These amendments, which were approved by producers, maintain the current 6.5 percent nonfat milk solid standard and incorporates an alternative 2.25 percent true milk protein criterion to determine whether a product meets the compositional standard for fluid milk products.

The new rule requires a milk product to have less than 2.25% protein, as well as less than 6.5% skim milk solids, in order to be exempted from Class I status on the basis of its skim solid composition. Previously, the product could be exempt with only a skim milk solids test below 6.5%. This closes a pricing loophole that encouraged some processors to formulate low-lactose milk products in order to get them priced as Class II products.

This rule also amends the fluid milk product definition to provide exemptions for drinkable yogurt products containing at least 20 percent yogurt (by weight), kefir, and products intended to be meal replacements. The decision clarifies how milk and milk-derived ingredients should be priced under all Federal milk marketing orders when used in fluid milk products.

Wisconsin total cheese production in July slipped 0.6 percent from a year ago to 221.7 million pounds. The Badger State saw a 2.6 percent increase in American cheese production to 73.7 million pounds, Cheddar output gained 3.3 percent to 56.4 million pounds while Italian production slipped 0.7 percent to 104 million pounds.

California total cheese production in July was 188.37 million pounds up 12.8 percent from a year ago. Italian type production in the Golden State jumped 16.8 percent to 116.17 million pounds while American production nudged 0.7 percent higher at 52.4 million pounds and Cheddar output dropped 9.1 percent to 27.3 million pounds.

Total cheese production in Idaho, 72.5 million pounds up 6 percent, New Mexico saw a 19.8 percent increase to 59.7 million pounds, New York slipped 1.4 percent to 58.6 million pounds and Minnesota lost 4.6 percent to 53 million pounds.

Total butter production in the U.S. in July was 111 million pounds, 2.9 percent less than last year. California saw a 10.8 percent increase to 41.646 million pounds but that was not enough to offset a 12.5 percent decline in the Atlantic Region and a 19.1 percent decline in the Central Region.

Other product production compared to a year ago:

• Nonfat dry milk, 132 million pounds down 1%
• Skim milk powder, 22.6 million pounds up 61.3%
• Dry whey, 87.5 million pounds, down 6.5%
• Lactose, 78.2 million pounds, up 27.8%
• Whey protein concentrate, 34.9 million pounds, down 0.8%
• Regular ice cream, 79 million gallons, down 6.3%
• Low fat ice cream, 41.2 million gallons, up 6.3%
• Sherbet, 4.64 million gallons, down 9.1%
• Frozen yogurt, 7.57 million gallons, down 4.6%

Read the full NASS report here:

For the first time in five months, prices were up at the Fonterra auction. Daily Dairy Report says anhydrous milk fat was up 9.5 percent from the August sale, skim milk powder was 15.8 percent higher and whole milk powder gained 18.8 percent from last month. The auction will now be held twice a month so the next sale will be September 15th.

Cooperatives Working Together (CWT) has accepted two export assistance bids to sell butter to customers in Europe and North Africa. One bid is from Land O’Lakes to sell 36 metric tons and once from CDI/Challenge for 96 metric tons.

Given current butter prices, some have questioned continuation of the export assistance program but CWT counters that the exports help producer milk prices in the short term and help cooperatives gain and maintain market share in the long run.

Since being reactivated on March 18th, CWT has assisted in the export of just under 42 million pounds of cheese and nearly 30 million pounds of butter and anhydrous milkfat to 23 countries.

The contributing factors remain: Class I demand is picking up for back-to-school, milk intakes are light east of the Rockies, ok in the West and cheese and powder plants are running reduced schedules. Dairy Market News says some cheese is coming out of storage to fill orders.

Commercial disappearance of dairy products during the first six months of the year totaled 95.9 billion pounds, 2.7 percent above the same period in 2009. Butter disappearance was up 2.1 percent, American cheese use up 0.3 percent, other cheese disappearance increased 4.8 percent, nonfat dry milk up 12 percent while fluid milk use declined 1.3 percent for the period.

Organic milk sales are increasing this year keeping supplies on the tight side but sufficient. The national weighted average advertised price for organic milk half gallons was $3.75, a 58-cent increase over two weeks ago and the highest price of 2010.

The California Department of Food and Agriculture reported the presence of listeria and another bacteria in cheese that was purchased at a California retailer, made by Morningland Dairy in Mountain View, Missouri. The samples were seized nearly two months ago (on June 30th) in California and Missouri officials were told of the results Thursday.

The Missouri Department of Agriculture says it’s working with the Missouri Department of Health and the U.S. Food and Drug Administration to determine where the cheese was distributed. The dairy makes several types of cheese made from raw cow’s milk and raw goat’s milk that is sold throughout the U.S.

Morningland Dairy officials are cooperating with authorities. There are no reports of any illnesses associated with the cheese.

Supplies are not quite as tight in the East although processors are paying a premium for spot loads. Out west, California milk intakes are running 3 to 6 percent ahead of year-ago levels however you must remember production was down a year ago in California. Plants in the Golden State are running steady but do have time to shut down for maintenance. Production is running above last year in the Pacific Northwest where supply is plentiful.

Tuls has the 4,400-cow Double Dutch Dairy at Shelby, Nebraska about 80 miles west of Omaha and is in the process of building another 5,400-head operation about five miles south of that.

Butter continues to be the big story gaining 20.75 cents in just the past week, the biggest weekly increase since the cash price hit $2.365 on April 14th of 2004. Given the current tight supply of cream, some think we may pass that price. Dairy Market News says retail sales are starting to slow down as price increases make their way to the grocery store shelves.

While overshadowed by butter, cash cheese continues to nudge higher on unfilled bids. Dairy Market News says while Western and Northeastern cheese plants are fine, Midwest cheese plants are running abbreviated schedules due to milk availability. Production has been down as a result of hot weather, Class I demand is picking up as bottlers gear up for back-to-school and some plants are finding it more profitable to sell cream than to make cheese.

According to the Foreign Ag Service, butter exports for the first six months of this year totaled 56.3 million pounds, 6.8 percent of total U.S. butter production for the period. Some are starting to question why CWT continues to offer export assistance on butter, over the next six months they will help ship nearly 30 million pounds of butter and anhydrous milk fat out of the country.

Speaking of exports, the International Dairy Foods Association says those just-announced retaliatory tariffs on some U.S. cheeses would have been a lot higher were it not for their action. IDFA senior group vice president Clay Hough tells Cheese Market News they learned several months ago that Mexico was contemplating a new list of targeted products and that dairy products would likely be on the new list. Hough says IDFA hired a consultant and tried to convince the Mexican government to keep cheese off the list. While that was unsuccessful, they did get the tariff reduced to 25 percent rather than the initially proposed 125 percent rate.