DairyBusiness Update: April 14, 2014

February Fluid Milk Sales Down 2.1%
February 2014 packaged fluid milk sales totaled 4.04 billion lbs., down 2.1% from February 2013. (Sales were not adjusted for calendar considerations).
February sales of conventional products, at 3.84 billion lbs., were down 3% from a year ago; organic products, at 195 million lbs., were up 18.5% Organic represented about 4.8% of total sales for the month.
January-February 2014 total packaged fluid milk sales, at 8.59 billion lbs., were down 1.2% from the same period a year earlier. Year-to-date sales of conventional products, at 8.18 billion lbs., were down 2.0%; organic products, at 411 million lbs., were up 16.3%. Organic represented about 4.8% of total sales.

Source: Dairy Market News

More Milk Means More Cheese: Take It Out to the Ball Game
   Cheese plants in many parts of the country are increasing production levels  where milk supplies are building seasonally, according to USDA’s Dairy Market News (DMN). Some Midwestern plants continue to report slower growth. The higher production rates are helping to fill orders and build stocks. Cheese prices are trending lower after reaching historic levels early in the year. As prices move lower, some end users are showing increased interest in acquiring inventory, while others continue to wait for lower prices.
   Process cheese demand is building for summer needs and buyers are looking to increase purchases at the lower price points. Food service demand is also showing increased interest. As baseball parks open across the country, there are increased orders for cheese curd and various other cheese products for sports fans.

Will 2014 Milk Production Grow That Much?
   As I reported from last week’s World Agricultural Supply and Demand Estimates report, USDA raised its milk production estimate slightly higher. Milk production during 2014 was forecast to total 206.1 billion pounds, up 400 million pounds from their forecast a month ago and up 4.9 billion pounds (2.4%) versus 2013.
   Jerry Dryer, editor of the Dairy and Food Market Analyst wrote in his April 11 issues that his milk production estimate is slightly lower at 205.8 billion pounds. USDA says “strong returns are expected to encourage a more rapid expansion in cow numbers and increase milk per cow.”
   Dryer says he can’t argue with this assessment, but “questions the magnitude of the response. Cow numbers will be held in check by debt-weary milk producers and bankers and output per cow will be slowed during the first half of the year by feed quality issues.”

GDT Preview?
   High Ground Dairy’s Eric Meyer reports that, while Fonterra’s 12 month forecast volume across all commodities was revised slightly lower versus two weeks ago (0.2%), his charted data shows an uptick in forecasted volumes over the next two events. In fact, WMP and SMP volumes were revised higher for most of the next two months which Meyer says “strengthens the case for more downward price movement in these markets in the near term.” The next Global Dairy Trade event is tomorrow.

Federal Tax on Cow Flatulence? Future Nevada-Type Standoff?
   As Bureau of Land Management officials have backed down in the Nevada cattle rancher Cliven Bundy standoff and we hear of farm operations being filmed and photographed by who knows who, one can’t help but wonder what will happen next and what similar threats to agriculture might lay ahead.
   The Daily Caller reports that Senate Republicans warn that President Obama’s new focus on agricultural methane emissions could mean a tax on livestock emissions — including cow flatulence.
   South Dakota Sen. John Thune and fellow GOP senators sent a letter to Obama administration officials urging them not to regulate livestock emissions as part of the president’s crusade against global warming.
   Obama’s “Climate Action Plan” would require the dairy industry to reduce methane emissions by 25 percent by 2020. The Agriculture Department, Energy Department and Environmental Protection Agency are set to put together a “Biogas” roadmap to reduce methane emissions.
   Republicans argue that Obama’s methane reduction plan could lead to “heavy-handed” regulations that would “have detrimental implications on livestock operations across the country.”
   Read more: http://dailycaller.com/2014/04/11/republicans-warn-of-a-federal-tax-on-cow-flatulence/#ixzz2ym2I4071

Cubans Being “Milked”
   CBS News reports that Cubans are taking another hit to their wallets as the government announces an increase in the cost of powdered milk, a staple of every home with children and basic to the diet of nearly everyone on the island.
   The measure will not affect the state-subsidized supply of powdered milk to children aged seven and under. They receive three kilograms of powdered milk at the equivalent of 40 U.S. cents a kilogram, paid for in ordinary Cuban pesos.
   But at hard-currency stores, the price of a half-kilogram package will go up 45 cents from $2.90 to $3.35. A kilogram package will go up by 85 cents or from $5.75 to $6.60. These stores sell in Cuban convertible pesos (CUC) comparable to the U.S. dollar and already have a 240 percent markup on their products.
   The average state employee earns the equivalent of between $20 to $30 USD a month and spends up to 80 percent of their income just on food so any price hike puts the family budget into a tailspin.
   Read the complete article at: http://www.cbsnews.com/new/cubands-getting-squeezed-by-soaring-milk-prices/  

