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| Cattle groups ask USDA to redesign TB eradication plan |
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National Milk and the National Cattlemen’s Beef Association (NCBA) leadership met Wednesday with USDA officials to discuss changes they would like to see in the USDA’s bovine tuberculosis (TB) eradication program. National Milk’s Jamie Jonker, said the meeting was a follow up to a joint letter to USDA last fall from NMPF and NCBA on the need to update the program.
Jonker reported that there are two unique TB issues to deal with today. Producers in Michigan and Minnesota face endemic wildlife populations infected with TB and it has appeared in the Southwest in strains that are consistent with those in Mexico. The recent TB discovery in California is a case in point, he said.
“We need to modernize our TB eradication program to reflect the realities of the low levels of TB that we have in the U.S.,” Jonker said.
“And the unique issues that we have with TB in wildlife populations in one area and strains that are of foreign origin in another area.”
One of the recommendations NMPF is calling for is to develop and implement improved diagnostic tests. We’re still using the skin fold test that has been around for a very long period of time, he said, and we need to have a test that is more accurate and easier to do on live cattle. We also need to look at changing feeder cattle practices to reduce exposure of breeding cattle to cattle of Mexican origin. Thirdly, Jonker said we need to look at what we can do to reduce TB in wildlife, such as developing an effective vaccination. If you look at what we have done with rabies vaccination in wildlife in some areas, perhaps we can do similar things for TB in wildlife populations. Cheese prices continue to weaken, further discouraging farmers whose milk check hinges on those prices. The 40-pound block price closed Friday at the Chicago Mercantile Exchange at $1.17 per pound, down 6.50 cents on the week and 73.50 cents below that week a year ago. The 500-pound barrels closed at $1.11, down 6 cents on the week, 73 cents below a year ago, and only a penny above the government support price. Five cars of block traded hands on the week and 20 of barrel. The NASS-surveyed block price average slipped 0.2 cent, to $1.2761. Barrel averaged $1.2988, down 2.1 cents.
Butter closed at $1.2025, down a quarter-cent on the week and 19 cents below a year ago. Eight cars were sold on the week. NASS butter averaged $1.1575, down 1.3 cents. NASS nonfat dry milk averaged 82.03, up 0.4 cent, and dry whey averaged 19.31 cents, up 1.5 cents. Price support purchases included 6.6 million pounds of nonfat dry milk, raising the cumulative total to 218.2 million, compared to none a year ago.
Downes-O’Neill Dairy Economist Bill Brooks said in Tuesday’s DairyLine that, while it’s not much comfort, the market always does turn around eventually, but there’s been a lot of pain felt by producers. He said that cheese is like a lot of other commodities; “We’re chasing a declining demand base and we just haven’t reduced our supplies enough.” Cheese is purchased when buyers see good value, according to Brooks. “That value is in the upper teens to the low $1.20s.”
“Thankfully, prices haven’t plunged to the $1.04 bottom seen in January,” Brooks said, “and we’ve seen the market move up 10, 15, or 20 cents, but then we hit a tipping point. That value that folks were looking for goes away and now unfortunately we’re seasonally outside of a good demand period, in between Easter and the unofficial start of summer on Memorial Day, and a lot of product has probably already been put away for that.”
He assures us the market will rebound, but there’ll likely be more pain before that happens and trading will likely range $1.15-$1.35 per pound until we get into the summer months, demand picks up seasonally, and supplies slow down.
Friday’s March Milk Production report will attract attention, according to Brooks, especially the cow numbers to see if they dropped as they did in January. He’s not sure that will happen, given the slowdown in slaughter we’ve seen, but people will be looking for more visible signs of a slowdown in milk production. Some hope it will be below a year and he admits that’s possible, but more than likely it will still be slightly above last year’s level.
Emotions driving volatility in markets
We continued the discussion Wednesday with Downes-O’Neill Dairy Broker Dave Kurzawski and ask him about charges that the system is broke, that the markets are being manipulated, and that imports are raising havoc with domestic markets. How much is reason and how much is emotion?
“The bulk is emotion right now,” Kurzawski answered, and he recalled how just a short while ago it was buyers of milk and cheese who were making the same complaints. The past two years they were paying a $2 plus per pound cheese price and they were making the same cries.
“It doesn’t mean it’s (the cries) not warranted,” he said,
“But it does mean it’s probably more emotion than anything else and, so long as we believe in the dairy industry and we believe that dairy products are good and that they’ll be around, the market will fix itself.”
Kurzawski said the market will adjust and he believes grain prices will come down and input costs will lessen as “they have been overvalued for too long.”
He added that a bull market is best when it’s demand driven, not supply driven. “The buyers of feed in this country are going through a very difficult time right now and that’s going to come through in price on that feed, if not this month, in the very short future,” he said, “And as a result, I think you’re going to see a situation where producers who have gone through three or four or five months of just being completely backwards in the market, come into an area where they will have profitable levels.”
Regarding the import question and the fact that the U.S. is really a milk deficit nation that does not produce enough milk to meet its own needs; Kurzawski doesn’t see imports as “the big game in town.”
He recalled how six or seven years ago imports of milk protein concentrate was “a very big deal,” but the U.S. eventually became a net dairy exporter so “these things ebb and flow,” he said, and he doesn’t see imports as detrimental to the dairy industry as some others do. The big question, according to Kurzawski, is when will export demand pick back up. “It will,” he concluded, “It’s just a matter of when and that’s the bigger question right now.”
Milk production is forecast to decline in 2009 on the basis of smaller herd size and a scant yield increase over 2008, according to the Agriculture Department’s latest Livestock, Dairy and Poultry Outlook. It says that domestic demand may have stabilized at a lower level and some export interest remains in dry products.
“Above-normal levels of commercial cow slaughter thus far in 2009 are a continuation of above-normal beef cow slaughter that began in the first half of 2006,” the Outlook said.
That was when dry conditions held sway over large portions of the Central, Mountain, and Southeastern U.S. Beef cow slaughter has been influenced by intermittent drought in the West, Plains, and Southeastern U.S. since 1996.
California’s May Class I milk price is $12.68 per cwt. for the North, up $1.10 from April but $6.10 below May 2008. The Southern price is $12.96, up $1.11 from April but $6.09 below a year ago. |
| 4/22/2009 |
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