Dairyline
By Lee Mielke

Farm milk prices keep inching higher. The Agriculture Department announced the July Federal order Class III price at $13.74 per cwt., up 12 cents from June and $3.77 above July 2009.

That pulls the 2010 average to $13.60, up from $10.16 a year ago, and compares to $18.25 in 2008. The Class IV price is $15.75, up 30 cents from June and $5.60 above a year ago.

Looking ahead, Class III futures were trading late Friday morning as follows: August $14.93, September $15.42, October $15.05, November $14.82 and December $14.72.

The NASS-surveyed cheese price averaged $1.4567 per pound, up a penny from June. Butter averaged $1.7375, up 14.3 cents. Nonfat dry milk averaged $1.2277, down 3.5 cents, and dry whey averaged 36.41cents, down a half-cent.

Cash dairy product prices remain strong; however, cheese may be showing a little weakness. The blocks closed the last week of July at $1.6025 per pound, unchanged following six weeks of gain, but 31.75 cents above a year ago. Barrel closed at $1.5575, down a quarter-cent on the week, but 29.75 cents above a year ago.

Six cars of block traded hands on the week and eight of barrel. The lagging NASS-surveyed U.S. average block price gained 6.3 cents, hitting $1.4999. Barrel averaged $1.5110, up 3.4 cents.

Butter gained a penny and a half, closing Friday at $1.8150, up 57 cents from a year ago. Nine cars were sold. NASS butter averaged $1.7713, up 2.8 cents. NASS powder averaged $1.1865, down 4.7 cents, and dry whey averaged 36.21 cents, up 0.1 cent. The University of Wisconsin’s Dr. Brian Gould said in Tuesday’s “DairyLine,” “That’s quite significant that butter has gained over 15 percent since June 1. There hasn’t been a down day at the CME spot price; it’s been going up continuously.”

He adds that the high butter price has broader implications with respect to the federal pricing system. For example, last Friday the advanced Class I was released and the Class IV was the mover, at $15.77, compared to the advanced Class III of $13.66. That’s more than a $2 difference between the Class IV and Class III, he said, and it has been that way for six of the last eight months.

“It’s truly a change in the market conditions,” Gould said, “due to purely what’s going on in the butter side.”

He said it could stay that way for a while, with the heat and humidity affecting a large portion of the United States: “The components are going down a little bit and being allocated to butter because it’s so valuable.”

The high butter price may bode well for cheese, according to Gould: “Again, the price of cheese may go up a little bit because fewer components are going into the cheese vat.”

Gould has a model on his “Understanding Dairy Markets” website at http://future.aae.wisc.edu with current futures market data and a state-specific statistical analysis to look at the relationship between the announced Class III and the futures Class III, and the mailbox price.

Using last week’s end-of-week Class III futures prices, we see that over the July-December period, the U.S. average Federal order mailbox is projected to be about $15.76. Wisconsin is $15.93 and California, not surprisingly, is $14.32.

“And these are substantially higher than obviously what happened at this time last year,” he concluded.

What’s in a name?
It’s been said that “a rose by any other name is still a rose,” but that doesn’t apply to dairy products, according to the National Milk Producers Federation (NMPF). The Federation’s Chris Galen updated “DairyLine” listeners in Thursday’s broadcast on imitation dairy product labeling.

You recall that in April, NMPF wrote the U.S. Food and Drug Administration (FDA) asking it to crack down on what NMPF calls the “misbranding of non-dairy products that use terms like milk, cheese or yogurt.” This week, the NMPF responded to requests by the FDA for public input on what types of information should be allowed on the front of packages, including labels and shelf tags when consumers encounter these products in stores.

“We’ve used this as another opportunity to remind the Food and Drug Administration that they really should disallow the use of terms like soy milk, rice yogurt and so on,” Galen said, “Because those are oftentimes things that consumers look at first and the only things they look at when they make a purchasing decision.”

He adds that when consumers see plant-based products with milk or yogurt in their name, they assume those products contain similar levels of protein, vitamins and minerals that dairy products do, but “research shows that imitation products made from plants, vegetables, weeds and seeds don’t have the same level of nutrition,” Galen said.

When asked if the NMPF has received any reaction from the FDA, Galen answered that this comment period will take a while to work through, but they did receive a letter from the FDA in response to the April petition, thanking NMPF for its response and said its input would be “take under advisement.”

Galen said the FDA hasn’t quite brushed NMPF off, but were fairly noncommittal in terms of what it’s going to do, “so we’re just going to keep up the drumbeat on this and keep pressure on the federal government, particularly the FDA, because they seem very concerned about how foods are presented, marketed and packaged, so the whole issue of whether or not foods have the right names to begin with should be a front and center issue for them,” he concluded.

Cheese & butter exports
The Cooperatives Working Together program has added butter and anhydrous milkfat (AMF) to its list of products eligible for export assistance, following an evaluation of the competitiveness of these products. A press release cited recent increases in butter at the Chicago Mercantile Exchange.

Four bids were accepted from Dairy Farmers of America (DFA) and three from Land O’Lakes to export 3.8 million pounds of butter and AMF to Europe, the Caribbean, South America and the Middle East, with delivery from July to November.

CWT also accepted two bids from the DFA on 213,848 pounds of cheddar cheese to Europe and Asia, with delivery from August to November. CWT cheese exports total 38.2 million pounds, to 23 countries.

Electronic reporting
Bills introduced in both the U.S. Senate and House this week reauthorize daily mandatory livestock price reporting for five years.

But probably of even greater interest to dairy producers, the bills instruct the secretary of agriculture to establish an electronic price reporting system for dairy products within one year.

Senate Ag Committee Chair Blanche Lincoln (D-Ark.) and Ranking Member Saxby Chambliss (R-Ga.) introduced the Senate version; House Ag Committee Chair Colin Peterson (D-Minn.) was joined by 19 others in introducing the House version (H.R. 5852). The current law expires Sept. 30.

(Please refer to the newspaper for the remaining portion.)

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.