DairyProfit Update for Sept. 13, 2012
CDFA’s Ross issues milk pricing statement
Karen Ross, California Agriculture Secretary, issued the following statement on Sept. 13:
Under state law, the California Department of Food and Agriculture (CDFA) has the responsibility of calculating the minimum price that milk producers are to receive from processors. In order to perform this duty, (CDFA) employs economists who monitor conditions in the dairy marketplace. When considering changes to the formulas used to calculate the minimum price, the Department is obligated to balance the economic impacts on producers, processors and consumers to ensure there is sufficient milk to meet demand, and that demand remains consistent. Because of the competing interests of these groups, (CDFA) is often required to make difficult decisions.
(CDFA) is acutely aware of the current challenges facing dairy farmers. Our economists have been following the national and international developments very closely. However, there are significant long-term problems that must be addressed. While the drought has resulted in a dramatic increase in feed costs, producer prices are also affected by a change in dairy consumption patterns and different marketing conditions in California versus the rest of the nation. Without reforms to the overall pricing structure to account for these changes, short-term price adjustments may not be an effective approach. Many in the dairy industry agree. Over the course of more than a year, stakeholders across the California dairy industry have expressed their concerns about our current pricing system and how it may affect the future of our industry.
That is why (CDFA) is assembling the Dairy Future Task Force. Dairy producers, processors and cooperatives are being asked to come together as a coalition to make recommendations for changes to the pricing structure, so that there is long-term stability in the industry and California may maintain its status as a world leader in dairy production well into the future.
IDFA: Congress back, Farm Bill action unlikely
Congress is back in session this week following its five-week recess, but lawmakers will only be in Washington for a few legislative work days. According to the International Dairy Foods Association (IDFA), it's unlikely Congress will pass a 2012 Farm Bill, and instead address it during the lame duck session.
If the Farm Bill will be considered soon, IDFA is urging it to be considered under regular order, allowing amendments, rather than a closed rule, which would restrict them. IDFA opposes dairy provisions of the current House Ag Committee and Senate proposals, specifically the Dairy Market Stabilization Program, and instead supports a margin insurance program for dairy farmers that wouldn’t require limits to milk production.
"Our position remains that if the Farm Bill moves to the floor of the House, it must be in an open process that would allow Reps. Bob Goodlatte (R-Va.) and David Scott (D-Ga.) to offer an amendment to strike supply management," said Jerry Slominski, IDFA senior vice president of legislative and economic affairs. "With the support of Speaker John Boehner (R-Ohio) and other representatives, both Republicans and Democrats, IDFA believes the amendment can win and would send a strong signal to the Senate to drop the controversial stabilization program from its bill."
Hypoxia task force launches new water quality monitoring efforts
Source: U.S. Environmental Protection Agency
The Mississippi River/Gulf of Mexico Watershed Nutrient (Hypoxia) Task Force is launching two new efforts to monitor reductions in nutrients – nitrogen and phosphorus – throughout the watershed. Chaired by the U.S. Environmental Protection Agency (EPA) and the State of Iowa, the task force has established the Mississippi River Monitoring Collaborative to evaluate progress toward reducing the amount of nutrients entering local waterways and ultimately to the Gulf of Mexico. USDA, a member of the task force is also preparing to update its technical standard for water quality monitoring to better measure the amount of nutrients coming from farm fields.
The task force is identifying streams with long-term nutrient monitoring and streamflow records. So far, the team has collected more than 670,000 nutrient data records from 12 states in the Mississippi River Basin, which it will use to evaluate where conservation practices and policies are working, and where new or enhanced nutrient reduction strategies need to be developed. Visit http://water.epa.gov/type/watersheds/named/msbasin/index.cfm
MARKETS: Butter, cheese up; Class III futures higher, too
Today's market closing prices:
Butter: up 0.5¢, to $1.8450/lb.
Cheddar blocks: up 1.5¢, to $1.8550/lb.
Cheddar barrels: up 1.25¢, to $1.8125/lb.
Grade A nonfat dry milk: down 1.0¢, to $1.69/lb.
Extra Grade nonfat dry milk: unchanged, at $1.6350/lb.
Class III milk: +2¢ to +26¢ through August 2013. Based on current CME closing prices, the average for September-December 2012 is $19.62/cwt.; the full year 2012 average is $17.36/cwt.; and the 2013 average is $18.73/cwt.
Corn, soybeans up; meal mostly higher
Corn: +4¢ to +10¢ through September 2013. The September-December 2012 average is $7.76/bu.; 2013 average is $7.32/bu.
Soybeans: +3¢ to +16¢ through September 2013. The September-November 2012 average is $17.45/bu.; 2013 average is $15.81/bu.
Soybean meal: -$1.90 to +$5.00/ton through September 2013. The September-December 2012 average is $531.17/ton; 2013 average is $452.41/ton.