Dairy producers will receive Milk Income Loss Contract payments (MILC) again.

USDA’s Farm Service Agency (FSA) issued additional details, according to the DairyBusiness Update, reporting that the “relief period” for dairy producers with annual production above the payment cap of 2.985 million pounds and wishing to change their “start month” in Fiscal Year 2013 is Feb. 1-28.

The enrollment period for new dairy operations started before Feb. 1 is Feb. 1-28, the retroactive payment rate for September 2012 milk marketings is approximately 59 cents per cwt. on eligible milk, and FSA began making payments on Feb. 5.

The retroactive payment rate for October 2012 milk marketings is approximately 2 cents per cwt. on eligible milk. But, before the October MILC payment can be issued, dairy farmers must complete a new form.

See your local FSA office for details.

The University of Wisconsin’s Dr. Brian Gould has posted his MILC payment projections, based on milk and feed futures prices at the close of trading on Jan. 31. He projects 11.41 cents per cwt. for January; February 52.63 cents; March 73.60 cents; April 57.2 cents; May 46.29 cents; June 36.91 cents; and July 26.85 cents. Updates are posted at “Understanding Dairy Markets” online at http://future.aae.wisc.edu/collection/software/current_MILC_est.xls

The USDA raised its 2013 milk production estimate again in this month’s World Agricultural Supply and Demand Estimates report. USDA projects output to hit 201 billion pounds, up 1.1 billion pounds from last month’s estimate.

The estimate for 2012 was also raised to 200.3 billion pounds, up 300 million from a month ago and compares to 196.2 billion in 2011.

USDA’s Cattle report indicated that the number of cows on Jan. 1 was about unchanged from 2012. Milk per cow forecasts were raised as last quarter-2012 estimates were higher than expected and lower forecast feed costs supported higher milk yields in 2013.

Cheese price estimates were unchanged from last month, but the price range was narrowed. Nonfat dry milk and whey prices were raised reflecting stronger demand, but the butter price was lowered.

The Class III milk price forecast was unchanged despite a higher whey price although the range was tightened. The Class III is now predicted to range $17.70-$18.40 per cwt. That compares to $17.65-$18.45 projected a month ago and to a $17.44 average in 2012 and $18.37 in 2011.

Lower forecast butter prices were more than offset by higher nonfat prices resulting in a slightly higher forecast Class IV price. The Class IV average is now put at $17-$17.80, up from the $16.90-$17.80 expected last month.

December American type cheese production hit 378 million pounds, up 4.2 percent from November and 2.6 percent above December 2011, according to USDA’s latest Dairy Products report. Italian type cheese totaled 409 million pounds, up 6.4 percent from November but 0.1 percent below a year ago. Total cheese output, at 949 million pounds, was up 3.8 percent from November and 2 percent above a year ago.

U.S. churns produced 173 million pounds of butter, up 20.9 percent from November and 4.4 percent above a year ago. Dryers spun out 157 million pounds of nonfat dry milk, up 35.8 percent from November and 4.7 percent above a year ago.

The markets had little reaction to the reports although cash block cheese saw the first gain since Jan. 1, closing the second Friday of February at $1.65 per pound, up a half-cent on the week and 17 1/2 cents above a year ago.

Barrel closed at $1.56, up 1 3/4-cents on the week, 7 1/2 cents above a year ago, but a larger than usual 9 cents below the blocks.

Two cars of block were sold on the week and seven of barrel. The AMS-surveyed U.S. average block price slipped 3 1/2 cents, to $1.7007, while the barrels averaged $1.6563, down 5.2 cents.

USDA’s Dairy Market News (DMN) said milk volumes to cheese plants remain strong, especially in the Midwest where milk output is up 4.8 percent from last December compared to a national increase of 1.7 percent.

Eastern milk supplies are strong with cheese manufacturers working busier than anticipated, according to DMN. Increased cheese inventories are affecting sales as buyers wait to find a market bottom. Lower prices have buyers looking to find cheese for aging programs, but slow to make commitments. Export buyers are in much the same position, although sales through the CWT program remain active.

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 publcation.