DairyBusiness Update: February 27, 2014
2013 Commercial Disappearance Outpaced Milk Marketings
USDA’s Dairy Situation at a Glance Dairy Data issued late yesterday shows commercial disappearance of milk in all dairy products in 2013 exceeded dairy farm milk marketings by 4.84 billion pounds and that is the highest level in nine years.
Commercial disappearance of milk in all dairy products for 2013 is estimated at 205.1 billion pounds, up 3.1 percent from 2012, while 2013 farm milk marketings totaled 200.3 billion pounds, up 0.4 percent from 2012.
American type cheese disappearance, at 4.45 billion pounds, was up 2.2 percent from 2013. December disappearance, at 373.5 million pounds, was up 1.3 percent. Other-than-American cheese disappearance totaled 7.0 billion pounds, up 3.2 percent from 2012. December disappearance totaled 615.7 million pounds, up 4.5 percent from a year ago. Butter disappearance in 2013 totaled 1.93 billion pounds, up 6.3 percent from 2012. For December, butter disappearance amounted to 171.5 million pounds, up 12.4 percent from a year ago.
Commercial disappearance of milk used in all dairy products for December totaled 17.08 billion pounds, up 3.4 percent from December 2012, and about 375 million pounds more than total farm milk marketings for the month. December farm milk marketings totaled 16.71 billion pounds, according to USDA.
Trans-Pacific Trade Deal Must Further Open Japan, Canada Markets
The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF), in a joint press release this morning, called on U.S. negotiators to insure that “the ongoing, and so far, inconclusive negotiations of the Trans-Pacific Partnership (TPP), result in the free trade of dairy products between the United States, Canada and Japan.” Speaking on behalf of America’s dairy farmers, processors and exporters, the two groups said “progress on market access into those two markets has been frustratingly slow, and U.S. negotiators shouldn’t allow the process to drag on indefinitely.”
The statement follows ministerial-level meetings in Singapore this week on several contentious, yet-to-be resolved issues, including resistance by Canada and Japan to allow further market access for “sensitive” sectors, including dairy imports. The TPP involves a significant number of markets bordering the Pacific Ocean, including the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
NMPF President and CEO Jim Mulhern noted, “The U.S. dairy industry is prepared to eliminate all tariffs affecting dairy trade with Canada and Japan, as long as they do the same. If Japan and Canada are not willing to make an effort and offer realistic market access to the U.S., then they are not serious about being part of TPP.”
“It is time to finish the Trans-Pacific Partnership negotiations, including resolving the treatment of agricultural trade,” said Tom Suber, president of USDEC. “The principle of creating comprehensive market access is too important to this and future trade agreements. Therefore, if Japan and Canada are not committed to this goal, we need to move forward without them.”
In addition to addressing market access, both organizations noted that any comprehensive agreement also must include effective disciplines for applying sanitary and phytosanitary (SPS) measures that are science-based and enforceable, and preventing restrictions on the use of common food products.
The two U.S. dairy industry groups also reiterated their concerns regarding New Zealand’s monopolistic dairy structure that creates unfair commercial advantages for a single company, and reminded US negotiators that the TPP talks must address that concern.
FDA Report: Raw Milk Residues Continued Decline
The Food and Drug Administration’s latest National Drug Residue Database (NMDRD) shows that only 0.014 percent of all truckloads of raw milk tested positive for medicinal animal drug residues in fiscal year 2013. The results, which are published yearly, shows the figure dropped from 0.016 percent last year.
The U.S. dairy industry tests every truckload of raw milk prior to use. All truckloads of raw milk testing positive for violative drug residues are disposed of and not used to produce food for human consumption. The benefits of this standard practice are reflected in the fact that no residues were found in any of the more than 160,000 samples of pasteurized milk and milk products tested since 2010 and reported through FDA’s NMDRD reports.
Furthermore, the amount of milk disposed of in fiscal years 2009 through 2013 continues a decline that began in fiscal year 2008, according to the NMDRD.
IDFA’s vice president of regulatory affairs and international standards, John Allan, stated on IDFA’s website that "The results further illustrate the high level of safeguards the dairy industry has in place to ensure that consumers can safely enjoy our high quality and nutritious dairy products."
Dairy farmers and veterinarians use animal medicines under strict controls to treat sick dairy cattle. Treated cattle are removed from regular milk production and are not returned to the milking herd until their milk is free of any medicinal residues. When used according to label directions, medicines should not result in any residues in the milk. Testing of all bulk milk trucks is designed to ensure that all necessary precautions are being taken to keep residues out of the milk supply.
Good Price News for New Zealand Dairy Operators
New Zealand-based dairy cooperative, Fonterra, lifted its forecast Farmgate Milk Price for the 2013/14 season yesterday by 35 cents to a record level of $8.65 per kgMS. The increase, along with a previously announced estimated dividend of 10 cents per share, amounts to a forecast Cash Payout of $8.75. Chairman John Wilson said the higher forecast was good news for farmers, and for New Zealand. “The increase reflects continuing strong demand for milk powders globally,” says Wilson.
It is difficult to convert these prices to U.S. hundredweight, says High Ground Dairy’s Eric Meyer, but suffice it to say they are well over the current U.S. All-Milk price.
Kansas Boasts Milk Production Growth in 2013
A report issued by USDA’s National Agriculture Statistics Service (NASS), shows Kansas’ milk production grew at the fastes rate in the United States, growing 7.3 percent, in 2013.
