DairyBusiness Update: April 9, 2014

WASDE: 2014 Milk Output Raised; Price Outlook Also Raised
USDA’s latest World Agricultural Supply & Demand Estimates report released today, raised projected 2014 milk production estimates from a month earlier as strong returns are expected to encourage a more rapid expansion in cow numbers and increased milk per cow. Fat-basis exports were raised on higher sales of cheese and butter, but the skim-solids export forecast was lowered on weaker-than-expected nonfat dry milk (NDM) sales. Skim-solid imports were reduced slightly due to lower imports of milk protein concentrate and casein.
      • 2014 production and marketings were projected at 206.1 billion lbs. and 205.2 billion lbs., respectively, up about 400 million lbs. and 500 million lbs. respectively from last  month’s projections. If realized, 2014 production and marketings would be up 2.4% from 2013. 
Product price forecasts for cheese, butter, and whey were higher, supported by strong demand and price strength to date. However, the NDM price was unchanged at the midpoint as export demand is weaker than expected. Class III and Class IV prices were raised on higher product prices. The all milk price was forecast at $22.55-23.05 per cwt.
Dairy Price Forecasts Estimated Product Forecasts
Product              2012  2013 2014    
Class III ($/cwt) 17.44 17.99 20.40-20.90
Class IV ($/cwt) 16.01 19.05 21.05-21.65
All milk ($/cwt) 18.53  20.01 22.55-23.05
Cheese ($/lb.) 1.7076  1.7683 1.9850-2.0350
Butter ($/lb.) 1.5943    1.5451 1.7600-1.8400
NFDM ($/lb.) 1.3279    1.7066 1.8300-1.8700
Dry whey (¢/lb.) 59.35 0.5902 0.6150-0.6450

WASDE Offers Lots to Feed Off Of
   U.S. feed grain ending stocks for 2013/14 are projected lower this month, according to today’s World Agricultural Supply and Demand Estimates report, with reductions for corn, barley, and oats. A 125-million-bushel increase in projected corn exports reduces corn ending stocks by the same amount. Continued strong export sales and a rising weekly shipment pace for U.S. corn during March support the higher expected export level as does an increase in projected global corn demand.
   The 2013/14 season-average farm price for corn is raised 10 cents at the midpoint with the projected range also narrowed to $4.40 to $4.80 per bushel, compared with $4.25 to $4.75 per bushel last month.
   U.S. soybean supplies for 2013/14 are projected at 3.49 billion bushels, up 30 million on increased imports. Imports are projected at a record 65 million bushels based on trade reported through February and prospective large shipments from South America during the second half of the marketing year. Soybean exports for 2013/14 are increased 50 million bushels to 1.58 billion reflecting record year-to-date shipments and large outstanding sales.
   Despite relatively high prices and record harvests in South America, U.S. exports have remained strong, especially to China, where imports from the United States have already exceeded the previous marketing-year record. The soybean crush is reduced 5 million bushels to 1.685 billion with lower domestic soybean meal consumption more than offsetting a small increase in projected soybean meal exports. Seed use is raised in line with the record plantings reported in the March 31 Prospective Plantings report, while residual use is reduced based on indications from the March 31 Grain Stocks report. U.S. soybean ending stocks are projected at 135 million bushels, down 10 million from last month.
   Projected prices for soybeans and soybean products are all raised this month. The projected range for the season-average soybean price is raised 5 cents at the midpoint to 12.50 to $13.50 per bushel. Soybean oil prices are projected at 38 to 40 cents per pound, up 1.5 cents at the midpoint. Soybean meal prices are projected at $460 to $490 per short ton, up 5 dollars at the midpoint.

WASDE Beef Update/Prices Remain Strong
   The 2014 forecast of total red meat and poultry production was lowered from last month in today’s World Agricultural Supply and Demand Estimates report, as higher beef production is more than offset by lower pork, broiler, and turkey production. For beef, production is forecast higher as lower forecast slaughter in the first quarter is more than offset by higher slaughter in the second half. The larger forecast second-half slaughter reflects larger placements of cattle during the first half.
   The beef import forecast for 2014 is raised from last month as demand for processing-grade beef remains strong and the export forecast is raised on continued strong sales to Asian markets.
   Cattle prices for 2014 are raised from last month, reflecting continued price strength for fed cattle.                                              Source:USDA WASDE report, April 9, 2014

National Milk Applauds House “Brew Moo” Bill
   The National Milk Producers Federation (NMPF) stated in a press release today that it supports legislation introduced this week by four House members to stop the Food and Drug Administration from making it harder to use beer by-products in animal feed. “We need to keep the brew in the moo on our farms, and this legislation is a signal that the FDA needs to rethink the regulation that it is pursuing,” says Jim Mulhern, NMPF President and Chief Executive Officer.
   As our comments to the FDA last month pointed out, there is no public health risk associated with the long-standing practice of using brewers’ grains as animal feed. The proposed FDA regulations would unnecessarily increase costs to dairy farmers. Farmers have been using high-protein brewers’ grains in livestock feed for hundreds of years.
   Last fall, the FDA suggested imposing stricter requirements for handling spent grains sold or donated to farmers as part of new feed regulations proposed under the 2010 Food Safety Modernization Act. The changes would require spent grains to be dried and packaged, before being passed on to farmers. Typically, farmers now receive wet grains, which help hydrate livestock.
   Both the beer industry and agricultural groups, including NMPF, object to the planned changes, and we are encouraged that the FDA has said recently it will review its draft language. In the meantime, we support the legislative approach offered by Reps. Steve Womack (R-AR), Reps. Peter Welch (D-VT), Chellie Pingree (D-ME) and Cory Gardner (R-CO) to highlight the importance of this issue.”

