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DairyBusiness Update: July 9, 2014


Why Whey?
The health benefits of whey was the topic in Monday’s DairyLine. The U.S. Dairy Export Council’s (USDEC) Alan Levitt reported on new research on whey and pointed out that whey is one of America’s top export products.
   “We shipped more than a billion dollars’ worth of whey products overseas last year,” he said. “So we see that consumer interest in protein, both in the United States and overseas, has never been higher, particularly from the diet and fitness community.”
  One of the behind-the-scenes projects that the USDEC is involved with is getting whey into the diets of vulnerable populations such as people suffering from HIV or chronic malnutrition in developing countries.
   The British Journal of Medicine recently published the results of a four-year study that found people living with HIV who are starting anti-retro-viral therapy have a better prognosis when they take food supplements that contain whey.
   “Now that we have the science to prove it, we can communicate these findings to policy makers so this becomes the standard of care,” Levitt said.
   The study was conducted by independent third-party researchers in Ethiopia using WPC 80 from the United States. But the U.S. dairy industry funded the study through USDEC and the Dairy Research Institute.
   USAID, which is the lead government agency that provides foreign aid to poor countries, just announced a new strategy with an increased emphasis on nutrition for the food it distributes. This new strategy means they’ll want to use more dairy ingredients in the products they buy and distribute for food aid.
    USDEC is also encouraged that the new strategy recognizes the importance of improving nutrition in the 1,000 days from pregnancy to a child’s second birthday.
    “We know this is a critical time for cognitive and physical development and dairy can play an important role in preventing malnutrition,” Levitt reported. “This, too, has been a long-time USDEC priority, and we’ve done a lot of work over the last few years, working with scientists and government officials to help make this happen.”
    Besides the altruistic goal of helping feed sick and hungry people, Levitt says there is also a commercial benefit to these programs.
    “Of course it’s great to feed the sick and hungry, but we think that ultimately better child nutrition results in healthier, more active members of society,” he said.
   And that leads to economic growth and increased dairy demand in developing countries, which are important customers for U.S. dairy products.

NE Butter Market “Unsettled” Exports Down 8%
   The northeast cream supply situation continues to slow butter output, as minimal production volumes clear into inventories of the region's balancing plants, according to USDA’s Dairy Market News. In some cases, significant reductions in butter stocks result from working inventories to fulfill short-term contractual orders. Overall, buyers are somewhat reluctant to make butter purchases outside of immediate needs. The market remains unsettled. 
   The Foreign Agricultural Service (FAS) reports that May 2014 U.S. exports of butter and milkfat totaled 12.1 million pounds, an 8% decrease from last year.

NE Cheese Output “Steady to Higher,” Exports Up 15%
   Cheese production in the Northeast continues at a steady to higher rate, according to Dairy Market News, with additional milk supplies made available, as some dairy plants closed over the July 4th holiday period. Most cheese vats operate on a 6-7 day week. Interest from some wholesale customers eased slightly prompted by seasonal catering drop-offs, school closings, and consumers vacationing.  Demand for domestic cheese is mixed, with moderate spot market interest.  
   The Foreign Agricultural Service (FAS), reports that May 2014 U.S. cheese and curd exports totaled 70.1 million pounds, a 15% increase from last year.

Lagging NDPSR Prices: Butter Jumps 7.4 Cents   
   The latest Agricultural Marketing Service’s National Dairy Products Sales Report (NDPSR), released this afternoon, shows the U.S. average block Cheddar cheese price at $2.0412/lb., up 0.3¢ from the week before, while the barrels averaged $2.0479, up 3.1¢. Butter jumped 7.4¢, to $2.2823/lb. Nonfat dry milk averaged $1.8585/lb., down 2.1¢, and dry whey averaged 69.42¢/lb., up 1.1¢. These prices are used in determining Federal order Class milk prices.

California Powder Price Keeps Slipping
   The California Department of Food and Agriculture announced its latest surveyed nonfat dry milk prices at $1.8161/lb. for the week ending July 4, on sales of 14.23 million lbs. The price was down slightly from $1.8202/lb. the week before, on sales of 11.63 million lbs.

Perspective on High Yield for 2014 U.S. Corn and Soybeans
   That is from Dr. Carl Zulauf, of the Department of Agricultural, Environmental, and Development Economics at Ohio State University. He writes in his recent Farmdoc posting: With U.S. corn and soybean conditions near record good-to-excellent levels and the June acreage report behind us, market discussion is turning to the possibility of a high yield (see June 16 farmdoc daily article by Darrel Good, "Potential for U.S. Average Corn and Soybean Yields, available here).
   This article will try to add perspective to this discussion. While most will focus on the numbers, the author's focus is to illustrate methods that use historical yield data to assess what are high yields. It is important to understand that these methods will give different estimates of high yields over different periods of data.  In short, the methods are data sensitive. In addition, other methods exist.
   This study uses harvest yield per acre for states and the U.S. over the 30 crop years from 1984 through 2013. Selection of the study period is a critical factor. A longer period means more observations and thus, usually, better statistical properties for the analysis.    
   But, it also tempers the importance of more recent yields, which may contain more information about current yield technologies and weather patterns.  Trade-offs exists and reasonable analysts can select different periods. The author likes 30 years as a balance between statistical properties and the potential information value of more recent yields. Source for the yields is the U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS) Quick Stats website, available here.
   Read the complete posting at: http://farmdocdaily.illinois.edu/2014/07/perspective-on-high-yield-2014-us-corn-and-soybeans.html.

