The National Milk Producers Federation (NMPF) applauded the inclusion of improvements to the dairy Margin Protection Program (MPP) and the cotton program in the Senate Appropriations Committee mark-up of its fiscal year 2018 agricultural appropriations bill.

 

NMPF President and CEO Jim Mulhern said, “The enhancements to the dairy MPP contained in the bill would strengthen the program and help pave the way for additional necessary improvements in the upcoming farm bill.”

A NMPF press release stated the appropriations bill makes two important changes that were included in NMPF’s farm bill proposal: It would reduce premiums paid by dairy farmers for the first 5 million pounds of milk coverage in the program, as well as change the USDA’s calculation of the actual margin from a two-month average margin to monthly.

Stan Ryan, president and CEO of Seattlebased Darigold, told a Congressional panel Tuesday that the North American Free Trade Agreement (NAFTA) “has created jobs and increased sales for his company and the entire U.S. dairy sector, and that a renegotiated treaty must maintain market access to Mexico while also fixing trade challenges with Canada.”

“An agreement that has done this much good and that supports more than 25,000 in the dairy sector alone must be preserved,” Ryan said.

Michael Dykes, D.V.M., president and CEO of the International Dairy Foods Assoc. added that “The members of the IDFA are encouraged to see that several key priorities for the U.S. dairy industry are reflected in the administration’s objectives for renegotiating the North American Free Trade Agreement.

“We strongly support the call for renegotiation, and we look forward to working with the U.S. Trade Representative and others in the administration to preserve the critically important dairy export market in Mexico.”

Preliminary USDA data reports June milk output in the top 23 producing states at 16.9 billion pounds, up 1.7 percent from June 2016. Revisions added 17 million pounds to the original May estimate, now put at 17.8 billion pounds, up 1.9 percent from a year ago.

The June 50-state total is 18.0 billion pounds, up 1.6 percent and output for the April to June quarter hit 55.3 billion pounds, up 1.8 percent from a year ago.

Cow numbers averaged 9.4 million head, in the quarter, up 76,000 from 2016. June milk cow numbers in the 23 states totaled 8.73 million head, up 4,000 from May and 83,000 more than a year ago. Output per cow averaged 1,939 pounds, up 13 pounds from a year ago.

Heat took a heavy toll on California cow numbers and milk output, down a hefty 2.1 percent, and the fifth month in a row the state’s output was below a year ago. Cow numbers were down 13,000 head, cow disposal services couldn’t keep up.

Output per cow was down 25 pounds. Wisconsin was nowhere close to making up the difference, up just 0.2 percent, as output per cow was only up 5 pounds and cow numbers were unchanged.

Texas continued to outpace the rest of the states, up a tank busting 15 percent, driven by 40,000 more cows and a 115 pound gain per cow. New Mexico, was up 9.8 percent, on 22,000 more cows and a 50 pound gain per cow from a year ago.

Idaho was up 1.9 percent, on 8,000 more cows and 10 pounds more per cow. Michigan was up 2.8 percent, also on 8,000 more cows and a 20 pound gain per cow. A 40 pound gain per cow propelled Minnesota to a 1.4 percent increase, despite a 4,000 cow loss. New York inched 0.4 percent higher on 4,000 more cows outweighing a 5 pound drop per cow. A 15 pound gain per cow was offset by 5,000 fewer cows. Washington State was down 1.3 percent on a 10 pound loss per cow and 2,000 fewer cows.

 

 USDA’s Livestock Slaughter report shows June culling was down from May but higher than 2016. An estimated 236,700 were slaughtered under Federal inspection, down 500 head from May, but 13,000 more than June 2016. Culling so far in 2017 totaled 1.495 million head, up 46,100 from a year ago or 3.2 percent.

The July 18 Global Dairy Trade (GDT) auction slightly reversed two events of decline. The weighted average for all products offered inched up 0.2 percent,  following a 0.4 percent slip on July 4 and0.8 percent on June 20.

Butter led the gains, up 3.4 percent, after it slipped 0.1 percent last time and Cheddar cheese was up 1.6 percent, after it dropped 3.2 percent. Whole milk powder was up 0.3 percent, following a 2.6 percent advance last time. Skim milk powder again led the declines, down 3.2 percent, following a 4.5 percent drop and anhydrous milkfat was off 0.2 percent, after it dropped 3.5 percent last time.

FC Stone equated the GDT 80 percent butterfat butter price to $2.6570 per  pound U.S. CME butter closed Friday at$2.5850. GDT Cheddar cheese equated to $1.8650 per pound U.S. and compares to July 21 CME block Cheddar at $1.7075.

GDT skim milk powder averaged 91.82 cents per pound and whole milk powder averaged $1.4127 per pound U.S. CME Grade A nonfat dry milk closed on July 21 at 87.25 cents per pound.

