DairyBusiness Update: February 26, 2014

NDPSR Cheese & Butter Prices Down…
   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 $2.2552/lb., down 6.7¢, while the barrels averaged $2.2506, down 7.4¢. Butter, at $1.8369/lb., was down 2.2¢. Nonfat dry milk averaged $2.0825/lb., up 0.6¢, and dry whey averaged 63.45¢/lb., up 0.6¢. These prices are used in determining Federal order Class milk prices and lag the CME cash prices by a week or two.

Golden State to Get Wet, Finally
   After weeks of dry conditions and above average temperatures, wet weather is finally returning to a region of the nation that needs it the most, according to the Weather Channel. Through the next several days, a pair of Pacific storms will finally bring beneficial rain and mountain snow to all of California, not simply northern California, not to mention parts of Arizona, Nevada, Oregon, and also the Rockies.
   The nation’s number 1 milk producer is experiencing one of the worst droughts ever and threatens the state’s abundant agriculture industry.
   The Pacific Northwest north of Seattle got hit this past weekend with cold temperatures, strong gusty winds, and 4-18 inches of snow in some areas.
   USDA’s Dairy Market News (DMN) reports that Icy, snow conditions causing transportation delays resulted in some milk delays to Midwest cheese plants last week, reducing vat numbers. That loss is scheduled to be made up this week.

Easter Demand Spurring Butter Sales
   Butter production in the Northeast is steady, according to Dairy Market News (DMN).  Cream supplies are more than adequate, with surplus volumes being cleared by some manufacturers through butter makers in other regions. Domestic butter demand is seeing slight increases as Easter season approaches. With moderate increases in sales returns of 82% unsalted butter, a few manufacturers are focused on churning significant volumes that primarily address export demand. The market tone is steady.
   Many Central operators are churning heavily, taking advantage of plentiful cream supplies. Some butter manufacturers are focused on rebuilding stocks, while others with 82% production capabilities are busy filling export orders. The market tone is steady with domestic retail sales picking up and good international interest. Retail orders are beginning to go back to normal seasonal orders after large Fourth Quarter holiday orders. Bulk butter availability continues to be limited with most supplies spoken for in the near term, according to DMN.

Cheese Output Growing/Sales Strong Despite Higher Prices
   Northeast cheese production is active, with increased volumes of milk supplies being reported by cheese makers, according to DMN. Some manufacturers are considering the likelihood and significance of farm milk prices relaxing.
   Stocks are improving, as a few cheese makers build their inventories around a 7 day production schedule. Demand for domestic cheese is mixed. Exports are strong. The market is steady.
   Midwest cheese manufacturers report that retail and food service cheese orders are strong, even with CME cheese prices having increased over the last week and a half or so. Reports are that orders began increasing late the week before last into early last week. When prices began increasing more aggressively mid to late last week, there was little reduction in ordering, unlike patterns earlier this year,
   An observation is that buyers were gun shy for so long as prices increased, they had no choice but to pull the trigger when prices declined. The need to build store and food service inventories now generally overrides the influence on buying patterns as prices increase.

Fuel Up to Play 60 Partners, Team Up for Breakfast Awareness
   Fuel Up to Play 60 (FUTP 60) – the nation’s largest in-school health and wellness program, created by the National Dairy Council and the National Football League, is helping to increase awareness of the importance of a healthy breakfast, including dairy, during National School Breakfast Week and National Nutrition Month in March.
   FUTP 60 is launching the “It Starts With School Breakfast” campaign with partnership support from Dean Foods and Share Our Strength, a national organization dedicated to fighting childhood hunger.
   “Breakfast with healthy foods, including dairy, is crucial,” said Paul Rovey, Arizona dairy farmer and chair of Dairy Management Inc., which manages the national dairy checkoff. “But, research confirms that millions of kids aren’t eating this important meal, and that has a lasting impact throughout their school day.”
   Local dairy checkoff staff around the country will kick off the campaign with school events during National School Breakfast Week, March 3-7. Dean Foods is supporting the campaign at retail locations across the country, and also is contributing $100,000 to fund breakfast initiatives at FUTP 60 schools. To learn more, visit www.StartWithSchoolBreakfast.com.

Dairy Checkoff Supports ‘Lactose Intolerance Awareness Month’
   As part of February’s “Lactose Intolerance Awareness Month,” the dairy checkoff has created two educational videos to help lactose intolerant consumers and health professionals who help guide their dietary plans enjoy dairy without restrictions.
   The dairy farmer-founded National Dairy Council® (NDC) videos focus on lactose intolerance symptoms, diagnosis and solutions and offer helpful tips for keeping dairy in the diet. NDC also created a food journal tool that allows consumers to track their dairy intake each day to share with their doctor or other health professional.
   Other checkoff-led efforts included a Twitter chat on lactose intolerance with Toby Amidor, a registered dietitian and FoodNetwork.com blogger. NDC also conducted outreach to other bloggers and health professionals to share dairy-first solutions with lactose intolerant consumers.
   Visit NDC’s Facebook and Pinterest pages or Twitter feed for additional lactose intolerance resources, including recipes.

