DairyBusiness Update for 9.27.13

Economists suggest ‘MILC and Honey’ compromise

It's late in the game, but with both sides in the dairy policy debate set in their positions, it is difficult to see a path to compromise. Dairy economists John Newton and Cam Thraen say they have.

They’ve developed a plan they label “MILC and Honey,” allowing dairy producers an option to choose annually between 1) Milk Income  Loss Contract (MILC) program participation, or 2) a stand-alone margin insurance program as their elected safety net. Specifically, the proposal for a combined program is called MILC-Insurance.

Newton and Thraen say the program offers a retooled dairy farm safety net that: (i) works for small and large-scale dairy farm managers; (ii) is fiscally responsible; (iii) does not mute market supply and demand signals; and (iv) does not require a market stabilization program.

The economists say the MILC-Insurance program saves money relative to the stand-alone margin insurance program by capping insurance at $6.00-$6.50/cwt. With the savings, the revenue can be redirected to an expansion of the MILC program, effectively offering the best of both programs (counter-cyclical revenue support or catastrophic margin insurance). Farms would no longer have an incentive to opt-out of the margin insurance and would instead opt for the no-cost MILC program when anticipated margins are favorable. This would allow all farms, regardless of size or management style, to participate in a government sponsored safety net program. Such a program, which offers continuous support, may prevent ad-hoc disaster payments in the future. Read more …


July commercial disappearance improves

Commercial disappearance of milk used in all dairy products during July 2013 totaled 17.50 billion lbs., 3.2% more than July 2012, and about 800 million lbs. more than total milk marketings for the month, according to USDA’s monthly report.

Producer milk marketings for July 2013 totaled 16.7 billion lbs. Adding to available supplies, beginning commercial stocks totaled 16.9 billion lbs., and imports for the month totaled 266 million lbs., for a total of 33.87 billion lbs.

At the end of July 2013, commercial stocks totaled 16.37 billion lbs., down about 530 million lbs. compared to June 2013, but about 1.8 billion lbs. more than July 2012.


Baltimore Ravens, Mid-Atlantic Dairy Association kick off 2013 ‘Play 60 Challenge’ assemblies

The Baltimore Ravens and Mid-Atlantic Dairy Association will kick off their promotion of the in-school Play 60 Challenge on Oct. 1 as part of the national NFL Play 60 campaign, designed to encourage kids to be active for at least 60 minutes a day in order to help reverse the trend of childhood obesity.

By implementing the 2013 Play 60 Challenge, the Ravens are challenging local students to be physically active for at least 60 minutes every day through an incentive-based system. In-classroom tracking materials and individual student guides will be distributed for students to record their physical activity during the four-week program. By reaching specified benchmarks, students will be awarded prizes such as water bottles, foam footballs, basketball hoops and yoga mats. One lucky student from a selected school will also be invited to the Ravens-Steelers game on Nov. 28 and take part in a pre-game ceremony. In addition, top performers from participating schools will attend a prize luncheon in the spring of 2014. 


IDFA: Prices to blame for fluid demise

USDA’s Agricultural Marketing Service estimated JUne U.S. sales of fluid milk products fell 5.9% from the same month last year, the second largest year-over-year monthly decline since USDA began reporting this data in January 2000, according to Bob Yonkers, IDFA chief economist.

Beginning in December 2009, fluid dairy product sales on an average daily basis have declined year-over-year in 38 out of the past 43 months through June 2013.

Theories abound for the decline, ranging from increased competition from alternative beverages to changes in the types of white and flavored milks offered in school breakfast and  lunch programs.

While these and other factors may contribute, one factor certainly will lead to lower fluid milk product sales – higher prices, said Yonkers. He cites a recent study led by researchers with USDA’s Economic Research Service, which found “a 1-percent change in price will cause an impact greater than 1-percent change in the quantity purchased of fluid milk.” Read more …


MARKETS: Cheese unchanged; Class III futures mixed in a narrow range

The cash cheese market slide paused for the weekend, according to DairyBusiness Update associate Editor Lee Mielke. The block price remained unchanged this morning on 3 sales all at yesterday’s closing price of $1.75/lb. That’s down 4 .5¢ on the week and 32.5¢ below a year ago. Cheddar barrels held at $1.72/lb. today, down 4.75¢ on the week, and 31.5¢ below a year ago. One uncovered offer this morning at $1.72/lb. was left on the board. Twelve cars of blocks traded hands on the week; nine of barrels.

