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DairyBusiness Update: July 15, 2014


Global Dairy Trade Average Plunges 8.9%
   Today’s Global Dairy Trade (GDT) auction saw the weighted average for all products drop 8.9%, following the 4.9% decline in the last session. The price index has pretty much seen declines since reaching its high on February 4.
   The downfall today was led by a 10.9% plunge in whole milk powder, which was down 5.4% in the last event. Anhydrous milkfat was down 10%, following a 7.4% decline last time. Skim milk powder was down 7.1%, after a slippage last time of 0.9%. Rennet casein was down 8.9%, following a 2.1% drop in the last event. Cheddar cheese was down 1.6% after a 2.9% drop in the last session. GDT butter was down 1.1%, following the 13.6% plunge in the last event. Buttermilk powder was down 4.6%, after being up 4% last time.  
   FC Stone reports the average GDT butter price equated to about $1.4261/lb. U.S., down from $1.4427/lb. in the July 1 event ($1.3913/lb. on 80% butterfat, down from $1.4075/lb.). Contrast that to CME butter which closed today at $2.39/lb. The GDT Cheddar cheese average was $1.8887/lb. U.S., down from $1.9170/lb. The U.S. block Cheddar CME price today is at $2.00/lb. GDT skim milk powder, at $1.5947/lb. U.S., is down from $1.7283/lb., and the whole milk powder average at $1.4009/lb. U.S., is down from $1.5690/lb. in the last event. The CME Grade A nonfat dry milk price today stands at $1.7350/lb.
                                                                                        Source: GDT & INTL FCStone     

New Seller of Sweet Whey to Join GDT
The GlobalDairyTrade (GDT) announced today that Molkerei Ammerland will join the seven existing sellers on GDT beginning September, 2014, offering Sweet Whey Powder for the first time on the world’s leading auction platform.
   Molkerei Ammerland’s participation as a seller on GDT marks yet another significant development in the world’s foremost online dairy commodity trading platform.
Molkerei Ammerland, one of Europe’s leading dairy cooperatives, gathers milk from over 2000 farmers across northwest Germany, and through its state of the art production facilities it processes more than 1.5 billion kilograms of milk for sale to over 50 countries around the world. Molkerei Ammerland specializes in cheeses, butter, whey powders, milk powders and fresh dairy products, and has capitalized on over 125 years’ experience.
   Molkerei Ammerland CEO Ralf Hinrichs said that “exports already make up 49% of our sales, and will become increasingly important as we increase our production capacity. GDT gives us the opportunity to access worldwide demand for dairy and to compete more effectively on the world stage. This announcement is good for Molkerei Ammerland, its farmers and other business partners.”
   Director of GDT Paul Grave said, “GlobalDairyTrade is delighted to welcome Molkerei Ammerland as the latest new seller in our fortnightly auctions. We believe the addition of Sweet Whey Powder will also be welcomed by the network of over 650 registered buyers as we continue to expand GDT’s role as a key platform for international trade in a broad range of dairy commodities.”
   Since its inception in 2008 GDT has sold over US $14 billion of dairy ingredients products. The introduction of Sweet Whey Powder extends GDT’s offerings to nine product groups offered by eight leading dairy producers. GDT has traded more than one million metric tons in just the last 12 months, and this new development will further deepen the liquidity and price transparency for these products.
   Further information about Molkerei Ammerland’s offering on GDT will be provided in the lead up to formal participation in September. Customer inquiries can be directed to gdt@molkerei-ammerland.de.

