By LEE MIELKE
Mielke Market Weekly 

Just as California debates the merits of joining the Federal Milk Marketing order program, comes word that the California Department of Food and Agriculture (CDFA), on its own motion, is calling a milk pricing hearing June 3 to consider proposed amendments to the Class 4b pricing formula.

Western United Dairymen (WUD) praised the call and said in a statement that it, "in joint effort with other dairy trade associations, has been committed to finding a way to bring change to the California milk pricing system that creates a fair pricing structure for the state’s dairy producers."

Rob Vandenheuvel, general manager of California’s Milk Producers Council, discussed that on Friday’s DairyLine. He also discussed the first public outreach meeting on creating a Federal order held Monday, May 4, in Fresno. He said that proponents of the proposals that have been submitted were given the opportunity to defend their plan to USDA officials and attendees. The proposals include those offered by three of the major dairy cooperatives; the Dairy Institute of California, representing the state’s dairy processors; plus two others.

He said the meeting in Fresno was very well attended and there was a lot of producer participation and interest in what’s in these proposals.

"We see some real challenges and problems with the way the processors of the Dairy Institute crafted their alternative proposal, but that’s why we have a hearing process, and USDA staff acts as the judge and jury in weighing the facts and the merits of the various proposals. And we’ll go through that process, hopefully, later this year if USDA does deem a hearing necessary."

With regard to CDFA’s call for a public hearing on amending the 4b pricing formula, Vandenheuvel agreed that we had "been there and done that" in trying to get long term reform through the state order.

"There’s recognition that producers are moving toward the Federal order as a long term option for how to regulate our milk pricing going forward," he said. "But between now and a Federal order, perhaps up to two years of hearings, recommended decisions, voting, and final decisions, Secretary Ross is providing a hearing for us to make a case why an up to 24-month adjustment to the Class 4b price calculation is warranted."

The Dairy Institute’s executive director, Rachel Kaldor, told DairyBusiness Update that "Dairy Institute appreciates Secretary Ross’ commitment to our industry. After finding some common ground during last summer’s legislative push, we had hoped to make progress with our industry partners to formulate both short term remedies and long term reform. Our efforts were eclipsed by the pressure of price declines and drought, which are understandable reasons to call a hearing. We plan to fully participate. The subject of appropriate valuation of whey in regulated prices is of great concern to our members."

Meanwhile, Tuesday’s Global Dairy Trade (GDT) auction saw the weighted average for all products offered drop 3.5 percent, following a 3.6 percent decline in the April 15 event and a 10.8 percent drop April 1. This is the fourth consecutive session of loss and the lowest level since 2009. Only one product offered saw a gain. Cheddar cheese was up 9.1 percent, which followed a 2.7 percent jump last time.

Leading the declines was buttermilk powder, down 14 percent, which was up 2.1 percent in the last event. Rennet casein was next, down 11 percent, following a 0.6 percent slip last time; then skim milk powder, down 7.5 percent, following a 7.8 percent drop last time. Anhydrous milkfat was down 6.3 percent, following a 2.3 percent gain last time. Next was whole milk powder, down 1.8 percent, following a 4.3 percent loss last time; and butter rounded up the losses, down 0.8 percent, following a 6.6 percent drop last time.

FC Stone reports the average GDT butter price equated to about $1.36 per pound U.S., down from $1.3727 in the April 15 event. Contrast that to CME butter, which closed Friday morning (May 8) at $1.9850 per pound. The GDT Cheddar cheese average was $1.37 per pound U.S., up from $1.3099. The U.S. block Cheddar CME price closed May 8 at $1.6125. GDT skim milk powder, at 93 cents per pound U.S., is down from $1.0221, and the whole milk powder average at $1.08 per pound U.S. is down from $1.1093 in the last event. The CME Grade A nonfat dry milk price closed Friday, May 8, at 95.75 cents per pound.

U.S. dairy exports grew to a nine-month high, according to the U.S. Dairy Export Council’s (USDEC) Alan Levitt in his latest blog posting.

"In March, U.S. dairy export volumes reached their highest level in nine months, led by record-high shipments of nonfat dry milk/skim milk powder (NDM/SMP) to Mexico and cheese to South Korea," Levitt said. "In addition, global shipments of lactose and whey protein isolate (WPI) topped previous highs."

Overall volume and value improved from previous months, though sales lagged year-ago levels. On a daily-average basis, exports were up 19 percent by volume and 14 percent by value from February. However, compared with last March, exports were down 9 percent by volume and 24 percent by value. Comparisons with March 2014 look less favorable, in part because U.S. exports last March were the most ever.

Shipments of NDM/SMP were 55,022 tons, up 40 percent from February (daily average) and up 7 percent from last year. Sales to Mexico were 26,213 tons, the most ever and 68 percent more than a year ago.

Cheese exports in March were 34,302 tons, up 5 percent from February (daily average) but down 5 percent from a year ago. Suppliers sold 8,410 tons to South Korea, up 48 percent from last year and a new high.