The Obama Administration’s look into antitrust and competitive issues focuses its attention on the dairy industry next week. Dairy Profit Weekly Editor Dave Natzke reported Friday that representatives of both the USDA and Department of Justice, including U.S. Agriculture Secretary Tom Vilsack, U.S. Attorney General Eric Holder, and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, will participate in what’s billed as a “public workshop” to examine competition and regulatory issues in the dairy industry.

Wisconsin Gov. Jim Doyle, State Ag Secretary Rod Nilsestuen, as well as many of Wisconsin’s Democratic congressional representatives will participate, according to Natzke.

Organizers have promised time for dairy farmers, processors and academia to provide input during the workshop, which is set for 9 a.m.-6 p.m., June 25, on the University of Wisconsin campus in Madison, Wis.

“The Obama Administration has stepped up investigations related to antitrust issues in the dairy industry,” Natzke reported, “And Wisconsin is in the center of one of those storms.” Last January, the Justice Department filed a suit challenging Dean Foods’ 2009 acquisition of two fluid bottling plants from Foremost Farms, a Wisconsin-based cooperative, alleging the deal hurt competition in the sale of milk to schools and stores in the Upper Midwest. Deans and Dairy Farmers of America, the nation’s largest dairy cooperative, also face an antitrust lawsuit in Vermont.
The dairy session is the third in a series of five workshops planned by the Obama Administration.

The Department of Justice and USDA will hold another public workshop, Aug. 27, in Fort Collins, Colo., where the focus will be on the livestock industry. That will be followed by a workshop on financial margins in agriculture, Dec. 8, in Washington, D.C. 
Previous workshops covered general agriculture and poultry industries, according to Natzke.

CWT announces bids from Foremost, DFA
The CWT program announced the acceptance of one bid from Foremost Farms, two from Dairy Farmers of America, and five from Darigold to export just over 2 million pounds of Cheddar and Monterey Jack cheese to the Middle East and Asia, delivered June through December. That raised CWT’s 2010 export total to 38 million pounds to 18 countries.

Dairy Management Incorporated’s Joe Bavido completed his series Monday on the goals and objectives of the dairy checkoff, focusing on the partnership with McDonald’s. McDonald’s is the world’s largest fast food chain and is working to develop and launch new menu items that include dairy as a key ingredient, Bavido reported, and is part of a multi-year partnership with the checkoff.

New menu offerings in the last 18 months include Frappes which are made up of 50 percent milk. Offered in 80 percent of McDonald’s 14,000 outlets, they will be available nationwide later this summer, he said, and will be offered in mocha and Carmel flavors and require an additional 100 million pounds of milk annually.
Real fruit smoothies are another new addition, according to Bavido, and use low fat yogurt in strawberry-banana and wild berry flavors. They will launch nationally in July and will require an additional 23 million pounds of milk annually.

Café Specialty coffees are also new to McDonald’s although they have been available nationwide for over a year. They use up to 80 percent milk and will require an additional 300 million pounds of milk annually, he said.

Improved milk shakes are a new formulation that includes real whipped cream in a plastic cup that, Bavido says will require an additional 320 million pounds of milk annually.

Finally, the Angus burgers that were introduced for a limited time in 2009 were so popular that they have become a permanent menu item, Bavido reported. The burgers use two slices of cheese per sandwich and will require an additional 60 million pounds of milk annually, and to meet the needs of those customers wanting a snack size option, the chain will also introduce Angus “Snackwraps” later this summer and they will include one slice of cheese.
“By using partners, the checkoff is gaining and increasing demand for dairy products,” Bavido concluded.

Prices for cheese improved for Dairy Month
The cheese price roller coaster headed back up midway through June Dairy Month as the market awaited the May Milk Production report, which came out Friday afternoon after our deadline. Cash block closed that morning at $1.4050 per pound, up 3.5 cents on the week, 28.75 cents above a year ago, and reversed three weeks of decline. The barrels closed at $1.3850, up 5.5 cents on the week, and 31.5 cents above a year ago. Fourteen loads of block traded hands on the week and 35 of barrel, all of them on Friday. The NASS-surveyed block price average lost a penny, slipping to $1.4581. Barrel averaged $1.4274, down 5.2 cents.

Butter continued its climb, closing Friday at $1.6350, up 2.5 cents on the week, and 43 cents above a year ago. Only three cars were sold on the week. NASS butter averaged $1.5766, up 3.4 cents. NASS powder averaged $1.3039, up 0.1 cent, and dry whey averaged 36.83 cents per pound, down 0.3 cent.

Cheese prices are in a familiar pattern of $1.35-$1.50, according to market analyst Alan Levitt in Tuesday’s DairyLine. Orders are good, he said, but he warned of the inventories hanging over the market, causing buyer resistance when prices approach $1.50. That level has been tested three times, he said, and will likely be tested a fourth time.

One factor that may help draw stocks down, he said, is the shift in trade. April cheese exports totaled 32 million pounds, while imports only totaled 19 million so there were about 13 million more pounds exported than imported and “that’s pretty unusual because historically we import much more than we export.”

School closings will divert more milk into the cheese vat, but Levitt pointed out that we’re past the seasonal peak in milk production and component levels are lower so, over the next couple months, supplies are going to shrink, and there may be a shortage of current cheese trading on the market in July and August and that could be the factor that pushes prices above $1.50, he said.

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.