Vermont Dairy Farmer Testifies of Benefits of Biotechnology
   Farmers need to do a better job at connecting with the public when talking about the benefits that biotechnology brings to producers, consumers and the environment, said Joanna Lidback, a dairy farmer from northeast Vermont, today. Lidback, who also keeps a blog documenting her family’s life on the farm (farmlifelove.com), testified during a hearing of the House Agriculture Subcommittee on Horticulture, Research, Biotechnology and Foreign Agriculture.
   “I believe that biotechnology plays a major role in our collective ability to not only feed a growing global population but also to make individual improvements on our own farms, be it 45 cows or 4500; a row crop operation or an apple orchard; a multiple-generation farm or a beginning farmer,” she said. “The science shows that GMOs are safe and bring tremendous benefits, but we in agriculture have failed to communicate this effectively with the public.”
   Lidback testified on behalf of Agri-Mark Dairy Cooperative and the National Council of Farmer Cooperatives; Agri-Mark is a member of both the National Milk Producers Federation and NCFC.
   Lidback also highlighted the impact that being forced to use non-GMO feed would have on the 45 cow dairy farm that she operates with her husband.
   “In speaking with our dairy nutritionist earlier this week, he pointed out that the only non-GMO feed he could get us right now was organic. Doing the math, our feed costs would go from $5,160 a month to $11,370 a month; over the course of a year, that means our feed costs alone would increase by $74520,” she testified. “I do not see how we could survive, let alone farm profitably, in the long term with those increased feed costs.”
   Lidback concluded her statement by reiterating the need for producers to engage more with the public on issues relating to agriculture’s use of biotechnology. “I’m happy to continue speaking up for our right to farm in whatever way we choose which in our case includes biotechnology and the use of GMOs. It’s important to share my knowledge about the opportunities and challenges we face as modern-day farmers and modern-day parents,” Lidback concluded. “When I have one person, or ten people, reach out to me for a question or appreciating my hands-on and practical perspective from the farm, then I have succeeded.”
   A full copy of the testimony is available online here.

Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update Associate Editor Lee Mielke)
   Cheese continues to make its way to the Chicago Mercantile Exchange and pressure prices. The 40lb. blocks were down 0.75¢ this morning. Nine carloads traded hands. The first 7 were at yesterday’s $1.9550/lb., the next one at $1.95/lb., and the final sale was at $1.9475/lb. A bid at $1.9425/lb. got no bites. The 500lb. Cheddar barrels, after losing 4¢ yesterday, were unchanged today, holding at $1.9450/lb., just 0.25¢ below the blocks. Again, they are typically 3-5¢ below. One car was sold at $1.9450/lb. but a bid at that price went unfilled.
   Class III futures saw double digit losses, Aug.-Feb., with the biggest drops Sept.-Jan.
   Cash butter, after losing 1¢ yesterday, was unchanged this morning, holding at $2.3850/lb., with a bid at $2.35/lb. left on the board.
   Butterfat is still largely tight, reports FC Stone dairy broker, Dave Kurzawski, in this morning’s Insider Opening Bell, “But the worry that was associated with the run to current levels is waning. This may set up the spot price for a bit more of a downward correction in the coming days."
   Grade A nonfat dry milk was unchanged again, holding at $1.7725/lb., with 1 car offered at that price but left on the board.

Today’s Market Closing Prices 
Butter: Unchanged, at $2.3850/lb.
Cheddar blocks: Down 0.75¢, to $1.9475/lb.  
Cheddar barrels: Unchanged, at $1.9450/lb.
Grade A nonfat dry milk: Unchanged, at $1.7725/lb.
Class III milk (prelim.): July $21.30/cwt., -2¢; Aug. $20.35, -18¢; & Sept. $19.81, -38¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $20.49, -19¢ from Tuesday. The Fourth Quarter average is now at $19.38, -32¢ from Tuesday. The First Quarter 2015 average is now at $18.21, -16¢ from Tuesday.

Looking ahead:
   The California Department of Food and Agriculture will announce its August Class I milk prices tomorrow. The August Federal order Class I base price is announced by USDA on July 23. The Agriculture Department’s monthly Crop Production report is issued Friday, along with the monthly World Agricultural Supply and Demand Estimates (WASDE) report, which will include USDA’s latest projections for 2014 and 2015 milk production and milk prices.

Thursday on DairyLine:
   National Milk’s Chris Galen updates us from the nation’s capital.
   Greg Larson, of GEA Farm Technologies, checks in with his monthly “Robotic Milking