2.4 percent from a year ago. Production per cow increased 64 pounds to average 1,790 while the dairy herd slipped 108,000 head to 9.12 million cows. However, cow numbers were up 11,000 from May and 40,000 so far this year.
In the 23 major dairy states, production increased 2.7% from a year ago to 15.2 billion pounds. Production per cow was 67 pounds better at 1,816 and the dairy herd in those states decreased 87,000 head to 8.35 million cows.
California milk production in June totaled 3.397 billion pounds, up 3.5 percent from a year ago. The Golden State’s dairy herd lost 53,000 head to 1.75 million cows but production per cow increased 80 pounds to average 1,940. Daily Dairy Report notes California’s herd increased 1,000 cows from May to June, their first increase in more than two years.
Wisconsin milk production in June was 2.246 billion pounds, 5.1 percent above June of 2009. The Badger State dairy herd added 5,000 cows and production per cow increased 80 pounds to 1,780.
Of the 23 major dairy states, only three: Colorado, Texas and Missouri saw production decline compared to a year ago. Missouri had the biggest loss, down 5.4 percent thanks to a 9,000 cow decline in the dairy herd. This follows a 7.5 percent decrease in the Show Me State in May.
For the second quarter of the year, total U.S. milk production was 49.7 billion pounds, up 1.7 percent from the second quarter of 2009. The average number of cows was 9.11 million head, 151,000 cows less than the second quarter of last year. The average cow produced 180 pounds more milk in the April through June quarter.
Read the full NASS report here:
A good week for the cheese market
The cheese market continues to nudge higher as cheese production nudges lower as milk intakes and components decline. Cash cheese on the Chicago Mercantile Exchange finished the week with barrels at $1.525 and blocks $1.575. For the week, barrels gained 2.5 cents and blocks added 4.75 cents per pound. Class III futures were lower on Friday but the 2010 contracts were all higher for the week.
Hot, humid weather in the Midwest and East causing significant declines in milk production and components. Some fluid plants are running on reduced schedules. Dairy Market News says there is good demand for surplus milk and offerings are getting premiums of up to $3 above class usage.
On top of that, the Foreign Ag Service says U.S. cheese exports for January through May totaled 140.1 million pounds taking 3.3 percent of total U.S. cheese production and 55 percent more than the same period last year.
Cooperatives Working Together (CWT) accepted one bid from Dairy Farmers of America and three bids from Darigold for a total of 176 metric tons (388,014 pounds) of Cheddar cheese and Monterey Jack to Africa and Asia. The product will be delivered in July and August 2010.
Since CWT reactivated the Export Assistance program on March 18, 2010, it has assisted members in making export sales of Cheddar, Monterey Jack, and Gouda cheese totaling 17,271 metric tons (38.1 million pounds) to 22 countries on four continents.
China reduces minimum milk protein level
In an effort to reduce the temptation to use melamine, China is lowering the minimum protein requirement for raw milk from 2.95 percent to 2.8 percent. The deputy director of the Chinese National Institute of Nutrition and Food Safety tells Reuters the new standard is more realistic given how the quality of the feed commonly used in China can lead to low protein levels.
The high nitrogen level in melamine prompted producers to use the toxic chemical to make protein levels in milk appear higher than they actually were. That led to hundreds-of-thousands of illnesses and several child deaths in 2008. Officials had tightened food safety laws, made arrests and even executed two individuals in an effort to stop the practice but contaminated product has shown up again, most recently last week. Indications are processors are trying to sneak in contaminated product which should have been destroyed in 2008.
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