The downturn in dairy prices continues. The U.S. Department of Agriculture announced January’s Federal order Class III milk price at $10.78 per hundredweight (cwt.), down $4.50 from December, $8.54 below January 2008, only 98 cents above the support price, and lowest it’s been since 2003. Class III futures late Friday morning portended a bottom of $9.43 in February. March was trading at $10.35 and April at $11.15. The peak was $14.84 in December.

The January Class IV price is $9.59, down 76 cents from December and $6.70 below a year ago..

The NASS-surveyed cheese price averaged $1.2961 per pound, down 45.8 cents from December.

Butter averaged $1.0868, down 15.8 cents. Nonfat dry milk averaged 83.18 cents, down a penny, and dry whey averaged 16.96 cents, down fractionally from December.

Meanwhile, block and barrel cheese prices strengthened the last week of January. The block price closed Friday morning at $1.15 per pound, up 7.50 cents on the week, 2 cents above support, but 65 cents below that week a year ago when blocks jumped 15 cents, to $1.80.

Barrel finished the final week of January at $1.1150, up 1.5 cents on the week, but 66.5 below a year ago.

Forty one cars of block traded hands on the week and five of barrel. The NASS surveyed U.S. average block price fell to $1.1529, down 7 cents. Barrel averaged $1.1330, down 13 cents.

Butter closed Friday at $1.1025, unchanged on the week but 12 cents below a year ago. Only one car was sold on the week. NASS butter averaged $1.0724, down a half-cent. NASS nonfat dry milk averaged 82.77 cents, down 0.3 cent, and dry whey averaged 16.59 cents, also down 0.3 cent.

Price support purchases for the week amounted to 600,000 pounds of butter and 8.1 million pounds of nonfat powder, raising the market year’s cumulative totals to 2.1 million and 150.1 million pounds respectively.

Brian Gould, of the University of Wisconsin at Madison, said in Tuesday’s DairyLine there’s still a lot of uncertainty in the cheese market and, while there have been upticks in the block price the past week or so, the price has come back down as well. He said he was waiting for some consecutive upticks and wasn’t sure when that would take place.

Turning to the plunge in the February Federal order Class I base milk price, Gould said the fall will trigger a Milk Income Loss Contract Payment (MILC) to producers of at least $1.34 per cwt., not factoring the feed cost adjustor. He said the University uses Friday futures prices to update their projected upcoming MILC payments and calls for an MILC payment of $1.43 for February, $1.69 for March, $1.71 for April, and $1.56 for May.

As of Jan. 23, their projections show six consecutive months where the MILC payment will be at least $1, he said, and show a payment for every month except December. Producers are invited to log on to the “Understanding Dairy Markets” website at http://future.aae.wisc.edu/ for complete, updated details.

Government help for dairymen?

The National Milk Producers Federation has again called for government help for dairy farmers plagued by falling prices. The Federation called on Congress and President Obama to focus immediately on the dairy crisis, according to Chris Galen, in Thursday’s broadcast, stating that they are very concerned about where prices are and where they’re going.

You’ll recall two weeks ago that Galen reported on a letter sent to outgoing Agriculture Secretary Ed Shafer, calling for more aggressive help to deal with the collapse in dairy prices. The letter contained a list of recommendations.

One of the most important acts, Galen said, is to improve the ability of manufacturers to sell cheese to the Commodity Credit Corporation (CCC) under the price support program. The reason prices have fallen below the government support price, he said, is that companies choose to sell to the commercial market at a lower price rather than going through the hassle of selling it to the USDA.
National Milk has called on USDA to alter its grading and packaging standards so it’s easier to sell product to the CCC.

The Federation also called for increased purchases of dairy products for government domestic and international feeding programs and to resurrect the Dairy Export Incentive Program, which hasn’t been used for five years.

I asked him about the rumor circulating in Washington last week that the so-called stimulus package being crafted in Congress would include a government-sponsored dairy herd buyout program. Galen said that, “Whenever you have a bill of such magnitude (over $800 billion) to spend, you have just about as many opinions as to where that money should be used.” He said NMPF is not seeking that but remains focused on utilizing its own six-year old, CWT program.

The Federation also initiated legal action last month to stop USDA from selling nonfat dry milk through a third party that could have resulted in prices lower than those specified in the price support program. As reported last week, the Department has announced that it will not proceed with this plan.

The new Agriculture Secretary Tom Vilsack, has only been on the job for a week, Galen said, “so we need to cut him a little slack, on the other hand, a lot of these decisions could be done by people who are not political appointees at USDA and we really think they need to get moving on these things because it’s apparent that we’re in for a period of low prices, prices are below the support level right now for cheese and something needs to be done.”

The National Family Farm Coalition has called on Congress to take emergency measures in the economic stimulus package to “ensure some of the benefits go to rural America,” warning that dairy farmers face the worst crisis since the Great Depression.