Happy New Year! 2011 is here! It’s not the best way to end one year and start a new one, but farm gate milk prices continue to slide.

The U.S. Department of Agriculture announced the December Federal order Class III benchmark milk price Thursday at $13.83 per cwt., down $1.61 from November, and $1.15 below December 2009. That pulled the 2010 average down to $14.41, up from $11.36 in 2009, but compares to $17.44 in 2008.
Looking ahead, the Class III futures were trading late Thursday morning as follows: January $13.28, February $13.84, March $14.15, and April was at $14.57, with the peak at $15.73 in October.

The December Class IV price is $15.03, down $1.65 from November, but 2 cents above December 2009.

The four-week NASS surveyed cheese price averaged $1.4606 per pound, down 15.5 cents from November. Butter averaged $1.6539, down 36.9 cents. Nonfat dry milk averaged $1.1848, down a penny, and dry whey averaged 37.89 cents, up fractionally.

Market analyst Alan Levitt said in Tuesday’s DairyLine that the pattern for most of 2010 was that, when cheese neared $1.40, buyers returned, but when prices got near $1.40 in December, “people had pretty much bought what they needed for the holiday season, weren’t interested in accumulating inventory going into the end of the year, and wanted to see how sales went over the holidays.” He expects buyers to return after the first, but “right now we’re in a little bit of a lull.”

When asked about the lack of reaction in the market to the November Milk Production and Cold Storage report, Levitt pointed out that cheese inventories are still well above historic levels. They dropped some in November, he said, but didn’t drop much in the fall and are still overhanging the market.

Butter stock supply at record low
Butter stocks are at a historically low level, according to Levitt, roughly two and a half week’s worth of use, and the smallest figure in five years so that will be a factor in 2011. He added that we don’t see the immediate impacts from those reports like we used to but, going into next year, butter is going to be short again.

Weather was another topic of discussion, with rains in California and snowstorms in the Northeast.

California has been getting dumped on, he said. Tulare County received almost four inches of rain this month, more than triple the normal level, and a lot of fields are under water but farmers have gotten better prepared in recent years in terms of cow comfort and have done what they can.

A lot of those farms are under cover, he said, and while we might expect to see some impact on milk production, it probably won’t be as much as we might have seen 10 years ago.

As to the Northeast, Levitt said it was too early to tell because we’re over the holiday period and we haven’t received all of the reports yet, but certainly the weather affects people’s ability to get out and buy milk from the stores and it affects farm pick-ups.

Speaking of drinking milk; lactose intolerance is often given as a reason for the loss of milk and dairy product consumption and the dairy checkoff has taken steps to deal with it. Dairy Management Incorporated’s Joe Bavido talked about a new website that the dairy checkoff produced to “connect with lactose intolerant consumers.” The website is www.moovision.com and also has a Facebook page, Twitter account, and YouTube channel.

The goal, according to Bavido, is to change the attitude and purchase behavior of millions of adults who experience real or perceived symptoms of lactose intolerance and thus avoid or restrict dairy consumption.

“Bringing them back to dairy could result in 2.3 billion pounds of new sales annually,” Bavido said, and the goal is to use these social media in a “light-hearted and novel way to converse with lactose intolerant consumers” with the core objective of “changing their perception of lactose free milk, identify opportunities to increase lactose free milk consumption, and address misconceptions about lactose free milk related to its nutritional value and taste.”

Price for cotton shoots through roof
Back on the farm, the tightening global cotton supply, coupled with a ravenous appetite for lint, could be the much needed shot in the arm for U.S. cotton growers.

Tom Wedegaertner, director of cottonseed research and marketing for Cotton Incorporated, admitted in Wednesday’s broadcast that the price of cotton has “gone through the roof,” but quickly adds that the news isn’t all bad for dairy producers because that will result in expanded acreages in 2011 in the U.S.
Cotton acreage has declined the past two years because there’s been an over- supply of cotton in the world market, according to Wedegaertner, resulting in declining prices to farmers and a smaller supply of cottonseed for dairy cows.
Last year there was only about 2 million tons of cottonseed available, he said, but this year, with increased acreage and good yields we should see an extra million tons or so to feed to dairy cattle and he expects an additional 2 million acres to be planted to cotton in 2011 to take advantage of the high prices “so cottonseed will become more and more readily available.”

Wedegaertner acknowledged that dairy farmers are caught in the middle of falling milk prices and rising feed costs. Corn is climbing, as are soybeans, he said, and “the soybean complex controls a lot of the feed market and if it comes down a little then cottonseed will also as they track together.”
Hopefully, as cotton acreage increases, cottonseed will be more competitive and remain an important part of the dairy ration, he concluded.
For more information, log on to www.wholecottonneed.com and if you log on to www.wholecottonseed.

com/contest, you’ll learn how you can win a pocket video camera simply by voting between the two finalists in Cotton Incorporated’s cottonseed video contest. The voting ends Jan. 31, 2011.

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.