Oh Deer! Missouri Dairy Aid Vetoed
Missouri’s 2,000 local dairy farmers and their 15 processing plants have been ‘left out in the cold’ with Governor Nixon’s veto of the two Omnibus Agriculture Bills, House Bill 1326 and Senate Bill 506. One of the reasons for the veto could be the flap over the farmed white tail deer.
   “It’s shocking to us considering both bills were passed with strong bi-partisan support by the Missouri General Assembly,” says Larry Purdom, president of the Missouri Dairy Association (MDA) in Monday’s DairyLine.
   “How the Governor could do this to Missouri’s agriculture industry is a mystery to me. The flap over the oversight of farmed white tail deer shifting from the Missouri Conservation Commission to the Missouri Department of Agriculture was completely blown out of proportion. The fact is the Missouri Department of Agriculture already does all of the testing for disease in farm deer. In addition, these farm deer are the property of the farm owners, not the Conservation Commission,” says Purdom.
   “These bills contained several important issues to all of Missouri’s farmers and ranchers including:

  • Enacts the Missouri Dairy Revitalization Act, which is an innovative program that dovetails in with the new Dairy Title of the Federal Farm Bill;
  • Increases the hauling limits for livestock on Missouri highways;
  • Modifies provisions relating to evidence of financial responsibility for certified commercial pesticide applicators;
  • Enables Missouri cattle producers the opportunity to vote whether or not they want to increase their investment in the Missouri beef checkoff;
  • Extends the equine liability waiver to all livestock; and
  • Continues the large animal veterinarian student loan program.

   “The pressure of finding local milk for our 15 dairy processing plants has reached a critical stage,” says Ted Barlows, president of the Missouri Dairy Products Association (MDPA).
   “A University of Missouri study showed in 2011 that Missouri’s dairy product manufacturing industry revenues translated into statewide total economic output worth $7.7 billion.  When you include the jobs, created at the farm level and with additional suppliers, a total of 23,297 jobs were supported providing $1.2 billion in labor income to Missourians in 2011.
   “Missouri’s gross domestic product (GDP) was $2.0 billion larger due to the value added by Missouri’s dairy product manufacturing industries,” says Barlows.
   Thirteen Missouri agriculture groups had urged Governor Nixon to “stand with Missouri agriculture” and sign these bills.  These organizations included FCS Financial, Missouri Agribusiness Association, Missouri Cattlemen’s Association, Missouri Corn Growers Association, Missouri Dairy Association, Missouri Dairy Products Association, Missouri Deer Association, Missouri Egg Council, Missouri Farm Bureau, Missouri Federation of Animal Owners, Missouri Pork Producers Association, Missouri Poultry Federation and the Missouri Soybean Association.
   Read more: http://dairybusiness.com/seo/headline.php?title=local-dairy-left-out-in-the-cold&date=2014-07-09&table=features#ixzz37UAB4mRJ

Margin Protection is News for Some Dairy Farmers
    As USDA continues to set up the new Margin Protection Program (MPP) for dairy producers, Minnesota Congressman Colin Peterson told members of the House Ag Committee recently that he’s worried that many producers are in the dark about the program and participation might be low.
   “Talking to dairy farmers in my area, especially the smaller ones, they have no idea that this margin insurance exists,” he said.
   USDA’s initial plan was to wait to notify producers until after all the details of the MPP were worked out and the educational tools distributed. Still, Peterson says producers should at least receive a letter saying there is a margin insurance program coming.
   “We’ll be finalizing the base issues and so forth later on, but just so they understand that this is coming,” he said. Undersecretary Michael Scuse says he is looking into whether they can get notification to dairy producers sooner rather than later. Meanwhile, the USDA Margin Protection Program Committee is meeting to iron out the final details of the program.

DFA to Pay Producers $50 Million
   The Associated Press reports that Dairy Farmers of America has agreed to pay $50 million to thousands of northeast dairy farmers to settle antitrust allegations. The Wall Street Journal reports that a class-action lawsuit filed in 2009 charged Dallas-based Dean Foods, DFA, and the cooperative's marketing arm, Dairy Marketing Services, with working together to monopolize the market for raw milk in the Northeast, driving down prices paid to dairy farmers.
   DFA does not admit any wrongdoing under the terms of the settlement. It says the legal costs have become too great. The settlement agreement is preliminary and must be approved by a judge.
   Dairy processor Dean Foods Co. agreed to a settlement of $30 million in 2011.
   Read more at: http://onlilne.wsj.com/article/AP3b89bf13c7ac4c029b39d41a4558ea97.html.

