As House Agriculture Committee Chairman Mike Conaway (R-Texas) worked to secure 218 votes to move the House Farm Bill, the argument over SNAP work requirements still dominated the debate, according to Bob Gray, editor of the Northeast Dairy Farmers Cooperative newsletter.

“A number of SNAP recipients were reported to have stated their support for the more strict training requirements imposed in the House Farm Bill,” Gray wrote. “It would require able-bodied citizens, 18 years or older, without dependents to work or attend a training program for at least 20 hours a week in order to be eligible for food stamps. But the issue divides the two parties.

“In addition to this issue, the question of what happens once the farm bill reaches the House floor remains a hot topic. The bill first has to clear the House Rules Committee, which determines what amendments can be offered to the bill. Chairman Conaway is opposed to allowing the House Democrats to offer any ‘poison pill’ amendments to the farm bill, which could sink its passage on the House floor. The Democratic side wants an ‘open rule,’ and is strongly opposed to selectively limiting certain amendments.

“I have never seen so much controversy surrounding a farm bill in the number of years that I have worked on past farm bill legislation,” Gray concluded.

Attention now moves to the Senate.

Milk production forecast lower

The USDA lowered its 2018 milk production forecast in its latest World Agricultural Supply and Demand Estimates report (WASDE), and gave us our first look into 2019. The 2018 forecast was reduced from the previous month on lowered milk cow numbers and slow growth in milk per cow.

Production and marketing for this year were projected at 218.7 and 217.7 billion pounds, respectively, down 300 million pounds from last month’s estimates. If realized, 2018 production would be up 3.2 billion pounds or 1.5 percent from 2017.

Production and marketing for 2019 was estimated at 221.5 and 220.5 billion pounds, respectively. If realized, 2019 production would be up 2.8 billion pounds or 1.3 percent from 2018.

Milk output for 2019 was forecast higher on gradual recovery in milk per cow. Cow numbers are expected to remain near 2018 levels.

Commercial exports on both a fat and skim-solids basis were forecast higher than the previous year on robust global demand. Fat and skim-solids basis imports were unchanged from 2018. With stronger expected domestic and export demand, cheese, nonfat dry milk (NDM) and whey prices were forecast higher for 2019. Butter prices were forecast slightly lower.

Cheese, butter, NDM and whey prices were raised from the previous month resulting in both Class III and Class IV prices being raised. Look for a 2018 Class III average of around $15.05 per cwt., up from $14.45 projected a month ago and compares to $16.17 in 2017 and $14.87 in 2016. The 2019 average is projected to range $14.80-$15.80 per cwt.

The Class IV price is forecast higher also as a stronger expected NDM price more than offsets the lower butter price. The 2018 average is expected around $14.05, up from $13.55 a month ago and compares to the 2017 average of $15.16 and $13.77 in 2016. The 2019 average is expected at $13.65-$14.75.

Exports were raised from the previous month on both a fat and skim-solids basis on strong global demand. Imports are lowered on a fat and skim-solids basis.

Feed-grain outlook also lower

The WASDE’s U.S. feed-grain outlook for 2018-19 is for lower production, domestic use, exports and ending stocks.

The corn crop is projected at 14 billion bushels, down from last year with a lower forecast area and yield. The yield projection of 174 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2017 time period.

And, with beginning stocks down from a year ago, total corn supplies at 16.3 billion bushels, if realized would be down 675 million from the prior year. Total U.S. corn use in 2018-19 is forecast to decline modestly from a year ago on reductions in domestic use and exports. The season-average farm price is projected at $3.30 to $4.30 per bushel, up 40 cents at the midpoint from 2017-18.

The 2018-19 outlook for U.S. soybeans is for higher supplies, crush, exports and lower ending stocks compared to 2017-18. The soybean crop is projected at 4.28 billion bushels, down 112 million from last year’s record crop on lower harvested area and trend yields. With higher beginning stocks, soybean supplies are projected at 4.835 billion bushels, up 2 percent from 2017-18.