Oregon Dairy Producers Meet in Salem
Nearly 300 dairy producers and industry professionals gathered for the Oregon Dairy Farmers Convention in Salem this week. The theme “Milk Matters” featured a variety of industry experts and hot topics. Highlights at this year’s conference included:
   -Dr. Tony Richard from the University of Missouri shared the latest research and
     insights on forage.
   -Former NFL player Anthony Newman discussed the importance of our youth and the
    “Fuel Up to Play 60” program. 
   -Bruce Vincent, a logger from Libby, Montana discussed the importance of having a
    relationship with local government, civic organizations and how activism can be fun
    and easy.
   -Amanda Gamblin from Schwabe, Williamson & Wyatt shared the latest news on how
    new labor laws will affect the dairy business in Oregon.
   -Dr. Sherri Noxel from Austin Family Business Program shared information and
    resources to build family unity and pride that is essential for securing the farm’s
   -Stan Erwine, VP of Producer Relations at Dairy Management, Inc. (DMI) gave an
    update on the national dairy checkoff activities and successes.
   -Don Schindler, Sr. VP of Digital Initiatives at DMI shared how dairy fits into the
    paradigm shift.
   -Troy Downing, Oregon State University Dairy Extension Specialist discussed the
    challenges and opportunities of producing milk in a global economy.
   -Oregon’s legislative leaders were addressed concerns and answer questions.

California Powder Price Higher, Sales Lower
The California Department of Food and Agriculture announced its latest surveyed nonfat dry milk prices at $2.0429/lb. for the week ending February 21, on sales of 6.5 million lbs. The price was up from $2.0360/lb. the week before, on sales of 8.12 million lbs.

Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
   In a repeat of yesterday, one unfilled bid of each took the cash cheese prices even higher this morning as sellers were nowhere to be found at the CME. Class III futures don’t appear to be buying it, prices saw a second day of declines.
   The blocks jumped 2.5¢, following yesterday’s 0.75¢ rise, 2¢ on Monday, and are now trading at $2.2150/lb. The barrels moved 2.25¢ higher, following yesterday’s 0.25¢ gain and 1.75¢ on Tuesday, and are now at $2.20/lb.  
   FC Stone risk management consultant, Joe Kobel, wrote in this morning’s Insider Opening Bell that the bids on CME spot cheese with nothing being brought to the market “indicates cheese prices will likely stay strong in the near term," but warns that “comments in the industry indicate strong levels of cheese production.”
   The action was in the butter where 10 carloads found new homes this morning but the price dipped 1.2¢, to $1.78/lb. Five cars sold at $1.77/lb., 3 at $1.7850/lb., 1, at $1.77/lb., and the last sale was at $1.78/lb.
   Cash Grade A nonfat dry milk, after jumping 2.25¢ yesterday and 0.25¢ on Monday, dropped 4¢ this morning, to $2.03/lb. The first sale was at $2.0550/lb. and the price kept sliding to $2.03/lb. Five more cars were offered at $2.03/lb. but got no takers.

Today’s Market Closing Prices:
Butter: Down 1.5¢, to $1.78/lb.
Cheddar blocks: Up 2.50¢, to $2.2150/lb.
Cheddar barrels: Up 2.25¢, to $2.20/lb.
Grade A nonfat dry milk: Down 4¢, to $2.03/lb.
Class III milk: Feb. $23.20, Unchanged; Mar. $21.92, +2¢; Apr. $20.48, -30¢; May $19.90, -16¢, & Jun. $19.76, -11¢. Based on today’s CME settlements, the Second Quarter 2014 average now stands at $20.06, -18¢ from Tuesday. The 2nd half average is $18.86, +2¢ from Tuesday.
Looking ahead:
   The Agriculture Department issues its monthly Ag Prices report Friday afternoon, which will include the latest milk feed price ratio. Next week will be a little busier. The California Department of Food and Agriculture announces the state’s February Class 4a and 4b milk prices on Monday, March 3. The Global Dairy Trade Auction takes place on Tuesday and USDA issues its January Dairy Products report, and Wednesday, USDA announces the February Federal order Class II, III, and IV milk prices.
Thursday on DairyLine:
   National Milk's Chris Galen provides his weekly report from the nation's capital.
   "The Silage Man" - Keith Bolson stops by to talk about, what else, silage!