USDA’s biannual Dairy: World Markets and Trade report, issued July 18, said, “During the past year, international prices for such dairy commodities as butter, cheese, and whole milk powder (WMP) have staged a significant recovery trading at over $3,000 per ton. While skimmed milk powder (SMP) prices have recovered they remain relatively soft at levels below $2,000 per ton. Import demand has been insufficiently strong to significantly draw down the readily available stocks and exportable supplies in the U.S. and the EU.

“The most notable price movement has been the rapid rise in butter prices, which have climbed from a mid-point low of $2,650 per ton FOB for Oceania and EU to a current mid-point price at about $6,100 per ton FOB, a 130 percent increase in the span of little over a year.

This rapid upswing is due largely to relatively tight world supplies and steady demand particularly evident in the U.S. and the EU.

“Demand growth has been fueled by consumers who now perceive butter as a safer alternative to vegetable oil substitutes such as margarine. The price situation for butter is unlikely to change in the near future if current shipments are an indication of available supplies to the international market. Exports from the top five major exporters, New Zealand, the EU, Belarus, Australia, and the United States, through April 2017 are lagging behind last year’s pace by 17 percent.

“This drop off has been particularly evident in the EU, which is down 28 percent or 25,000 tons. In the period 2012-16 exports of butter from these major suppliers had been growing at annual rate of 4 percent. While high prices of butter will be welcomed by dairy farmers this will likely induce further production of butter and its co-products, mostly in the form SMP. This will add to SMP supplies and likely temper any recovery in prices,” the report warned.

The CME cheese price gap shot higher the third week of July. The blocks closed on July 21 at $1.7075 per pound, up 3.25 cents on the week, following a 12.25 cent jump the previous week, and are dead even with a year ago.

The barrels closed at $1.41, down 6.5 cents on the week, 36.5 cents below a year ago, and gapping 29.75 cents below the blocks, largest spread since Oct. 22, 2014 when it hit 30 cents. Eight cars of block sold this week and 40 of barrel.

Central cheese contacts suggest milk production is easing back a bit, but there is still plenty of it, according to Dairy Market News (DMN), and some say spot loads are available at $1.50 to $3.50 under Class. Plants are running at or near full capacity and demand is generally following seasonal patterns.

Sales into food service are steady to lower, ahead of the seasonal gear up of school and college cafeterias and the advance of the fall pizza season.

Some manufacturers report that their cheese stocks are building and, in an effort to limit the size, market participants have been actively offering cheese barrels on the CME. Demand for fresh cheese barrels has been able to provide some support to market prices, but there remains a large spread between block and barrel prices.

“The disparity in price, and the length to which it has lasted, is unsettling to some barrel cheese producers in that it makes procurement and cost management more challenging,” DMN reported.

Cheese is also being produced at full capacity in most western plants as milk is readily available despite higher daytime temperatures. Cheese is plentiful but contacts suggest that block inventories are slightly tighter than the barrels.

Some contacts don’t think prices reflect current conditions due to the abundance of cheese but demand is steady and, “With current higher cheese prices in the EU, the international market is showing more interest for U.S. cheese.”

 

May fluid milk consumption inched higher, according to the USDA. Packaged fluid sales totaled 4.1 billion pounds, up 5.8 percent from April and 0.4 percent above May 2016.

Conventional product sales totaled 3.84 billion pounds, up 0.1 percent from a year ago; organic products, at 226 million pounds, were up 4.1 percent. Organic represented about 5.6 percent of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, up 4.3 percent from a year ago, up 2.1 percent year to date, and made up 30.2 percent of total fluid sales in the month. May skim milk sales were down 10.1 percent from a year ago. Total packaged fluid milk sales for first five months of 2017 totaled 20.2 billion pounds, down 2.4 percent from the same period a year ago. Year-to-date sales of conventional products, at 19.1 billion pounds, were down 2.6 percent; organic products, at 1.1 billion pounds, were up 1.3 percent.

Organic represented about 5.4 percent of total fluid milk sales so far in 2017.  The August Federal order Class I basemilk price is $16.72 per cwt, up 13 cents from July and $1.65 above August 2016, propelled by the rising butter price. It is the highest Class I since March 2017 and equates to $1.44 per gallon, up from $1.43 in July and $1.30 a year ago. The eight month average stands at $16.37, up from $14.10 a year ago and $16.33 in 2015.

The surveyed butter price used in calculating the month’s Class I value averaged $2.6256 per pound, up an enhancing 20.7 cents from July. Nonfat dry milk averaged 90.26 cents per pound, down 1.8 cents. Cheese averaged $1.5266, down 11.5 cents, and dry whey averaged 44.89 cents per pound down 4.7 cents.