The 2018-19 U.S. season-average soybean price range is forecast at $8.75 to $11.25 per bushel compared with $9.35 per bushel in 2017-18. Soybean meal prices are forecast at $330 to $370 per short ton, compared with $360 per ton for 2017-18.

U.S. cotton projections for 2018-19 include smaller production, unchanged exports, and slightly higher ending stocks compared with 2017-18. Production is forecast at 19.5 million bales, based on 13.5 million planted acres as indicated in the March Prospective Plantings report. The range for the marketing year average price received by producers is 55-75 cents per pound.

USDA’s latest Crop Progress report shows 39 percent of the corn crop is in the ground, as of the week ending May 6. That compares to 45 percent a year ago and 44 percent in the five-year average.

The report also shows 15 percent of the soybeans have been planted, up from 13 percent a year ago as well as the five-year average. And, 20 percent of the cotton is planted, dead even with a year ago and the five-year average.

Cash dairy product prices mixed

Cash dairy product prices were mixed the second week of May. Block Cheddar climbed to $1.7025 per pound on May 8, highest price since Nov. 15, 2017, but saw a CME close May 11 at $1.6325, down 3.25 cents on the week and a quarter-cent below year ago. Barrel hit $1.6525 on May 7, highest price since Dec. 15, 2017, but finished at $1.62, up 2 cents on the week and 9 cents above a year ago.

Trading on the week saw eight cars of block and 35 of barrel sold.

FC Stone dairy broker Dave Kurzawski pointed out in his May 10 Early Morning Update, “We seem to have plenty of milk at the moment, with the Upper-Midwest not expected to hit peak flush until later this month or early June (a little later versus California, which was early this year). Beyond that, however, the questions around US production mount. How will summer weather turn out?

“Just how much of an impact will the widespread removal of rBST be this year? What about the daily articles of smaller producers going out of business? What does that really mean? What about on-farm labor issues? There are plenty of questions and scenarios to keep you up at night, but one thing is for sure, the trend for dairy products at large seems to be moving higher. And although corrections will occur, 2018 is shaping up to be one of much better demand and much more questionable supply.”

Dairy Market News reported that Central region cheese demand reports vary. Some cheesemakers suggest that buying is day to day, as buyers wait out a potential price drop. Others are pleasantly surprised by a continued uptrend in orders, particularly because this is historically a slower period.

Milk continues to flow in at discounted rates, $1-$4 under Class III. With schools on the verge of closing and spring flush in effect, cheese producers are not expecting milk prices to increase unless unexpected heat brings overall milk production down a lot.

Cheese is moving relatively well but some Western processors say buyers are cooling to rising prices. A few are making purchases only as needed. Some sense the strengthening dollar in relation to other world currencies may make it more difficult to export U.S. cheese. Inventories remain heavy, especially for barrel cheese. Improving weather and the advent of grilling season is creating a bump in interest for process American cheese, said DMN.

Butter price down for the week

Butter fell to $2.3025 per pound on May 8, but closed May 11 at $2.3350, down 1.75 cents on the week but 7.25 cents above 2017 with 52 cars sold on the week.

DMN said 80 degree days, already a common occurrence in the South Central region, have begun to grace the Upper Midwest resulting in a noticeably lighter cream supply, due at least in part to an increase in ice cream manufacturers clearing more cream. Eighty-two percent butter is still sought after, and domestic retail sales are fair, reportedly meeting expectations. Butter inventories are generally in good shape and the markets are and have been remarkably bullish.

Western butter supplies are steady compared to the previous week. Churning remains strong, typical for this time of the year. Class II demand for cream is increasing, but not enough to absorb all the cream offerings. Ice cream demand is expected to increase in coming months; therefore, competition for cream will increase. Butter exports are strong in that U.S. prices are favorable in the international market and retail accounts continue to adequately move butter.

