DairyBusiness Update for 10.17.13
A California federal judge dismissed California Dairies Inc. from a class action lawsuit accusing it and affiliate DairyAmerica Inc. of lowballing nonfat dry milk (NFDM) prices, but found DairyAmerica's alleged misreporting affected dairy producers' payments for raw milk.
The lawsuit (Carlin et al v. DairyAmerica, Inc. et al, 1:09-cv-00430), in the California Eastern District Court, was originally filed in March of 2009. Subsequent lawsuits filed by other dairy producers were consolidated into the single class action suit.
The lawsuit alleged false reporting of NFDM prices – used to calculate federal order minimum prices – resulted in depressed milk prices to dairy producers. Following an audit for the period covering April 29, 2006 to April 14, 2007, USDA’s Ag Marketing Service (AMS) found some price reports included fixed forward pricing sales, which are explicitly prohibited. During the height of the problem – Nov. 11, 2006 to March 10, 2007 – prices were understated by an average of 4.2¢/lb.
It’s estimated a penny increase in the NFDM price raises producer milk prices about 9¢/cwt. in the federal order blend or “uniform” price. AMS estimated the errors resulted in a loss of about $50 million to dairy producers, or about 4¢/cwt. Read more ...
The executive board of the National Conference on Interstate Milk Shipments (NCIMS) met last week in Chicago to finalize conference actions on the 2013 Grade “A” Pasteurized Milk Ordinance (PMO). The actions were based on the U.S. Food and Drug Administration’s approval of all but one of the proposals put forth by the NCIMS following its spring conference.
According to the International Dairy Foods Association, FDA will issue a detailed memorandum, IMS-a-49, outlining the specific changes to the PMO and related documents. The finalized proposals will take effect one year after the date that the IMS-a memo is issued unless other effective dates for individual proposals have been established. Read more …
More than 50 state and national dairy and farm organizations have joined together to urge congressional farm bill conferees to adopt the Senate’s Dairy Security Act (DSA), because it offers farmers the most effective safety net for the future. The groups expressed their support in a joint letter sent today to the Senate and House members who will decide the fate of the 2013 farm bill.
The letter to the conferees points out that the “Dairy Security Act is specifically designed to offer dairy farmers help when they desperately need it: when margins between farm milk prices and production costs shrink to dangerous levels. Equally important, the Dairy Security Act is designed to limit taxpayers’ liability through its market stabilization mechanism. This provision will help farm milk prices recover more quickly, while mitigating against prolonged or particularly serious downturns that would otherwise increase government program costs.”
Jim Mulhern, National Milk PRoducers federation (NMPF) Chief Operating Office, said it is critical that farm bill conferees adopt the Senate dairy provisions in order to protect dairy farmers, provide greater stability to dairy markets and protect taxpayers. Read more …
The House leadership last Saturday named 17 Republicans and 12 Democrats to the conference committee that will reconcile the respective House and Senate farm bills passed earlier this year. They are joining seven Democratic Senators and five Republicans. Leaders of the farm bill conference said they are likely to formally begin meeting the last week of October.
Mielke’s Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Buyers opened their wallets at the Chicago Mercantile Exchange this morning. Cash block cheese jumped 1.25¢, to $1.8475/lb., on 4 trades at that price. Three bids at $1.8475/lb. went unfilled. However, the barrels rolled in the opposite direction, losing another 1.25¢, following yesterday’s 0.25¢ loss, and are now trading at $1.7650/lb., an unsustainable 8.25¢ below the blocks. Four cars of barrel traded hands: 2 at $1.77/lb. and 2 at $1.7650/lb.; with 1 offer at $1.7650/lb. going uncovered.
They keep buying butter, but the price keeps falling, dropping another 2¢ this morning,. The spot price is now $1.50/lb., the lowest since Sept. 11. Sales today ranged from $1.48/lb. to $1.5025/lb.; 1 bid at $1.50/lb. and an offer at $1.52/lb. were left on the board.
Grade A nonfat dry milk picked up another 0.25¢ on an unfilled bid, after gaining 0.5¢ yesterday, and is now at $1.8525/lb. Extra Grade remained at $1.80/lb., with no activity.
Today’s market closing prices:
Butter: down 2¢, to $1.50/lb.
Cheddar blocks: up 1.25¢, to $1.8475/lb.
Cheddar barrels: down 1.25¢, to $1.7650/lb.
Grade A nonfat dry milk: up 0.25¢, to $1.8525/lb.
Extra Grade nonfat dry milk: unchanged, at $1.80/lb.
Class III milk: -4¢ to +3¢ through July 2014. Based on current CME closing prices, the Q4 2013 average is $18.11/cwt.; with an overall 2013 average of $17.85/cwt.; and a 2014 average of $16.90/cwt.
Government and USDA are back, but not all dairy reports
Lawmakers crafted a compromise on Wednesday night to end the 16-day government shutdown and raise the U.S. debt ceiling. The Senate vote was 81-18; it was 285-144 in the House.
It remains to be seen how quickly USDA reports will resume. While the lapse in federal funding has ended, NASS has not been able to engage in the necessary data collection and analysis over the past few weeks. NASS said it assessing its data collection plans and evaluating the timing of upcoming reports.
The monthly Livestock, Dairy, and Poultry Outlook would be the first restored report that we monitor, scheduled for Friday, after the dairy markets are closed. Other reports affecting dairy include the monthly Livestock, Dairy and Poultry Outlook (Oct. 18), Milk Production (Oct. 21), Cold Storage (Oct. 22), cull cow slaughter (Oct. 24), Milk Cost of Production (Oct. 28) and Ag Prices (Oct. 31) reports.
USDA announced the National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) have canceled or postponed publication of selected USDA statistical reports impacted by the lapse in federal funding.
NASS's Crop Production report and the WAOB's World Agricultural Supply and Demand Estimates (WASDE) report, scheduled for Oct. 11, were canceled. The next scheduled release for these reports is Nov. 8.
Additionally, NASS's Crop Progress reports scheduled for Oct. 7 and 15 are canceled. NASS's Cattle on Feed report scheduled for Oct. 18 is postponed.
In California: The California Department of Food and Agriculture is scheduled to announce its November Class I prices on Tuesday, Oct. 22, and will include any mandated price increase resulting from the recent milk price hearing in Sacramento.
Corn steady; soybeans, soybean meal futures up
Today’s futures prices at the Chicago Mercantile Exchange:
Corn: steady to slightly higher through December 2014, settling in a range of $4.43-$4.83/bushel.
Soybeans: +6¢ to +17¢ through November 2014. November 2013 through August 2014 contracts settled in a range of $12.43-$12.93/bushel.
Soybean meal: +$3.10 to +$9.20/ton through December 2014. December 2013-September 2014 contracts settled in a range of $372-$413/ton.
• The “MILC and Honey” proposal in Ohio is drawing attention, Lee Mielke reports.
• Nutrigenomics is the topic in this weeks “Feed Facts” segment with Mike Hutjens.
For a sample copy of DairyBusiness Update, or subscription information, visit http://dairybusiness.com/Update.php or phone: 800-334-1904, ext. 222.
Stay connected to DairyBusiness Communications on the go with the DairyBusiness News section on our HolsteinWorld APP for iPhone and Droid. Simply go to http://www.widgetbox.com/mobile/app/holstein-world-rblodgett