DairyBusiness Update for Nov. 12, 2013

USDA seeks National Fluid Milk Processor Promotion Board nominees

USDA is seeking candidates for seven positions on National Fluid Milk Processor Promotion Board. The appointees will serve three-year terms, July 1, 2014, through June 30, 2017.

USDA will accept nominations for board representation in six geographic regions and one at-large position. Nominees for the six regional positions must be active owners or employees of a fluid milk processor in the following regions: Region 2 (New Jersey and New York); Region 5 (Florida); Region 8 (Illinois and Indiana); Region 11 (Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma); Region 13 (Idaho, Montana, Oregon, Washington and Wyoming); and Region 14 (Northern California). The at-large position may be filled by either a processor or public member.

The national fluid milk program is financed by a mandatory 20¢/cwt. assessment on fluid milk processors who process and market commercially in consumer-type packages more than 3 million lbs. of fluid milk products per month in the contiguous 48 states, excluding those fluid milk products delivered directly to consumer residences.

Nomination deadline is Dec. 12. E-mail Whitney Rick at whitney.rick@ams.usda.gov or visit  http://www.ams.usda.gov/Dairy.   


CWT moves more product offshore

Cooperatives Working Together (CWT) accepted 11 requests for export assistance from Bongards Creameries, Dairy Farmers of America, Foremost Farms USA and Tillamook County Creamery Association to sell 2.079 million lbs. of cheddar, gouda and Monterey Jack cheese to customers in Asia, Central America, the Middle East and North Africa. The product will be delivered in November 2013 through May 2014.

So far in 2013, CWT has assisted member cooperatives in selling 112.019 million lbs. of cheese, 84.915 million lbs. of butter, 44,092 lbs. of anhydrous milk fat and 218,258 lbs. of whole milk powder to 37 countries on six continents. These sales are the equivalent of 2.948 billion lbs. of milk on a milkfat basis. The tonnage is adjusted to reflect cancellations, according to CWT.


Dean Foods reports lower milk sales, market share

Dean Foods Company reported third quarter 2013 net sales of $2.2 billion, compared to $2.2 billion of net sales in the third quarter of 2012.

Operating income totaled $23 million, compared to $108 million in the same quarter a year ago. Net income attributable to Dean Foods totaled $415 million for the third quarter of 2013. On an adjusted basis, third quarter net income attributable to Dean Foods totaled $11 million.  

Dean Foods' share of U.S. fluid milk sales volume declined to 34.9% during the third quarter, down from 36.4% in the second quarter of 2013. 

Due to the previously disclosed loss of business at a large retailer, Dean Foods' unadjusted fluid milk volumes declined 10% on a year-over-year basis. Excluding that loss and another customer's decision to vertically integrate its dairy operations last year, Dean Foods' milk volumes declined 1.7% in the quarter. (Industry fluid milk volumes declined approximately 1.7% year-over-year in the third quarter on an unadjusted basis, based on USDA data and company estimates.) Total volumes across all products declined 8% to 685 million gallons.

Dean continues to target $120 million of cost savings in 2013, including the planned closure of 8-12 (10-15%) of its manufacturing facilities by mid-2014. The company has closed or announced the closure of eight plants since its accelerated cost reduction initiative began in the fourth quarter of 2012. As of the end of the third quarter, seven of the announced closures have ceased operations.

The third quarter 2013 average Class I Mover, a measure of raw milk costs, was $18.98/cwt., an increase of 15% from the third quarter of 2012, and 5% above the second quarter 2013 level.


LOL seeing strong sales and earnings
Land O'Lakes, Inc. (LOL) announced third quarter financial results showing solid sales and strong earnings that surpassed the prior year for both the quarter and year-to-date. Third quarter net sales totaled $3.1 billion, up 4% from the same quarter last year while earnings increased to $49 million, up 173% than third quarter 2012. 

Year-to-date sales were $11.1 billion compared with $10.4 billion last year while net earnings through September were $198 million, 32% higher than the $150 million reported during this period in 2012.

Chris Policinski, LOL president and CEO, said the company's Dairy Foods business is experiencing strong earnings driven by its iconic butter and cheese brands. 

"The 2013 earnings in Dairy Foods have also grown as a result of new products such as Kozy Shack® refrigerated desserts and continuing innovations such as the recently expanded line of Sauté Express® Sauté Starter products," he added. 

LOL Inc. total debt as of Sept. 30, 2013, was $1.87 billion, up 2% from the same date one year ago. The increase was due to higher working capital, which was largely offset by improved cash flow, according to a LOL press release. Details are posted at www.landolakesinc.com. Click on "Investors" then "Quarterly Financial Statements."

Another government website not working?

Cornucopia  Institute (CI) reports the U.S. Food and Drug Administration’s food safety rule webpage repeatedly crashes, just as the Nov. 15 deadline approaches for public input on the FDA’s proposed food safety rules

“This is potentially disenfranchising thousands of farmers and consumers, and is flat-out unacceptable,” said co-director Will Fantle  “We have been working for months, as have many other organizations across the country, to raise public awareness of the Food Safety Modernization Act (FSMA) and the proposed rules developed to implement it. With the public comment period set to close on November 15, we have received numerous reports from our members that they cannot send in timely comments because the portal for doing so, regulations.gov, is not working.”


Mielke’s Market Daily

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

The cheese price roller coaster headed down this morning in Chicago. The 40-lb. blocks, on 2 sales, lost 2¢ and slipped to $1.8025/lb. One offer at that price went uncovered, and an uncovered offer took the 500-lb. barrels down 1.25¢, to $1.77/lb.

They came to buy butter this morning and tacked on another 2.25¢, following yesterday’s 0.25¢ gain. The Double A price now stands at $1.5850/lb., the highest it has been since Oct. 7. Six cars were sold. Prices started at $1.57/lb. with the last sale at $1.5850/lb. Two bids at $1.5825/lb. went unfilled.

And they bought some powder. Three carloads of Grade A nonfat dry milk sold at $1.9450/lb. but an unfilled bid at $1.95/lb. took the price up another 0.5¢, following a 1.25¢ increase yesterday. Extra Grade remained at $1.87/lb., with no activity. 

Today’s market closing prices:

Butter: up 2.25¢, to $1.5850/lb.

Cheddar blocks: down 2¢, to $1.8025/lb.

Cheddar barrels: down 1.25¢, to $1.77/lb.

Grade A nonfat dry milk: up 0.5¢, to $1.95/lb.

Extra Grade nonfat dry milk: unchanged, at $1.87/lb.

The dairy markets won’t have much to feed on this week from USDA. USDA issues its monthly Livestock, Dairy, and Poultry Outlook Friday afternoon, after the markets have closed for the week.


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