Congress is back in town for a lame duck session. National Milk’s (NMPF) Chris Galen said in Thursday’s DairyLine that “The duck may be able to fly in a couple areas.” Taxes are the big issue right now, he said, in particular the possible extension of the Bush tax cuts.
An agreement appears to be in the works, according to Galen, but NMPF is particularly concerned about estate taxes because, currently there isn’t any, but they will come back to life with a pretty high assessment rate in about six weeks.
One other area that National Milk is monitoring is the Senate-approved Child Nutrition Act, which still awaits action by the House. Another piece of legislation is the Food Safety bill.
The House has passed its version, but the Senate still has to take it up. There will not be any action on dairy policy per se, Galen said. That will likely wait until next year, he concluded.
And, while there won’t be any action on dairy policy in the lame duck Congress, there still is dairy policy activity going on in the nation’s capitol, according to Dairy Profit Weekly Editor Dave Natzke in Friday’s DairyLine broadcast.
“With Thanksgiving here and 2010 seemingly winding down, most of the dairy policy work in Washington is geared toward the longer-term,” Natzke began. First, USDA and the U.S. Department of Justice (DOJ) will hold the fifth and final joint workshop on antitrust, competition and regulatory issues in agriculture. The workshop, set for Dec. 8, will examine the issue of “margins” at various levels of the food supply chain.
We usually talk about margins between farmer milk prices and feed costs, Natzke said, but this workshop will look at margins as related to the farmers’ share of wholesale and retail dollars.
Also on the agenda is a meeting of USDA’s Dairy Industry Advisory Committee scheduled for Dec. 14-16. The committee has been meeting since last spring to explore federal dairy policy options, and is expected to issue policy recommendations to U.S. Agriculture Secretary Tom Vilsack, for consideration in the 2012 Farm Bill.
Dairy farmers and others can submit comments if they can’t attend. Here are website links for information on the DOJ/USDA joint workshop on competition and regulatory issues in agriculture: Register for the Dec. 8 workshop at www.surveymonkey.com/s/marginsworkshop
To view transcripts and videos for past workshops, including a June 2010 hearing on dairy held in Madison, visit the DOJ Antitrust Division agriculture workshop website at www.justice.gov/
atr/public/workshops/ag2010/index.htm or contact agriculturalworkshops
@usdoj.gov
The Link for USDA’s Dairy Industry Advisory Committee is: www.fsa.usda.gov/FSA/webapp?area=about&subject=landing&topic=dia-mt
October milk
production up from ’09
October milk production in the top 23 states totaled 14.8 billion pounds, up 3.3 percent from October 2009, according to USDA’s preliminary data. The 50 state output totaled 15.9 billion pounds, up 2.9 percent. Revisions raised the September total to 14.5 billion, an increase of 6 million pounds and 3.7 percent above September 2009.
Cow numbers in the 23 states totaled 8.37 million head, unchanged from September but 52,000 head more than October 2009. Production per cow averaged 1,767 pounds, up 47 pounds from a year ago.
California production was up 4.3 percent from a year ago, despite 20,000 fewer cows. However, output per cow gained 100 pounds. Wisconsin was up just 0.8 percent, on 6,000 more cows and a five pound gain per cow.
New York was up 4.7 percent, though cow numbers were down 3,000 head, but output per cow was up 85 pounds. Idaho was up 6.9 percent, on 25,000 more cows and a 40 pound gain per cow. Pennsylvania was up 2.9 percent. Cow numbers were up 2,000 and output per cow was up 40 pounds. Minnesota was down 0.1 percent, despite 1,000 more cows. Output per cow was off 5 pounds.
The biggest increase was in Oregon, up 11.4 percent. Arizona was next, up 9.5 percent, and Kansas was third highest in milk production, at 8.2 percent. 
The biggest decline was in Missouri, down 7.3 percent, followed by Iowa, down 3 percent, and Illinois, off 2.5 percent.
USDA announced the December Federal order Class I base milk price Friday at $16.96 per hundredweight, down 28 cents from November, but still $2.97 above December 2009. That put the 2010 average at $15.35, up from $11.48 in 2009.

The NASS-surveyed butter price averaged $2.0995, down 9.5 cents from November. Nonfat dry milk averaged $1.1903, up 1.5 cents. Cheese averaged $1.7063, down 6.3 cents, and dry whey averaged 37.16 cents, up a penny.

The cash dairy markets were anticipating Thursday’s milk production data. Block cheese closed the third week of November at $1.4450 per pound, up 3.5 cents on the week, but 15.5 cents below a year ago.

Barrel reversed eight consecutive sessions of decline on Wednesday, regaining 4 cents, and closed Friday at $1.43, up 6 cents on the week, but 7 cents below a year ago. Nine cars of block traded hands on the week and 12 of barrel. The NASS-surveyed U.S. average block price fell 5.7 cents, to $1.6721. Barrel averaged $1.6417, down 8.4 cents.

Butter closed Nov. 19 at $1.89, down a dime on the week, but still 36.5 cents above a year ago.

Only one car was sold. NASS butter averaged $2.0550, down 7.4 cents. NASS nonfat dry milk averaged $1.1921, up 0.3 cent, and dry whey averaged 37.13 cents, down 0.1 cent.

Barrel cheese price continues downward spiral
There’s plenty of barrel cheese looking for a home, according to Market Analyst Mary Ledman, principal of Keough Ledman and Associates in Libertyville, Ill. Ledman commented in Tuesday’s DairyLine on the continued decline in the barrel cheese price, which widened the spread between the blocks.

Barrels were selling at a premium to the blocks five days ago, Ledman reported, but are now selling a nickel and a half below. There are rumors of plenty of barrel being offered at a sizable 5-10 cent a pound discount off the market, she said, and they are not coming to the CME, but are being offered to brokers on the side so she looks for continued downward pressure on the barrel market in particular.

As to the butter market, Ledman said we have already seen that this market can fluctuate and drop 27 cents in one day, but she predicts “a butter correction” in the next week or two and head down to $1.75-$1.85 per pound and possibly take a break there, but by year-end she sees butter at $1.65.

Ledman anticipated “more of the same;” in the October Milk Production report, namely strong gains in milk per cow and a possible gain of 5,000-10,000 head in cow numbers. She admitted “That’s not a huge increase, but milk prices were really strong in October and continued to be strong in November, so there is incentive to keep cows in the herd and producing as much milk as possible.”

She warned that the market signals will change at the beginning of the year, but through year-end “we’re going to see strong milk per cow and some incremental increase in cow numbers.” She expects Thursday report to show a 3.5 plus percent gain in milk production versus the prior year.

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.