Registration Open for Regional National Mastitis Council Meeting
   Registration for the National Mastitis Council (NMC) Regional Meeting, August 4-6, 2014, is now open. This three day event will be held at Ghent University in Ghent, Belgium.
   The regional meeting provides attendees with information and skills necessary to strengthen milk quality programs and increase dairy profitability. The conference also provides an excellent opportunity to network with individuals from around the world who share the common interest of quality milk production. The meeting is being organized jointly with the M-team at Ghent University.
   The three-day conference will begin on Monday, August 4 with a session on the use of antimicrobials in prevention and cure of mastitis, focusing on the responsibility of the industry, academia and regulators. An opening reception will be held that evening at the Assembly Hall of Ghent University (Aula) in Ghent, Belgium.
   The main program will be held on Tuesday, August 5 and includes 11 speakers covering topics ranging from immunity and mastitis, genetics and mastitis, treatment programs, dry cow management, udder health programs around the world, and an update on milking and milking techniques. Other topics include a look at what has been learned over the years on mastitis and milk quality, as well as updates on contagious mastitis, emerging pathogens, environmental pathogens, and opportunistic pathogens. The conference dinner that evening will be held at the historic ‘Castle of the Counts’ (Gravensteen) in the center of Ghent.
    Specialized short courses will be held on Wednesday, August 6. The short courses provide a smaller group setting for the participants, offering the opportunity to interact directly with the instructor and other registrants in the course.
    The early bird discount registration deadline is June 1 and the final day to pre-register is July 15. Registration will also be accepted on-site at the meeting, however please note that the short courses may fill up before the deadline. Registration for the short courses is based on a first-come, first-serve basis.
    To learn more about the NMC regional meeting and to register, visit: www.nmc2014.ugent.be. For additional information contact the NMC office at nmc@nmconline.org; phone (608) 848-4615 or contact the M-team at NMC2014@Ugent.be.

Groundbreaking Marks New Era for World Dairy Expo Cattle Facilities
   A crowd was on hand April 11 as project partners turned the first shovels of dirt, marking the start of the construction for the New Holland Pavilions at Alliant Energy Center, Madison, Wis. The $24 million expansion will replace the current barn facilities with state-of-the-art multi-use pavilions. The construction project is to be completed in time for World Dairy Expo, September 29 through October 4.
   The New Holland Pavilions will span 290,000 square feet, and will be equipped with modular stalling systems, modern ventilation and livestock exhibitor amenities. Scott Bentley, World Dairy Expo General Manager states, “We are excited that the pavilion building project is underway. The new facilities will provide improved accommodations for the elite dairy cattle that travel to World Dairy Expo to compete”.
   World Dairy Expo’s theme is “Designer Dairy” and will be held September 30 through October 4, 2014. Visit worlddairyexpo.com, follow us on Facebook or Twitter @WDExpo or #WDE14 for more information.

Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
   Friday’s 0.5¢ rally in cash cheese was sustained, at least for this morning, when a bidder (as in ONE) took the barrels up 8.75¢, to $2.1675/lb., and the blocks gained 1.5¢, climbing to $2.1850/lb. One unfilled bid of each was all it took but it narrowed the typical 3-5¢ spread to 1.75¢, down from 9¢ on Friday.
   FC Stone risk management consultant Chris Hildebrand wrote in this morning’s Insider Opening Bell that  he looks for “continued pressure on cheese prices.” "Eleven loads of blocks traded last week,” he said, “The most we've seen in some time. So it's becoming more available and exports are slowing a little bit." He expects cheese prices to continue to decline, but not to take a sharp drop.   
   May and June Class III futures contracts were up 53¢ and 31¢ respectively but slipped in the remaining months of 2014.
   Cash butter, on a trade, (1st one since April 4) headed in the other direction, shedding 4¢, and dipped to $1.93/lb. after holding at $1.97/lb. for 6 consecutive sessions.
   "With Easter holiday demand met, prices could weaken further and I expect exports to soften,"  Chris Hildebrand warns. “Global demand is steady while exports from Oceania and Western Europe are increasing.”    
   Cash Grade A nonfat dry milk inched up 0.25¢ on 2 unfilled bids, both at $1.91/lb., after gaining 0.75¢ Friday, and 1.25¢ on Thursday. While it has a ways to go to recapture the 11¢ it lost last Wednesday, it is headed up.

Today’s Market Closing Prices
Butter: Down 4¢, to $1.93/lb.
Cheddar blocks: Up 1.5¢, to $2.1850/lb.
Cheddar barrels: Up 8.75¢, to $2.1675/lb.
Grade A nonfat dry milk: Up 0.25¢, to $1.91/lb.
Class III milk: April $24.09, +7¢; May $22.03, +53¢; & Jun. $20.36, +31¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $19.42, -5¢ from Friday. The 2nd half average is now at $19.03, -6¢ from Friday.
Looking ahead:
   This is a short week for dairy trading as the markets are closed for Good Friday and wrap up on Thursday. There isn’t a lot coming out of USDA this week either. Tomorrow is the Global Dairy Trade auction. We all will be watching to see whether prices rebound or continue to slide. USDA issues its monthly Livestock, Dairy, and Poultry Outlook tomorrow afternoon and that’s it for the rest of the week.
Tuesday on DairyLine:
   FC Stone's Bill Brooks on the latest dairy prices.
   Dr. Duane Norman on the reduction in mastitis in the U.S. dairy herd as measured by
         the Somatic Cell Count of herds on DHI test.