DairyBusiness Update: March 6, 2014

Rain Relief Short-Lived  
   The U.S. Drought Monitor reports that the most significant storm of the season crossed California, delivering drought-easing rainfall to coastal areas and beneficial snow in the Sierra Nevada. In addition, rain in California’s agricultural regions temporarily eased irrigation requirements and aided drought-stressed rangeland and winter grains. However, spring and summer runoff prospects improved only slightly, as pre-storm snowpack values were near record lows and because drought-parched soils soaked up most of the available moisture. In addition, the storm moved too far south to provide optimal amounts of moisture in California’s key watershed areas, with the heaviest precipitation occurring in coastal and southern California rather than the Sierra Nevada.
   Meanwhile, other parts of the country remain in the deep freeze as spring approaches. I noticed a report earlier this week that 90% of the Great Lakes were frozen and even Niagara Falls had come to a virtual standstill due to the deep freeze. Reports vary on how far back one has to go to find similar temperatures and such record weather patterns but, until I read of a certain “other place” freezing over, I don’t think many of us will be overly impressed.

Milk Increasing and Heading to Manufacturing
   Milk production continues to increase in the Northeast and Mid-Atlantic regions, according to USDA’s Dairy Market News. As bottling sales decline, loads are increasingly going to manufacturers in the region. Some manufactures have increased Class III and Class IV production while expanding inventories as a result of the increased milk supplies. 
   Manufacturing milk supplies in the Southeast are heavy resulting from increased production and sluggish Class I demand. Florida milk production is higher as warm weather and mild rain induces good cow comfort levels.  Some producers are adding cows to their herds. This week’s Class I sales were stronger. Strong surplus milk supplies saw 140 loads exported from Florida this week.
   Cream supplies are reported as tightening. Demand for cream has increased as numerous manufacturers increase production of Class II and Class III ahead of Easter and Passover. The unusual winter weather has hampered anticipated ice cream and ice cream sales.

Wisconsin Cheese Plants Running at Capacity
   Some Wisconsin cheese plants are now running at capacity to meet demand and report being sold out, according to DMN. Producers opting to maintain steady production are generally drawing down inventory levels to meet demand. Orders have remained strong, even after markets saw prices strengthen. Orders received in the Midwest include those from regular customers, as well as orders to meet cheddar demand not being met by some Western cheese producers facing reduced milk availability. 
   Among regular buyers, there has been a noticeable increase in demand for hard Italian cheeses. Plants manufacturing mozzarella and provolone report stronger interest in mozzarella. Reports of cheese plants buying surplus milk on spot markets are not widespread, but sales are reported to be occurring at up to $1.50 over class. Most cheese manufacturers expect milk supplies to continue to increase in coming weeks.

Western Hay Prices Won’t See Relief
   Hay prices in most of the country are expected to decline in 2014 due to widespread drought recovery, according to the Capital Press, but Carol Ryan Dumas writes that prices for hay, particularly alfalfa, in the West are expected to remain strong and higher than the national average due to drought and strong export demand.
   Drought and strong exports are expected to keep hay prices strong in the West, particularly for alfalfa, according to Katelyn McCullock, dairy economist with the Livestock Marketing Information Center (LMIC).
   With the exception of Texas, most of the country has recovered from a moving drought that hit largely in the Southern Plains to affect the 2011/12 marketing year and centered in the Midwest to affect the 2012/13 marketing year, she said.
   A return to normal weather in most of those areas in 2013 is expected to hold in 2014, and LMIC is forecasting decreased hay prices for an annual national average of $135 a ton for all hay, $150 a ton for alfalfa hay and $100 a ton for other hay in 2014.
   But a drought in the West, largely centered in California, is expected to keep prices higher in the region. LMIC is not forecasting how high alfalfa prices might go.
   Premium alfalfa hay is selling at $195 a ton in Idaho and $300 a ton in northern and central California, according to USDA Market News report.
   Prices for dairy quality hay could reach $230 to $250 a ton in Idaho by late summer and $325 to $350 a ton in California’s Central Valley, Wilson Gray, University of Idaho extension livestock economist, said on Tuesday. Read more at http://goo.gl/pHJn3d

Penn State Income over Feed Costs Up 6.5%
   Penn State’s measure of income over feed costs rose by 6.5% in February. This is an increase of 73¢/cow/day, according to Jim Dunn, Professor of Agricultural Economics at Penn State. “The February value of $12.02/cow/day is the highest value since we began calculating this measure in January 2000.”
   The increase in February is because of the higher milk price, which rose by 4.8% from January levels. Feed prices also rose, but by only 1%, mainly because soybean meal prices are higher. The cost of feeding a cow rose by 5¢/day to $4.95. Income over feed cost reflects daily gross milk income less feed costs for an average cow producing 65 pounds of milk per day.
   The milk margin is the estimated amount from the Pennsylvania all milk price that remains after feed costs are paid. Like income over feed cost, this measure shows that the February PA milk margin was 6.5% higher than in January. To read more, log on to: http://www.personal.psu.edu/faculty/j/w/jwd6/DairyOutlook%20mar2014.pdf.