Butter was unchanged as well, holding at $1.61/lb., up 1¢ on the week, but 34¢ below a year ago, when the spot price stood at $1.95/lb. Five carloads were sold this morning, all at $1.61/lb., and 28 cars found new homes on the week. Three more cars were offered this morning at $1.61/lb., but the buyers had left for the weekend.

Grade A nonfat dry milk, on 1 sale, gained back 1¢ this morning after losing 2.5¢ yesterday, and is back up to $1.83/lb. Two bids at $1.83/lb. went unfilled. Extra Grade remained at $1.78/lb., with no activity.

Today’s market closing prices:

Butter: unchanged, at $1.61/lb.

Cheddar blocks: unchanged, at $1.75/lb.

Cheddar barrels: unchanged, at $1.72/lb.

Grade A nonfat dry milk: up 1¢, to $1.83/lb.

Extra Grade nonfat dry milk: unchanged, at $1.78/lb.

Class III milk: -4¢ to +6¢ through December 2014. Based on current CME closing prices, the September-December 2013 average is $17.75/cwt.; with an overall 2013 average of $17.73/cwt.; and a 2014 average of $16.76/cwt. 


Corn lower; soybeans and soybean meal futures mixed

Today’s futures prices at the Chicago Mercantile Exchange:

Corn: -2¢ to -3¢ through December 2014, settling in a range of $4.54-$4.92/bushel.

Soybeans: -3¢ to +3¢ through August 2014. November 2013 through August  2014 contracts settled in a range of $12.51-$13.21/bushel.

Soybean meal: -$1.10 to +$3.50/ton through December 2014. October 2013-September 2014 contracts settled in a range of $371-$420/ton.

Next week will be a busy week, with DBC staff at World Dairy Expo, Oct. 1-5.

Dairy producers: Take our ‘technology’ survey

Have you invested in some new dairy production/management technology (equipment, product or system) in the past year? Are you planning to invest in some new technology in the next 6-12 months, but want to read more about it before making a decision? Is there some new technology you purchased recently that you simply can't live without? To take the short DairyBusiness technology/innovation survey (and be eligible for a $5 gift card), click here.


Monday on DairyLine:

• DMI Update: Trying to find a solution for declining fluid milk sales 

• Automatic calf feeding is becoming more popular. Lacey Koontz reports from Virginia Tech Dept. of Dairy Science.


Looking ahead 

California’s September 4a and 4b milk prices are announced on Oct. 1; federal order Class II, III & IV prices are announced on Wednesday, Oct. 2; and the latest Dairy Products report is out Thursday, Oct. 3.


This week in DairyBusiness Update:

1) Happy New (fiscal) Year: Can a Farm Bill be far behind?

2) Bulls, bears (and the panda impact): China’s dairy buying felt in global prices

3) Trends: 2012 per capita cheese consumption a record; July commercial disappearance better

4) Numbers: Weekly dairy cow culling highest since early March

5) Washington: Fire prevention; REAP digesters; organic trade; antibiotics

Next week: Due to travel and an extensive meeting schedule at World Dairy Expo (Oct. 1-5), there will be no DairyBusiness Update next Friday, Oct. 4. Look for daily news alerts at www.dairybusiness.com.


Today on Facebook


• Photo of the Day: It’s Flashback Friday. It's almost here! The air is crisp, the leaves are turning and excitement is building as trailers filled with some of the world's best animals make their way to Madison! Here's one of our favorite Expo photos that truly captures the intensity and excitement that is found at ringside. We hope everyone has a safe trip to Wisconsin - we'll see you there! #HolsteinWorldPOTD — with Brian Craswell and Tyler Doiron.


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