By LEE MIELKE
Mielke Market Weekly 

The U.S. Senate’s 62-37 passage of the Administration-backed trade bill gives the president authority to complete trade deals that Congress can in turn approve or reject, but not change. Forty eight Republicans supported the measure, but only 14 of the Senate’s 44 Democrats.

The International Dairy Foods Association gave lawmakers a thumbs-up on the vote, stating in a press release: "We applaud the Senate for working together in a bipartisan manner to advance the TPA-2015 bill. We encourage the House to take up the legislation and pass it as soon as possible.

"Trade Promotion Authority is critical to ensuring that the U.S. dairy industry receives greater market access from the two trade agreements under negotiation, the Trans-Pacific and the Transatlantic Trade and Investment Partnership."

The National Milk Producers Federation and U.S. Dairy Export Council also commended the Senate for its action and urged the House to quickly pass their own TPA legislation.

"Trade promotion authority is crucial to concluding trade agreements that will open foreign markets to more U.S. dairy products," said NMPF President and CEO Jim Mulhern. "In the Trans-Pacific Partnership negotiations, in particular, having TPA in place is essential to increase pressure on Japan and Canada to extend their best offers."

USDEC President Tom Suber added, "Knowing that a trade agreement will be considered by Congress under Trade Promotion Authority paves the way to press our negotiating partners to make their best offers on the most sensitive issues. Clearly, dairy exports fall into that category, and the U.S. needs all the tools it can muster to get the best possible deal."

The two organizations said TPA will increase congressional influence over trade negotiations and lead to agreements that are better for both the country and the dairy industry. TPA, which expired in 2007, is important to the U.S. dairy industry because the U.S. exports the equivalent of one-seventh of its milk production.

Three California producer trade associations, the California Dairy Campaign (CDC), Milk Producers Council (MPC), and Western United Dairymen (WUD), submitted a proposal to the California Department of Food and Agriculture for its June 3 milk pricing hearing that would temporarily modify the Class 4b pricing formula, specifically the portion of the Class 4b calculation that relies on dry whey prices as an input, and have crafted a proposal with those limitations in mind.

In a letter to CDFA, they requested that the changes be made Aug. 1, 2015, to July 31, 2017, and specifically propose modifying the current sliding scale in the Class 4b formula to allow the whey factor to more closely reflect the whey value generated by the current Class III formula.

"The current formula has been in place since Aug. 1, 2012, and it is clear that it fails to track the whey value in federal orders in a reasonable manner," the letter states. "In fact, since then, the California whey value averaged $1.79/cwt. lower than federal orders. We believe an adjustment to this calculation would not only restore equity in what our manufacturers are paying for milk relative to comparable manufacturers around the country, but would also generate much-needed revenue for dairy farmers facing historically high operating costs."

The Dairy Institute of California (DIC), representing state processors, also submitted proposed changes, arguing that "the whey scale currently used in the 4b formula is based on dry whey and is no longer representative of the whey values received by cheese plants operating in California."

It adds that the number of plants in the state making dry whey has diminished, and plants selling liquid whey increasingly find their liquid whey product’s value is more closely tied to movements in the price of WPC 34 percent. DIC says, "The whey price series used in the proposed formula would be the simple average of the weekly Central and West 34 percent Whey Protein Concentrate-Mostly prices as published in USDA’s Dairy Market News between the 26th of the prior month and the 25th of the current month."

The changes are proposed to make the Class 4b pricing formula better reflect the current market situation and to balance the needs of producers and the diverse types of cheese plants that operate in the state of California. It is reflective of the value of whey to cheesemakers that concentrate liquid whey and sell it to other plants for further processing, and is therefore more appropriate for inclusion in an end-product price formula designed to calculate minimum regulated prices for milk." DIC proposes that the new whey scale be in effect for six months.

Ag Prices report

Preliminary data in the USDA’s latest Cold Storage report show butter stocks at 230.4 million pounds on April 30, up 46.1 million pounds or a whopping 25 percent from March and 43.5 million pounds or 23 percent above those in April 2014.

American type cheese, at 639.5 million pounds, was up 7.9 million pounds or 1 percent from March but 9.4 million or 1 percent below a year ago. The total cheese inventory amounted to 1.1 billion pounds, up 15.6 million pounds or 1 percent from March and 43.3 million pounds or 4 percent above a year ago.

The April 2015 milk feed price ratio slipped to 1.95, down from 2.00 in March and compared to 2.42 in April 2014 and 1.54 in April 2013, according to USDA’s latest Ag Prices report, issued Thursday, May 28. The index is based on the current milk price in relationship to feed prices for a ration of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay, in other words, one pound of milk today can purchase 1.95 pounds of dairy feed of that blend.

The April U.S. average all-milk price dropped to $16.50 per cwt., down 10 cents from March and $8.80 below April 2014. April corn, at $3.75 per bushel, was down 6 cents from March and 96 cents below April 2014. Soybeans averaged $9.70 per bushel, down 14 cents from March, and $4.60 per bushel below April 2014. Alfalfa hay averaged $184 per ton, up $12 from March, but $23 per ton below April 2014.

Looking at the cow side of the ledger, the report shows the April cull price for beef and dairy combined averaged $113.00 per cwt., down $1 from March but $10 per cwt. above April 2014, and compares to the 2011 base average of $71.60 per cwt. Price received for milk cows was $1970.00 per head, down $20 from March 2015 but $160 above April 2014, and $550 above the 2011 base.