Cash Grade A nonfat dry milk climbed to 86 cents per pound on May 7, highest since Sept. 1, 2017. It closed May 11 at 85 cents, up .75 cents on the week and 1.25 cents below a year ago, with 35 cars exchanging hands for the week.

Dry whey closed May 11 at 32.5 cents per pound, up three-quarter cents on the week and the highest price it’s seen since it began trading on March 12.

“Long term survival of a dairy operation will hinge on management’s ability to find ways to push the cost of production below $17.50 per cwt while maintaining some level of reinvestment in the operation,” reported Penn State’s latest Dairy Outlook.

The Outlook said, “Milk futures prices have taken on a decidedly positive movement over the past month. Many in the industry are looking at those fourth quarter prices with the same longing of a weary desert traveler looking at an oasis on the horizon that has the promise of water.

“But, as we know, sometimes the oasis is more of a mirage than reality, and the promise of water to the weary traveler never comes true. One aspect of the markets that make the fourth quarter prices somewhat of a mirage is feed prices.”

Read the entire report at https://extension.psu.edu/dairy-outlook-may-2018

Dairy relying more on exports

Dairy farm bottom lines have become increasingly dependent on exports and U.S. dairy exports have increased 604 percent since 1995 but the U.S. Dairy Export Council (USDEC) said, “We are just getting started.”

Mark O’Keefe, vice president of editorial services, said they have set new goals for an industry-wide initiative called The Next 5 Percent. The concept includes building U.S. dairy export volume from about 15 percent of U.S. milk solids to 20 percent, according to the USDEC website.

“While the goal is expressed in terms of volume, it’s more than a volume target,” the USDEC said. “That’s because the U.S. dairy industry cannot expand volume as needed without heightening the focus on meeting the evolving demands of overseas customers and consumers with innovative, high-value products. Thus, The Next 5 Percent is a dual-track goal to deliver volume expansion concurrently while lifting the value of the products U.S. Dairy is selling.”

USDEC said, “In some ways, dairy farmers have become economic victims of their own industriousness, innovation and efficiency. In 1950, the average U.S. cow produced roughly 5,500 pounds of milk per year. With advances in technology, nutrition and animal care, the average cow is now producing about 23,000 pounds per year.

“That’s contributed to a situation in which U.S. dairy farmers produce more milk than their fellow Americans consume. We must find new markets to keep farmers in business. If we aggressively move to increase our export volume now, the growing supply base can serve those markets well into the future.”

USDEC pointed out that 95 percent of the world’s population – potential customers – live outside the United States. “Looking beyond our borders is where a significant part of our future business lies and where we can find more markets for our milk, products and ingredients. Since 2003, nearly half of ‘new’ milk produced in this country has gone to exports,” according to the USDEC, and projects global dairy trade will increase by 2.3 million metric tons in the next three to five years.

March dairy exports set a new record on a total volume basis, up 26.8 percent on a milk equivalent basis. FC Stone dairy broker Dave Kurzawski, talked about it in the May 14 Dairy Radio Now broadcast and attributed the encouraging data to U.S. prices being more competitive on the world market.

Cooperatives Working Together (CWT) accepted 13 requests for export assistance this week from members that have contracts to sell 1.07 million pounds of Cheddar and Monterey Jack cheeses, and 330,693 pounds of butter to customers in Asia and Europe.

The product has been contracted for delivery through October and raised CWT’s 2018 export to 34.07 million pounds of American-type cheeses, 10.15 million pounds of butter (82 percent milkfat) and 923,737 pounds of whole milk powder to 25 countries.

June Class I milk prices jumped in California. The northern price was announced by the California Department of Food and Agriculture at $17.19 per cwt. and the southern price at $17.46. Both are up $1.10 from May, 20 cents above June 2017, and the highest Class I since December 2017.

The six-month northern average stands at $16, down from $17.65 at this time a year ago and compares to $15.45 in 2016. The southern average, at $16.27, is down from $17.93 a year ago and compares to $15.72 in 2016.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.