Lagging NDPSR Prices All Up But Powder
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 $2.3983/lb., up 5.4¢, while the barrels averaged $2.3583, up 3.7¢. Butter was up 7.2¢, to $1.9697/lb. Nonfat dry milk averaged $2.0524/lb., down 2.1¢, and dry whey averaged 67.10¢/lb., up 0.4¢. These prices are used in determining Federal order Class milk prices.

California Powder Dips to $2/lb.
   The California Department of Food and Agriculture announced its latest surveyed nonfat dry milk prices yesterday at $2.0007/lb. for the week ending April 4, on sales of 16.2 million lbs. The price was down from $2.0262/lb. the week before, on sales of 17.6 million lbs.

Producers Drive Change at Dairy Calf and Heifer Assoc. Conference
   More than 300 dairy calf and heifer growers, industry representatives and allied associates met in Green Bay, Wis., for the Dairy Calf and Heifer Association (DCHA) 2014 Annual Conference held April 1-3. Producers in attendance represented more than 500,000 cattle.
   The conference lineup included interactive educational seminars for both farm managers and employees, an inside look at industry-leading dairy operations and a keynote presentation from renowned leader, humanitarian and Green Bay Packers’ all-time leading receiver Donald Driver.
    “The conference was an exciting event for our organization and our industry,” says Jack Banker, DCHA President and owner of Scenic-View Farms in Black Creek, Wis. “Calf and heifer growers from across the country joined in the excitement of the renewed vision of DCHA by sharing their experiences and learning new strategies. The success of the conference is a testament to our organization’s future strength – a future that we are very excited about.”
   The 2015 DCHA conference is March 30-April 1, 2015, in Madison, Wis. Additional information will be available at www.calfandheifer.org and www.facebook.com/calfandheifer or call 855-400-3242 or email: info@calfandheifer.org

Over 260 Future Dairy Leaders Take Part in the 2014 Dairy Challenge®
   Optimism for the dairy industry’s future filled the convention center in Fort Wayne, Indiana, where 264 college students congregated to improve skills, network, and learn about careers and industry innovation. The national Dairy Challenge held April 3-5, 2014, attracted these students from 37 colleges in 25 states and three Canadian provinces.
   “Dairy Challenge truly showcases cooperation of farmers, agribusinesses and academia, working together to train future leaders and promote agricultural careers,” said Dr. Maurice Eastridge, 2014 event chair and professor at The Ohio State University.
   The North American Intercollegiate Dairy Challenge® (NAIDC) allows dairy students to apply theory and learning on a real-world dairy farm while working as part of a team.
   In Fort Wayne, two programs ran concurrently – the 13th annual Dairy Challenge contest and the second annual Dairy Challenge Academy. The events were coordinated by the NAIDC Board of Directors and staff from the host universities, Purdue University, Michigan State University and The Ohio State University.
   The 2014 contest included 32 universities, each with four students on their university team competing for awards. The Academy provided interactive training in dairy farm evaluation for 138 students, generally underclassmen at four-year universities or students in two-year dairy programs. Academy participants were divided into smaller groups, mixing students from various colleges, and their work was guided by Academy Advisors – agribusiness volunteers and university professionals.
   The next national event will be April 9-11, 2015, in Syracuse, NY. Four regional events are held in late fall and winter; details at www.dairychallenge.org/calendar_news.php.

Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
   It was another day of bloodletting at the CME’s cash cheese market which spilled into the powder. One uncovered offer plunged the Cheddar blocks down another 7.75¢, following yesterday’s 3.5¢ drop and 5¢ loss on Monday. The blocks are at their lowest level since February 24, 2014, at $2.1875/lb., down 24.5¢ from their March 24 record peak. The barrels were down 7.5¢, following a 7.5¢ plunge yesterday on an offer, and are now trading at $2.0750/lb., 11.25¢ below the blocks. Three cars traded hands this morning, all at $2.0750/lb.
   Butter held at $1.97/lb. for the 4th consecutive session, but 2 offers at that price went  uncovered.
   Two trades took the cash Grade A nonfat dry milk to $1.8875/lb., down 11¢ on the day, and the lowest price since October 24, 2013. A bid at $1.88/lb. was left on the board.

Today’s Market Closing Prices
Butter: Unchanged, at $1.97/lb.
Cheddar blocks: Down 7.75¢, to $2.1875/lb.
Cheddar barrels: Down 7.5¢, to $2.0750/lb.
Grade A nonfat dry milk: Down 11¢, to $1.8875/lb.
Class III milk: April $23.98, -4¢; May $21.45, -13¢; & Jun. $20.38, -22¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $19.92, -4¢ from Tuesday. The 2nd half average is now at $19.42, -3¢ from Tuesday.
Looking ahead:
   The California Department of Food and Agriculture announces its May Class I milk prices tomorrow. Looking to next week, there’s not much on tap for the markets to feed off of. The biweekly Global Dairy Trade auction is Tuesday and Agriculture Department issues its monthly Livestock, Dairy, and Poultry Outlook that afternoon.
Thursday on DairyLine:
   National Milk’s Chris Galen updates us on two issues relating to animal feed – keeping the brew in moo and federal GMO labeling regulations.
   Dave Korbelik from Boehringer Ingelheim Vetmedica gives us three reasons your dairy farm should be DACQA certified.


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