By LEE MIELKE
Mielke Market Weekly 

Dairy farmers can now enroll in USDA’s Margin Protection Program (MPP) for coverage in 2016. The voluntary program, established by the 2014 farm bill, provides financial assistance to participating dairy operations when the margin (the difference between the price of milk and feed costs) falls below the coverage level selected by the farmer. USDA Deputy Secretary Krysta Harden made the announcement while visiting a farm and dairy school in Freeport, Maine.

"More than half of our nation’s dairy producers enrolled in the 2015 program, which exceeded our expectations for the first year of the program," Harden said. "We are confident that dairy farmers across the country will again take advantage of this safety net program for 2016. USDA will continue outreach efforts, including partnering with cooperative extension services, to ensure dairy producers are fully informed about the protections that this safety net program can provide during periods of market downturns."

The MPP gives participating dairy producers the flexibility to select coverage levels best suited for their operation. Enrollment began July 1 and ends Sept. 30, 2015, for coverage in 2016. Participating farmers will remain in the program through 2018 and pay a $100 administrative fee each year. Producers also have the option of selecting a different coverage level during open enrollment each year. MPP payments are based on an operation’s historical production.

An operation’s historical production will increase by 2.61 percent in 2016 if the operation participated in 2015, providing a stronger safety net.

In politics, the International Dairy Foods Assoc. (IDFA), representing 550 dairy foods companies and their suppliers, had praise for President Obama’s renewal of Trade Promotion Authority.

"We commend the President for signing Trade Promotion Authority into law and thank the entire administration for its collaboration with Congress in passing the TPA-2015 bill," said Connie Tipton, president and CEO of IDFA. "We now look forward to working both with the administration and Congress to ensure the U.S. dairy industry receives the best deals from two trade agreements currently undergoing negotiations – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership."

"A lot is at stake for U.S. dairy producers, manufacturers, suppliers and marketers as our dairy exports continue to be a major success story for industry growth," Tipton said. "These agreements will allow the U.S. dairy industry to grow and prosper with increased trade opportunities."

Happy National Ice Cream Month! Dairy producers started the month with a 53 cent increase in the June Federal order Class III milk price. USDA announced the benchmark price July 1 at $16.72 per cwt, up 53 cents from May but $4.64 below June 2014, which equates to about $1.44 per gallon, up 5 cents from May. It is also $1.17 above the comparable California 4b cheese milk price, the smallest shortfall between the two since March 2014. The six month Class III average stands at $15.99, down from $22.68 at this time a year ago, and compares to $17.74 in 2013.

Looking ahead, the July Class III futures contract was trading late Thursday morning (July 2) at $16.11 per cwt, which would be a drop of 61 cents from June. August was at $16.50; September, $16.59; October, $16.64; November, $16.74; and December was at $16.72.

The June Class IV price is $13.90 per cwt, down a penny from May and $9.23 below a year ago. The 2015 Class IV average now stands at $13.70, down from $23.09 a year ago and compares to $18.17 in 2013.

California’s June 4b cheese milk price was announced by the California Department of Food and Agriculture at $15.55 per cwt, up 92 cents from May but $3.52 below June 2014. The six month average now stands at $14.32, down from $20.63 at this time a year ago, and compares to $16.05 in 2013.

The June 4a butter-powder milk price is $13.65, down 26 cents from May and $9.54 below a year ago. The 4a average now stands at $13.48, down from $22.94 a year ago, and compares to $17.94 in 2013.

Meanwhile, CME cash cheese and nonfat dry milk prices headed south. The Cheddar blocks closed the Fourth of July holiday shortened week at $1.62 per pound, down 2 cents on the week and 34.75 cents short of last year’s level. The Cheddar barrels closed Thursday at $1.5825, down 4.25 cents on the week and 40.25 cents below a year ago. Eleven cars of block traded hands on the week and 29 of barrel. The NDPSR-surveyed U.S. average on the blocks hit $1.7531, up 1.7 cents, while the barrels averaged $1.7285, unchanged.

Dairy Market News (DMN) reports that "Strong cheese sales have been normal in the Midwest for some time, and that is contributing to some manufacturers playing more hardball in price negotiations. There were early week calls to some manufacturers seeking loads of cheese, which manufacturers had available but opted to hold for later sale when buyers would not meet seller’s current price expectations.

Noteworthy is the confidence of manufacturers in being willing to hold cheese for future sale, rather than accept slightly fewer cents a pound to sell in early July rather than late June. Profitability is looking good this year for Midwest cheese manufacturers as the half way point of the year is reached. The overwhelming majority of comments looking forward a few months are confident about selling however much cheese a plant can make," DMN said.

"Those that can absorb surplus milk are finding tentative offers occasionally as low as $5.00 below Class depending on timing and location. Some plants are reporting that components are beginning to decline, not in any alarming way, from recent weeks, as is seasonally normal. In much of the region, the weather has been excellent for cows. This has also led to a good crop year, with second cutting of hay alfalfa completed in much of Wisconsin. Corn in some areas was nearly shoulder high by the Fourth of July. These factors are working together, in the opinion of cheesemakers, to contribute to expected good milk production over the next few months," according to DMN.