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DairyBusiness Update: Dec. 12, 2013


FDA implementing plan to ‘ensure judicious use of antibiotics in food animals’

The U.S. Food and Drug Administration is implementing a plan the agency says will help phase out the use of medically important antimicrobials in food animals for food production purposes. The plan would also phase in veterinary oversight of the remaining appropriate therapeutic uses of such drugs.

In a final guidance, announced Dec. 11, FDA lays out a road map for animal pharmaceutical companies to voluntarily revise the FDA-approved use conditions on the labels of these products to remove production indications. The plan also calls for changing the current over-the-counter (OTC) status to bring the remaining appropriate therapeutic uses under veterinary oversight. Once a manufacturer voluntarily makes these changes, its medically important antimicrobial drugs can no longer be used for production purposes, and their use to treat, control or prevent disease in animals will require veterinary oversight.

The guidance for animal pharmaceutical companies is now in final form, and the proposed VFD rule is open for public comment for 90 days. Read more …


IDFA: Farm Bill extension not necessary

As of Dec. 11, International Dairy Foods Association’s Jerry Slominski said it appears the principal leaders of the Farm Bill Conference Committee are close to reaching a final deal, with plans to wrap up negotiations and pass the bill in early January. Although the House of Representatives may vote on a short extension of the 2008 Farm Bill as a safety measure before adjourning for the year on dec. 13, Senate Democrats believe the extension won’t be necessary because the Obama Administration assured them that there will be no reason for milk prices to spike in January.          

Under the Agricultural Act of 1949, which is suspended until Dec. 31, 2013, the Secretary of Agriculture is required to take actions, most likely by purchasing dairy products at prices well above market rates, to raise farm milk prices to 75%-90% of parity, currently about $38/cwt. According to a report in Politico, Senate Ag Committee Chair Debbie Stabenow (D-MI) said the negotiators received assurance USDA Secretary Tom Vilsack that milk prices would not be impacted if a new Farm Bill could be implemented quickly in January.

“Because implementation of the 1949 Act will require entirely new regulations, the Secretary of Agriculture enjoys ample legal authority to delay the enforcement of the 1949 act should Congress fail to pass a new farm bill prior to December 31,” said Slominski, IDFA senior vice president of legislative affairs and economic policy.

Read the Politico story, “No farm bill in 2013,” here.   


Weekly cow slaughter a turkey, but on pace to top 3 million again

Cull dairy cow slaughter during the Thanksgiving holiday-shortened week totaled 48,500 head, the lowest weekly total of the year, but it pushed the 2013 year-to-date total to about 2.88 million. Cow dairy cow slaughter would have to average just 30,750 per week in December to push the 2013 total above 3 million head for a second straight year. USDA began differentiating dairy cow slaughter from total cows in 1986. Before 2012 (3.1 million head), dairy cow slaughter topped 3 million only twice: in 1986, at 3.595 million (whole herd buy-out program); and 1996, at 3.037 million.


Pennsylvania November IOFC improves

Penn State University’s measure of income over feed costs (IOFC) rose 3.7% in November, according to the latest Dairy Outlook report from economist Jim Dunn. At $9.91/cow/day, the November IOFC is up 36¢/day from October, and the highest value in several years. 

IOFC reflects daily gross milk income less feed costs for an average cow producing 65 lbs. of milk per day, and most of the improvement in November came from higher milk prices, up 2.3% from October. The November Pennsylvania all-milk price was up 23¢/cwt. from October, to $22.50/cwt. Pennsylvania corn prices were down 13¢/bushel, from $4.15 to $4.02 per bushel, but hay prices rose 3%. The soybean meal price fell 8.7%. The average cost to feed a cow producing 65 lbs. of milk per day fell 3¢, to $4.72/day. 

Measured another way, feed costs per hundredweight of milk produced averaged $7.26/cwt., down 48¢ from October. With the higher milk price, the milk margin over feed costs was $15.24/cwt., up 54¢/cwt. from October.

Dunn’s forecast of the average 2013 Pennsylvania all-milk price is $21.42/cwt., $1.39/cwt. (6.9%) more than the 2012 average price. His all-milk price forecast through the first half of 2014 is $22.38/cwt., which would be up 96¢ (4.5%) from 2013’s estimated price.

