DairyBusiness Update: Jan. 6, 2014
Appeals court reinstates antitrust suit against Dean Foods
UPI reported that a federal appeals court reinstated an antitrust suit against Dean Foods that alleges the company conspired to drive up milk prices in the Southeast United States. All five counts of the suit, filed by grocery chain Food Lion and others, had previously been dismissed.
Court documents indicate Dean Foods was acquired in 2001 by Suiza, the nation's largest milk bottler. At the time, Dean got most of its milk from independent farmers, while Suiza got a large portion of its milk from National Dairy Holdings, a subsidiary partially owned by the Dairy Farmers Association (DFA).
As part of the merger, the U.S. Justice Department required Suiza to sell its stake in National Dairy Holdings to DFA.
Food Lion and the other plaintiffs charged that while National Dairy Holdings was set up to compete with Dean Foods, it actually had a conflict of interest because DFA also had contracts with Dean Foods.
DFA sold National Dairy Holdings to a Mexico-based dairy processor, Grupo Lala, in 2009.
The appellate court's reversal of the lower court's ruling reinstates count one of the suit that alleges the relationship between Dean and National Dairy Holdings was a "conspiracy not to compete."
What will Fonterra’s GDT footprint mean?
High Ground Dairy’s Eric Meyer wrote in his daily comment this morning that “Three weeks ago, Fonterra reduced their 12 month volume forecast after increasing for six straight events. But as of last week, supply trends remain firm as the overall volume forecast ticked 0.5% higher versus their last estimate. Volumes are still 8.6 million pounds lower than the most recent high of 1.77 billion lbs. that was published five weeks ago.
Whole milk powder 12 month volume forecasts were bumped 1.8% higher to 1.11 billion lbs. last week which represents 63.3% of all Fonterra product offered on GDT. There were no changes to volumes for Tuesday’s trading event or the following three auctions.
Fonterra’s 12 month skim milk powder volume forecasts were reduced 4.9%, 15 million lbs. from three weeks ago yet they increased volumes for the next four trading events. So while Fonterra is anticipating having less SMP down the road, they seem to have slightly more available in the near term.” It remains to be seen what impact, if any, that will have on GDT trading.
California poised to join the family?
California’s Milk Producers Council’s Jan. 3 newsletter says a Federal Milk Market Order in California “appears to be moving forward at a rapid pace.”
“It’s a lengthy process,” the article warns, and says that “It will certainly not be completed in 2014, but nonetheless, after trying every method possible to get the much needed changes to the California system, whether through administrative hearings, legislation, or even a lawsuit, California dairy families appear to be very focused on going down this path to a Federal Order.”
“Producers certainly have questions about this process, many of those focused on how it will handle our State quota program or how the pooling rules will be different. While we don’t know all the answers yet, they are certainly all solvable issues, and I expect that the coming months will bring a lot of clarity to this process,” the article concludes.
Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Cash dairy traders are returning to “normal” following the Christmas and New Year’s holidays (normal is only a setting on a dryer) and await tomorrow’s Global Dairy Trade (GDT) auction but spot prices saw more gains today.
The block cheese price inched up 0.75¢, to $2.05/lb., on a single unfilled bid. Barrel was up 3¢ on a bid and hit $1.95/lb. The spread is now 10¢. The largest spread in 2013 was 20.5¢ on May 2nd.
FC Stone risk management consultant Joe Kobel wrote in this morning’s eDairy Insider Opening Bell that "Until the spread narrows, expect volatility and uncertainty in the marketplace." He looks for some tightening in the spread this week.
Cash butter moved higher as well today, up 5¢, to $1.62/lb., the 4th session in a row of gain, and highest price since Dec. 11, 2013. Four carloads traded hands, the first two at $1.60/lb., 1 at $1.6025/lb., and 1 at $1.6125/lb., but two unfilled bids took it to the close of $1.62/lb.
Cash Grade A nonfat dry milk gained 1.25¢ and is trading at $2.08/lb. One car was sold at $2.0775/lb. A bid at $2.08/lb. took the price higher but drew no seller. Extra Grade remained at $2.09/lb., where it’s been since Dec. 17, with no activity.
Today’s market closing prices:
Butter: Up 5¢, to $1.62/lb.
Cheddar blocks: Up 0.75¢, to $2.05/lb.
Cheddar barrels: Up 3¢, to $1.95/lb.
Grade A nonfat dry milk: Up 1.25¢, to $2.08/lb.
Extra Grade nonfat dry milk: Unchanged, at $2.09/lb.
Class III milk: Jan.$20.06, Unchanged, Feb.$19.83 +15¢, Mar. $19.18 +11¢, Apr. $18.59 +4¢, May $18.25 +7¢, & Jun. $18.03 +7¢. Based on today’s CME closing prices, the 2014 average stands at $18.31, +5¢ from Friday.
FC Stone’s Joe Kobel wrote in this morning’s Insider Opening Bell that "Class III prices have been skyrocketing to new highs, and now the market indicates the climb could have been too high, too fast."
The California Department of Food and Agriculture announces its February Class I milk prices on Friday and USDA issues its monthly Crop Report Friday afternoon as well as its World Agricultural Supply and Demand Estimates report, which will include the latest milk production and milk price projections.
Tuesday on DairyLine:
Bill Brooks thaws out in the Midwest looks ahead to 2014
Denise Behnke from BouMatic tells us about SmartDairy
Sixth Circuit reinstates antitrust suit against Dean Foods
Canada: Supply management scores two wins
US appeals court rules against Dean Foods in antitrust case
2014: THE INTERNATIONAL YEAR OF FAMILY FARMING
In hyped claim organic milk is healthier, activist science meets bungled reporting
Chobani takes yogurt beyond breakfast with new menu items, recipes
Dairy 2.0: Dairy industry enters new, natural-focused era
Coming Wednesday in DairyBusiness Weekly:
(Our digital-only magazine)
• Take the ‘New Year’s Manager’s Challenge’
• California‘s commitment to community health
• ‘Shake, Rattle and Roll’: Butter sculpture honors iconic milk shake
• Cabot honors ‘true celebrities’ with cruise
• Carryover, not hangover: Strong finish to 2013 adds to bullish outlook for 2014
• 110th Anniversary: HolsteinWorld looks back on past 110 years
• California Holstein Convention set for January 30-February 1
• Breeder profile: Flambeau Manor Farm
• Check out our industry briefs and show and sale calendar, view our product spotlight, listen to our podcasts and more!