Drought Study Assesses Losses and Potential Future Impacts
   A new report from the University of California, Davis, shows that California agriculture is weathering its worst drought in decades due to groundwater reserves, but the nation’s produce basket may come up dry in the future if it continues to treat those reserves like an unlimited savings account.
   The UC Davis Center for Watershed Sciences study, released today at a press briefing in Washington, D.C., updates estimates on the drought’s effects on Central Valley farm production, presents new data on the state’s coastal and southern farm areas, and forecasts the drought’s economic fallout through 2016.
   The study found that the drought — the third most severe on record — is responsible for the greatest water loss ever seen in California agriculture, with river water for Central Valley farms reduced by roughly one-third.
   Groundwater pumping is expected to replace most river water losses, with some areas more than doubling their pumping rate over the previous year, the study said. More than 80 percent of this replacement pumping occurs in the San Joaquin Valley and Tulare Basin.
   The results highlight California agriculture’s economic resilience and vulnerabilities to drought and underscore the state’s reliance on groundwater to cope with droughts.
“California’s agricultural economy overall is doing remarkably well, thanks mostly to groundwater reserves,” said Jay Lund, a co-author of the study and director of the university’s Center for Watershed Sciences. “But we expect substantial local and regional economic and employment impacts. We need to treat that groundwater well so it will be there for future droughts.”
   The report goes on to talk about how groundwater is a “slow moving train wreck.  
Read the full report
Link to news release
Link to archived news conference

Latest Research Unveiled During World Dairy Expo Seminars
   A World Dairy Expo press release says Expo is the place to find the latest dairy technology, cutting-edge genetics and the latest research. Industry experts from coast-to-coast will be on hand to present research and management practices for this year’s Expo Seminar series.
   Eight free seminars will cover a variety of management topics including: consumer questions, three times feeding calves, genomics, new monitoring technology, robots, new employee training, value of manure and value-added products.
   Continuing education credits can be earned by members of the American Registry of Professional Animal Scientists (ARPAS) and the American Association of State Veterinary Boards – RACE Program* (RACE). Additionally, all seminars will be available for viewing after they are presented at worlddairyexpo.com.
   Seminars will be showcased each day, Tuesday through Saturday, in the Mendota 2 meeting room, in the Exhibition Hall. Badgerland Financial, Council on Dairy Cattle Breeding, DeKalb, GEA Farm Technologies, Inc., Jung and Land O’Lakes Animal Milk Products Co. are sponsors of this year's seminars. A brief synopsis of each Expo Seminar can be found on worlddairyexpo.com under the “Seminars & Tours” tab.

Tuesday, September 30, 1 p.m.
“How to Handle Difficult Questions from Consumers and Make a Difference for Dairy”
Stan Erwine, Vice President of Producer Communications, Dairy Management Inc.
Continuing Education Credits: ARPAS (1), RACE (1)

Wednesday, October 1, 11 a.m.
“Impact of Feeding Calves Three Times a Day versus Twice a Day”
Dr. Donald C. Sockett, Epidemiologist/Microbiologist, Wisconsin Veterinary Diagnostic Laboratory Sponsored by: Land O’Lakes Animal Milk Products Co.
Continuing Education Credits: ARPAS (1), RACE (1)

Wednesday, October 1, 1 p.m.
“Why We Are Genomic Testing”
Dr. Bennet Cassell, Moderator, Virginia Tech
Matthew Nuckols, Eastview Farm
Greg Andersen, Seagull Bay Dairy
Robert Bignami, Brentwood Farms
Sponsored by: Council on Dairy Cattle Breeding
Continuing Education Credits: ARPAS (1), RACE (1)

Thursday, October 2, 11 a.m.
“New Monitoring Technologies May Help Manage Cow Reproduction and Health”
Dr. Jeffrey Bewley, Associate Extension Professor, University of Kentucky
Sponsored by: DeKalb
Continuing Education Credits: ARPAS (1), RACE (1)