Bovine Euthanasia Guidelines Available
   The American Association of Bovine Practitioners (AABP) is offering its members, other beef and dairy veterinarians and livestock producers Practical Euthanasia of Cattle guidelines. These guidelines are intended to aid caretakers, animal owners, livestock market operators, animal transporters, and veterinarians in choosing effective euthanasia methods.
   The guidelines, which were posted on AABP’s website in September 2013, have recently been translated into Spanish. Both versions can be found at http://aabp.org/about/AABP_Guidelines.asp
   Both the English and Spanish versions are in accordance with euthanasia recommendations from the American Veterinary Medical Association. The AABP guidelines include information on human safety, animal welfare, restraint, practicality, skill, cost, aesthetics, diagnostics and carcass disposal. 
   AABP Animal Welfare Committee Chairman Dr. Dave Sjeklocha, Satanta, Kan., says, “Veterinarians, farmers and farm employees need to understand that euthanasia should not be taken lightly. There are acceptable methods that we must employ and it is in the best interest of the animal to use these methods.
   “Euthanasia means ‘good death’,” Sjeklocha explains. “The goal of euthanasia is to end the suffering of an animal as quickly and painlessly as possible. These guidelines are key to making that goal a reality, and we must be aware of the proper methods for the good of our livestock.”

Annual Western Regional Dairy Challenge Draws 67 Students
  
Sixty-seven students from nine western U.S. colleges and one Canadian university traveled to Tulare, Calif., for the 9th annual Western Regional Dairy Challenge on February 28 – March 1, 2014. Headquarters for the contest was the College of the Sequoias (COS).
   The Western Regional Dairy Challenge is an innovative, three-day educational competition designed to prepare students for dairy careers. Working in mixed-university teams of five or six students, participants assessed all aspects of a working dairy farm, including facilities, nutrition, financials, reproduction, and animal health. Students collaborated on a 20-minute team presentation that detailed their observations and suggestions to a panel of judges. Teams were ranked based on how well their evaluations matched the judges’ evaluations of the dairy operation.
   The Western Regional Dairy Challenge is under the guidance and support of the North American Intercollegiate Dairy Challenge (NAIDC), established in April 2002 to incorporate evaluation of all aspects of a dairy farm. The national Dairy Challenge is slated for April 3-5, 2014, and will be hosted by Michigan State University, Ohio State University and Purdue University in Fort Wayne, IN. Log on to www.dairychallenge.org.

Dairy Producer Group Supports Wisconsin Implement Legislation   
   The Dairy Business Association applauds Rep Joan Ballweg and her colleagues Rep Gary Tauchen, Rep Lee Nerison, Rep Howard Marklein, and Rep Travis Tranel for their leadership on introducing AB 842, which will allow Wisconsin's farmers and agribusinesses to utilize their Implements of Husbandry (IoH) during upcoming planting and harvesting seasons without fear of being ticketed by law enforcement.
   DBA agrees there is urgency to address the road weight and safety issues related to IoH before the legislature adjourns in April. Doing nothing is not an option. But doing the wrong thing would be far worse for farmers and agribusinesses than doing nothing at all. AB 842 provides a fair, reasonable, and immediate solution to the primary IoH road issues without placing unnecessary burdens on farmers and agribusinesses.  AB 842 also provides lawmakers more time to develop a more comprehensive IoH solution over the next 18 months.
   DBA is asking dairy farmers and agribusinesses across the state to contact their Legislators and ask them to support the Rep Ballweg's IoH solution - AB 842.  To find contact information for your legislators, go to www.widba.com

Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
   One unfilled bid of each took the cash cheese prices higher again this morning. The blocks were up 4.25¢, to $2.28/lb. and the barrels were up 0.75¢, following yesterday’s 11.5¢ rise, and are now at $2.25/lb. and back to a more typical 3¢ spread.
   Class III futures again saw double digit gains, Mar.-Aug., with Apr. up 67¢.
   Cash butter was unchanged, holding at the $1.88/lb. level hit Friday after that 10¢ jump. There was 1 sale at that price this morning. An offer at $1.90/lb. was left on the board. FC Stone market analyst, Derek Nelson, says Tuesday's Dairy Products report and GlobalDairyTrade auction results were “somewhat bullish” for butter.
   Grade A nonfat dry milk regained the 1.25¢ it lost on Monday and is back to $2.04/lb. Four carloads traded hands, the 1st 2 were at $2.04/lb., 1 at $2.03/lb., and the last sale was at $2.04/lb. A bid at $2.03/lb. went unfilled.

Today’s Market Closing Prices:
Butter: Unchanged, at $1.88/lb.
Cheddar blocks: Up 4.25¢, to $2.28/lb.
Cheddar barrels: Up 0.75¢, to $2.25/lb.
Grade A nonfat dry milk: Up 1.25¢, to $2.04/lb.
Class III milk: Mar. $22.60, +40¢; Apr. $21.21, +67¢; May $20.25, +34¢, & Jun. $19.98, +28¢. Based on today’s CME settlements, the Second Quarter 2014 average now stands at $20.48, +43¢ from Wednesday. The 2nd half average is now $19.07, +9¢ from Wednesday.
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Looking ahead:
   The California Department of Food and Agriculture announces the State’s April Class I milk prices on Monday. The Agriculture Department issues its latest Crop Production report and its monthly World Agricultural Supply and Demand Estimates report on Monday. The monthly Livestock, Dairy, and Poultry Outlook is issued on Friday.
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Friday on DairyLine:
  
Market analyst Jerry Dryer answers the question, how long will we see $2 cheese and  
   takes a look at commercial dairy product disappearance
   Dr. Mike Hutjens has his weekly “Feed Facts” in our second half.
http://dairyline.com/friday.mp3

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