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CDFA requests emergency hearing to review whey formula
Mielke Market Report
The California Department Food of Agriculture (CDFA) released a joint petition on Nov. 5 from Land O’Lakes, California Dairies, and Dairy Farmers of America Western Council requesting an emergency hearing to review the whey valuation in the Class 4b milk price formula. The request is for a 12-month change to the whey portion of the formula to increase the dry whey scale to “represent the full value of whey as contained in the federal class III pricing formula.” CDFA has 15 days to respond to the petition.

And, while we’re in California; Daily Dairy Report Editor Mary Ledman reported in her audio Daily Dairy Discussion on her website that lower milk production in California resulted in lower cheese production. 

USDA reports that California milk production totaled 3.18 billion pounds in September, down 3.9 percent, or 128 million pounds, versus last year. California cheese production took the brunt of the state’s lower milk production. California cheese production at 170.1 million pounds was down 10.9 million pounds from September 2011. In other words, 85 percent of the decrease in California’s milk production translated into lower cheese production. 

Checking the latest salvo in the war out west; Dairy Profit Weekly (DPW) reports that things “remain cloudy.” In a faxed letter on Nov. 13, the California Department of Food & Agriculture (CDFA) informed three dairy producer organization their petition for an emergency hearing to consider changes to the state’s Class 4b milk pricing formula apparently can’t be considered due to “language technicalities.”

In the letter, Kevin Masuhara, director of CDFA’s Division of Marketing Services, told leaders of petitioning organizations, California Dairies, Inc. (CDI), Dairy Farmers of America Western Area (DFA) and Land O’Lakes, Inc. (LOL), “as submitted, the petition fails to set forth the Secretary’s authority to take the action requested. In the absence of such a statement, it cannot determine if the petitioners are proceeding under the discretionary hearing procedure or the mandatory one set forth” (in the California Code of regulations). “The department will evaluate any future resubmissions of the petition in accordance with the provisions of the applicable regulatory procedures.”

CDI, DFA and LOL submitted the petition on Nov. 2, requesting a temporary modification to the sliding scale for dry whey prices used to determine California’s Class 4b price. 

Supporting the call for a hearing were Western United Dairymen (WUD), Alfred Soares Dairy, California Dairy Women, Lorinda Dairy, and the California Dairy Campaign. The state’s largest processor organization, Dairy Institute of California, Hilmar Cheese Co. and Los Altos Food Products, Incorporated called on CDFA to deny the hearing request. Details are posted at www.cdfa.ca.gov/
dairy/uploader/postings/petitions/

USDA raises milk estimate
The USDA raised its 2012 milk production estimate in its latest World Agricultural Supply and Demand Estimates report issued Friday morning due to higher estimated milk per cow in third quarter. Production forecasts for the remainder of 2012 and 2013 were unchanged from last month. Look for this year’s output to hit 199.7 billion pounds, up 100 million pounds from last month’s issue and compares to 196.2 billion in 2011 and 192.8 billion in 2010. 2013 output remained at 199.7 billion pounds.
Fat basis exports in both years were reduced largely on lower butterfat exports. Skim solids exports were raised largely due to whey protein product sales.

Cheese prices were forecast lower in 2012, but unchanged for 2013. Butter prices for both 2012 and 2013 were lowered as butter stocks were forecast higher than last month. Nonfat dry milk was forecast higher for both years. The whey price forecast was unchanged for 2012 but was raised for 2013. 

The 2012 Class III milk price was unchanged from last month’s estimate, at $17.55-$17.65 per cwt., down from $18.37 in 2011, but compares to $14.41 in 2010. The 2013 projection was raised a dime on both ends of the range and is now expected to averaged $17.85-$18.75.

The Class IV price forecast was lower on weaker butter prices. It’s projected at $15.95-$16.15, down a nickel from last month’s estimate. The 2013 estimate was put at $16.90-$17.90, up 15 cents on both ends from a month ago. Higher whey and nonfat dry milk prices in 2013 push the Class III and Class IV price forecasts higher, according to USDA.

Hurricane Sandy had little effect on cheese plants in the Northeast, according to USDA’s Dairy Market News (DMN). Most plants received near normal milk intake volumes with only minor, periodic power outages. Nationwide, recent CME price gyrations, coupled with price levels, were causing some buyers to change ordering plans as well as some plants to modify production schedules. 

Readers with questions or comments for Lee Mielke may write to him in care of this publication.
11/27/2012