Thursday, October 2, 1:00 p.m.
“Milking with Robots: How is it Done? Part II”
Dr. Marcia Endres, Professor, University of Minnesota – Twin Cities
Sponsored by:  GEA Farm Technologies, Inc.
Continuing Education Credits: ARPAS (1), RACE (1)

Friday, October 3, 11 a.m.
“Dairy Farm Employee Management: Getting the New Employee Off to a Good Start”
Dr. Melissa O’Rourke, Farm & Agribusiness Management Specialist, Iowa State University
Continuing Education Credits: ARPAS (1), RACE (1)

Friday, October 3, 1 p.m.
“The Nutrient Value of Manure: What’s It Really Worth?”
Dr. Brad Joern, Professor, Purdue University
Sponsored by: Jung
Continuing Education Credits: ARPAS (1), RACE (1)

Saturday, October 4, 11 a.m.
“Exploring Value-Added Dairy Opportunities”
Sarah Cornelisse, Senior Extension Associate, Penn State University
Sponsored by: Badgerland Financial
Continuing Education Credits: ARPAS (1), RACE (1)

FarmFirst Adds Members Relations Consultant
   FarmFirst Dairy Cooperative has hired Amanda Rabehl to their member service team. Rabehl joins as a Member Relations Consultant, serving the greater part of Minnesota, South Dakota and Northwest Wisconsin. Rabehl is a southeastern Minnesota native and currently lives just outside of Rochester.
   Complete details can be found at www.FarmFirstDairyCooperative.com.

Mielke Market Daily (A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update Associate Editor Lee Mielke)
   Cheese traders were anticipating this morning’s Global Dairy Trade but nudged the cash block cheese to $2/lb., up 0.25¢ on a single trade. An unfilled bid took the Cheddar barrels to $2.0325/lb., up 2.75¢.
   “Heat out West may have provided a bit of the impetus for Monday's broad-based dairy complex rally,” says FC Stone risk management consultant Derek Nelson in this morning’s Insider Opening Bell. "Overnight temps in California, Washington and Idaho eclipsed 70 degrees over the weekend and last night and have zapped any relief animals may have received from the daily temps hovering around 100."  He adds that “Midwest temperatures, on the other hand, have subsided into an unseasonably cool, very comfortable week. Markets tend to worry about problem areas rather than applaud the benign."
   Class III futures weren’t buying it. Most months showed losses.
   In heavy trading, spot butter jumped 1.5¢, following yesterday’s 0.25¢ nudge, and is now trading at $2.39/lb. Thirteen carloads traded hands today, the first load going at $1.36/lb. but the price kept climbing. A bid at $2.38/lb. was left on the board.
   “Cream demand is still very strong and that is the larger issue at hand,” according to Derek Nelson. “We exacerbate the situation when we throw some hot weather in the mix."
   Grade A nonfat dry milk was unchanged again this morning, holding at $1.7350/lb., with 2 bids at $1.70/lb. going unfilled.

Today’s Market Closing Prices 
Butter: Up 1.5¢, to $2.39/lb.
Cheddar blocks: Up 0.25¢, to $2.00/lb.   
Cheddar barrels: Up 2.75¢, to $2.0325/lb.
Grade A nonfat dry milk: Unchanged, at $1.7350/lb.
Class III milk (prelim.): July $21.46/cwt., +3¢; Aug. $21.02, +5¢; Sept. $20.10, -5¢, Oct. $19.93, -10¢; Nov. $19.50, -5¢; Dec. $19.21, -12¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $20.86, +1¢ from Monday. The Fourth Quarter average is now at $19.55, -9¢ from Monday. The First Quarter 2015 average is now at $18.26, -10¢ from Monday.

Looking ahead:
   The weekly National Dairy Products Sales Report prices are issued tomorrow afternoon by USDA. The Agriculture Department issues its monthly Livestock, Dairy, and Poultry Outlook Thursday morning and the preliminary June Milk Production report is out Friday afternoon.


Wednesday on DairyLine:
  We head to the corner of Strategy & Discipline with Ag Business Consultant Mike
   Our weekly installment of "Your Bottom Line" from PDPW.