The last week of September and first two days of October was a big news week for dairy as well as the week of World Dairy Expo, which I attended and enjoyed so much.

First, a U.S. House-Senate Conference Committee agreed to a plan to spend $350 million to help cash-strapped dairy farmers. Sixty million dollars will go toward dairy product purchases, primarily cheese, for government feeding programs and $290 million will be made as direct payments to producers.

Details have to be worked out, Congress must approve the
legislation and the President must sign it.
Then came the announcement of a third herd retirement program for 2009 by Cooperatives Working Together (CWT). Bids will be accepted through Oct. 15.

The maximum bid again is $5.25 per cwt. with bids paid in two installments: 90 percent up front and 10 percent plus interest, if the producer and his farm stays out of dairying for a year.
The September federal order Class III milk price was announced Friday at $12.11 per cwt., up 91 cents from August, $4.17 below September 2008 and 71 cents above the comparable California 4b price.

The federal order Class IV price is $11.15, up 77 cents from August but $4.30 below a year ago.

What a difference a year makes! The 2009 Class III average now stands at $10.49, down from $17.93 a year ago, and compares to $17.55 in 2007.

The October Class III futures contract was trading late Friday morning at $12.77. November was at $13.95 and December, $14.32. That would portend a 2009 average of just $11.29, down from $17.44 in 2008 and $18.04 in 2007.

The NASS surveyed cheese price averaged $1.3522 per pound, up 9.2 cents from August. Butter averaged $1.1811, down 2.2 cents.
Nonfat dry milk averaged 96.64 cents, up a dime, and dry whey averaged 29.79 cents, up fractionally.

California’s September 4b cheese milk price is $11.40 per cwt., up 11 cents from August and $5.23 below September 2008.
The 4a butter/powder price is $11.08, up 87 cents from August, but $4.43 below a year ago.

Cash cheese prices moved a little higher the week of Sept. 28 but uncertainty over what the government was going to do likely kept traders from venturing very far.

The 40-pound blocks closed Friday at $1.4350 per pound, up 2.25 cents on the week, but 37.5 cents below that week a year ago, when the blocks fell 13 cents to $1.81.

The 500-pound barrels closed Friday at $1.42, up 4.25 cents on the week, but 37.25 cents below a year ago.

Twelve cars of block traded hands on the week and four of barrel. The lagging NASS surveyed U.S. average block price slipped 2.2 cents, to $1.3135. Barrel averaged $1.3046, up a penny.

Cash butter closed Friday at $1.2350, down 2.25 cents on the week and 51 cents below a year ago. Only three cars were sold on the week. NASS butter averaged $1.2076, up 3 cents.

Cash Grade A nonfat dry milk closed at $1.18, up 11.5 cents on the week, and Extra Grade closed at $1.15, up 14 cents. NASS powder averaged 97.78 cents per pound, down 0.7 cent. NASS whey averaged 30.26 cents, up 0.1 cent.

A slowdown in milk production is leading to the recovery of milk prices, according to Bob Cropp, professor emeritus at the University of Wisconsin-Madison, who called the recovery a slow process in Tuesday’s DairyLine.

“With a loss in the export market, particularly in powder and of course cheese and butter, with butter being way down, we’ve had to get milk production down,” Cropp said.

He pointed out that August output was only down 0.2 percent but he believes some of the strength in the market “might be just the fact that milk production is down seasonally and fluid sales are up a little bit.” Cropp remains optimistic that the federal order Class III price will rise to around $14 by the end of the year.

He believes the market is going to be stronger than what some believe, and said, “I think the futures are a little pessimistic in the long term. Production coming down and cow numbers declining, there will be some signs of improvement.”

The September Milk-Feed Price Ratio is 1.93, up from the August revised estimate of 1.78, according to USDA’s latest Ag Prices report, and compares to 1.9 in September 2008.

The All Milk Price was estimated at $12.70 per cwt., up 70 cents from last month’s estimate, but $5.50 below a year ago. Corn averaged $3.32 per bushel, down a penny from August, and $1.69 below a year ago. The soybean price, at $9.85 per bushel, was down 95 cents from August, and also 95 cents below a year ago.

Alfalfa baled hay was $110 per ton, down $1 from August and $65 below a year ago.

FARM to bolster trust

A new FARM animal well-being program aims to bolster consumer trust in the U.S. dairy industry. FARM stands for Farmers Assuring Responsible Management. The National Milk Producers Federation announced the initiative’s guidelines and principles last year at World Dairy Expo in Madison.

A comprehensive animal care resource manual was unveiled, a quick reference user guide and other materials that will be used to help educate farmers, processors, retailers and consumers about best practices animal care.

“We will use these materials to reach out to the entire marketing chain, particularly for those companies that may want to demonstrate their animal care commitment,” said NMPF’s Chris Galen.

He called it a corroboration of what most dairy producers are already doing and said, “A lot of this is not heavy lifting or rocket science. We are in an environment where food production is increasingly under the spotlight and there is concern from consumers where food comes from, who processes it and who produces it. We need to have this new dairy FARM national program to demonstrate the ongoing commitment that dairy farmers have to animal well-being.”

Producers can expect an on-farm evaluation process next year by the farms and marketing entities who choose to take part. A trained veterinarian, extension educator or a co-op field staff person will go through the guidelines on the farm. In 2011, third-party verification will take place, where a small sampling of farms will be visited by someone who’s not affiliated with them to demonstrate that the program is working.

Published on Oct. 7, 2009