To read Dunn’s latest 2013 Dairy Outlook report, click here.


MilkPEP to unveil new national fluid milk campaigns

The Milk Processor Education Program has announced two new initiatives for 2014. 

The first is a national integrated marketing campaign designed to drive incremental milk consumption and sales by bringing to life the power of milk's high-quality protein at breakfast. The ongoing campaign will include television, print and digital advertising, in-store materials, public relations and social media.  

The second initiative involves an unprecedented, long-term partnership with Feeding America that will expand on work already started by the National Dairy Council. This effort will spotlight the need for nutrient-rich milk in the nation's hunger-relief programs and for a call to action that will spur consumers to help fill local food banks with gallons of milk.

To learn more about the initiatives and MilkPEP’s strategic approach, processors are invited to a webinar on Thursday, Dec. 19, at 3:00 p.m. (Eastern). The initiatives are scheduled to launch in late February, and a follow-up webinar will be held in early January to share additional details as they become available.

Register here for the “MilkPEP 2014 National Campaign Initiatives” webinar.


Mielke’s Market Daily

(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)

Cash cheese saw more gains this morning in Chicago. The 40-lb. cheddar blocks jumped to $1.8950/lb. on a sale, following yesterday’s 1¢ gain and 0.75¢ Tuesday, but 2 unfilled bids took it up to $1.91/lb., up 2¢ on the day. The big question is, will there be price resistance at this level like last week when it climbed to $1.9475/lb.? A sale took the 500-lb. barrels up 2¢ as well and hit $1.80/lb., but the spread remains at 11¢.

Cash butter headed in the other direction, dropping 6¢ this morning, on 2 uncovered offers.

An unfilled bid took the Grade A nonfat dry milk up another 0.5¢, after gaining 1¢ yesterday, and is now trading at $2.0750/lb., but no seller came to the rescue. Extra Grade was unchanged again, holding at $2.04/lb., with no activity today.

Today’s market closing prices:

Butter: Down 6¢ , to $1.60/lb.

Cheddar blocks: Up 2¢, to $1.91/lb.

Cheddar barrels: Up 2¢ , to $1.80/lb.

Grade A nonfat dry milk: Up 0.5¢, to $2.0750/lb.

Extra Grade nonfat dry milk: Unchanged, at $2.04/lb.

Class III milk: -11¢ to +4¢ through December 2014. The 2013 Q4 average stands at $18.66/cwt., with a total 2013 average of $17.99/cwt., and a 2014 average of $17.49/cwt.

The latest National Dairy Products Sales Report (NDPSR), the prices used to calculate federal order milk prices, shows the average dry whey price dropped 3.4¢ in the week ended Dec. 7, to 55.86¢/lb. The lower whey prices add to a weaker tone in the market and a sense that a correction could be coming, warned FC Stone dairy broker Dave Kurzawski in this morning’s eDairy Insider Opening Bell.

Kurzawski talks about that, the lack of a Farm Bill, and Land O Lakes joining the Global Dairy Trade auction, on tomorrow’s DairyLine broadcast.


Coming up

USDA releases its monthly Livestock, Dairy & Poultry Outlook report on Dec. 16. The U.S. Bureau of Labor provides an update on the Consumer Price Index (including dairy product prices) on Dec. 17. The federal order January 2014 Class I base price is announced Dec. 18. Reports later in the week include the monthly cull cow slaughter estimates and the monthly Milk Production report, Dec. 19, and the Cattle on Feed report on Dec. 20.


Other headlines  

USDA to clarify organic transitioning rule

Vermont's Commonwealth Dairy Doubling On Greek, In-Pouch Yogurts

Iowa State Dairy Association to hold 2014 annual meeting

Greek yogurt 'opened up the market' for healthy dairy: Chr Hansen


Enter the holiday dairy photo contest 

We want to see your best farm-related holiday photos. Maybe your Holstein is acting as Rudolph, or perhaps you’re dressed like elves by the farm sign. Either way, we hope you’ll share! A grand prize winner will be selected and will receive a new digital camera in addition to a possible future cover on DairyBusiness Weekly. To enter, send your best photo with caption to kjentz@dairybusiness.com by Friday, Dec. 20. 

Rules: One entry per contestant. Photos entered in previous contests are not eligible. High resolution photos are preferred. 


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