Kansas posted the third largest increase in total pounds of milk production in 2013, only trailing dairy giants Wisconsin and New York. The dairy industry in Kansas is a crucial component to the state’s agricultural industry and overall economic growth. According to Josh Roe, economist for the Kansas Department of Agriculture, the value of milk produced in Kansas totaled nearly $592 million adding approximately $131 million to the Kansas economy and 482 jobs in 2013.
As the national demand for food and agricultural products continues to grow, Kansas is quickly rising to the top as the premier dairy frontier. Abundant farmland, feed supply, ideal climate and agriculture-based culture make it an ideal location to dairy. Kansas is home to more than 300 dairy farms and 137,000 dairy cows.
For details log on to http://www.agriculture.ks.gov/divisions-programs/dairy-in-kansas.
California Drought Impact on Agriculture to be Assessed
The California State Board of Food and Agriculture will focus on drought impacts to the agricultural sector at its upcoming meeting on Tuesday, March 4th in Merced. This meeting will be held from 10:00 a.m. to 3:30 p.m. at the University of California, Merced, 5200 Lake Road – Terrace Center (California Room), Merced, CA 95343
“It is important for the State Board and the Governor’s Drought Task Force to hear from local leaders on current drought impacts,” said CDFA Secretary Karen Ross. “This drought is going to have significant statewide impacts on many sectors of California’s economy – we are engaging with local communities and with farmers and farm workers to help advise on potential future actions that can be taken at the state level.”
Invited speakers to the State Board meeting include: Jean Okuye, President of the Merced County Farm Bureau; Tim Koopmann, President of the California Cattlemen’s Association; Bill Harp, Chairman of the Almond Board of California; Marco Lizarraga, La Cooperative Campesina de California; Ilene Jacobs, California Rural Legal Assistance; Diana Tellefson Torres, United Farm Workers Foundation; Lupe Sandoval, California Farm Labor Contractors; Grant Davis, Sonoma County Water Agency; and Dan Nelson, San-Luis Delta Mendota Water Agency. Other invited speakers include representatives from the California Tomato Growers Association, and other local water agencies and grower associations.
The California State Board of Food and Agriculture advises the governor and the CDFA secretary on agricultural issues and consumer needs. The state board conducts forums that bring together local, state and federal government officials, agricultural representative and citizens to discuss current issues of concern to California agriculture.
The meeting will be streamed online at www.cdfa.gov/LiveMediaStream.html.
Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Cheese is not showing up at the Chicago Mercantile Exchange. One unfilled bid took the cash block Cheddar up another 0.5¢ this morning, as was the case in yesterday’s 2.5¢ jump, Tuesday’s 0.75¢ rise, and Monday’s 2¢. The blocks are now at $2.22/lb. and still no one is selling. The last block sale was last week Thursday. The barrels were unchanged this morning however, with no activity, holding at $2.20/lb. after gaining 2.25¢ yesterday on a bid, 0.25¢ on Tuesday, and 1.75¢ on Monday. CME barrel hasn’t sold since Friday. Class III futures saw double digit gains Mar.-Dec., except for Nov.
The Daily Dairy Report points out that yesterday marked the 45th trading day with CME Cheddar blocks at or above $2/lb., establishing the second longest run at these price levels in the past decade. Should the CME block market continue to trade above $2/lb. through March 10, this streak will match the 2011 record of 53 trading days, June 3 to Aug. 17, that prices were that high.”
Things were quiet in the butter market this morning as well, compared to yesterday when 12 carloads traded hands. The Double A price was unchanged this morning, holding at $1.78/lb, following a loss yesterday of 1.2¢. A bid at $1.78/lb. went unfilled today.
Weekly cold storage holdings of butter, as of February 24, stood at 12.9 million pounds, up 14.9% from the previous week but 5.4% above a year ago.
The Grade A nonfat dry milk roller coaster was up 1¢ this morning, following yesterday’s 4¢ loss, Tuesday’s 2.25¢ gain, and Monday’s 0.25¢ rise. Cash powder is now priced at $2.04/lb. Five cars exchanged hands; 4 at $2.04/lb., with the last sale at $2.0375/lb., but an unfiled bid at $2.04/lb. is where things ended when the dust settled.
Today’s Market Closing Prices:
Butter: Unchanged, at $1.78/lb.
Cheddar blocks: Up 0.5¢, to $2.22/lb.
Cheddar barrels: Unchanged, at $2.20/lb.
Grade A nonfat dry milk: Up 1¢, to $2.04/lb.
Class III milk: Feb. $23.19, -1¢; Mar. $22.23, +31¢; Apr. $20.97, +49¢; May $20.21, +31¢, & Jun. $20.07, +31¢. Based on today’s CME settlements, the Second Quarter 2014 average now stands at $20.42, +36¢ from Wednesday. The 2nd half average is $19.00, +14¢ from Wednesday.
The monthly Ag Prices report is issued by USDA tomorrow afternoon and will include the latest milk feed price ratio. California’s February Class 4a and 4b milk prices are announced by CDFA on Monday, March 3. The Global Dairy Trade Auction takes place on Tuesday and USDA issues its January Dairy Products report. USDA announces the February Federal order Class II, III, and IV milk prices on Wednesday.
Friday on DairyLine:
Western United Dairymen’s Mike Marsh discusses California’s consideration of forming a federal milk market order.
Mike Hutjens has his weekly Feed Facts segment in the second half.
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