The American Dairy Coalition (ADC) and the National Milk Producers Federation (NMPF) gave a thumbs up to the Chairman of the House Judiciary Committee, Rep Bob Goodlatte (R-Va.), and the Judiciary Committee for moving forward Goodlatte’s AG Act (HR 4092).
The bill would create a guest worker program that NMPF said “provides a new opportunity for immigration reform in agriculture” by establishing a new visa program, dubbed the H-2C visa, to allow farm employers to hire foreign workers on a year-round basis.
A NMPF press release stated that “although not ideal,” president and CEO Jim Mulhern said the AG Act “helps advance our efforts to assure a stable, dependable and legal workforce for America’s dairy farmers, now and in the future. The AG Act is the first step in a long process of establishing a workable solution for dairy farmers’ labor needs. It recognizes that we must improve on the current system by pursuing a new approach to matching the supply and demand for workers in U.S. agriculture.”
National Milk and the International Dairy Foods Assoc. applauded the introduction on Oct. 24 of a bipartisan bill to help reverse the decline of milk consumption in schools.
The School Milk Nutrition Act of 2017, introduced by Rep. G.T. Thompson (R-Pa.) and Rep. Joe Courtney (D-Conn.), would allow schools to offer low-fat and fat-free milk, including flavored milk with no more than 150 calories per 8-ounce serving, to participants in the federal school lunch and breakfast programs.
The bill allows individual schools and school districts to determine which milkfat varieties to offer their students.
The nation’s two leading dairy organizations stated in a joint press release that they “strongly support the bill and encourage Congress to pass it. Once enacted, the bill would make permanent the administrative changes in the school lunch program proposed earlier this year by the U.S. Department of Agriculture.
“Agriculture Secretary Sonny Perdue, in one of his first official actions earlier this year, supported giving school districts the option to offer a variety of milk types as part of the National School Lunch and School Breakfast programs.”
IDFA president and CEO Michael Dykes, D.V.M., said, “Congressmen Thompson and Courtney recognize the nutritional role that milk plays in helping school-aged children to grow and develop to their full potential. We appreciate their steadfast commitment to reverse declining milk consumption by allowing schools to give kids access to a variety of milk options, including the flavored milks they love.”
The legislation includes a pilot program to test strategies that schools can use to increase the consumption of fluid milk. This could include ways to make milk more attractive and available to students, including improved refrigeration, packaging and merchandising.
National Milk praised the U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb’s recent comments about the need for strong federal oversight of food labels. A NMPF press release stated it’s “exactly what is needed to address the misleading labeling and branding of imitation dairy products.”
In a letter to Gottlieb, NMPF implored the agency to “devote resources to prevent nutritionally inferior products from using the names of real dairy foods. The letter follows several recent public comments in which Gottlieb outlined the FDA’s interest in reviewing the information on food labels and their impact on public health.”
U.S. milk output increasing
September U.S. milk output was up for the 45th consecutive month, but not as much as expected. Preliminary USDA data shows output in the top 23 producing states at 16.2 billion pounds, up 1.2 percent from September 2016, with the 50-state total at 17.2 billion pounds, up 1.1 percent.
Revisions added 8 million pounds to the original August 23-state estimate, now put at 17 billion pounds, up 2.2 percent from a year ago.
Milk cow numbers totaled 8.74 million head in the 23 states, down 3,000 from August but 73,000 more than a year ago. The 50-state total, at 9.4 million head, is down 4,000 from August but 69,000 above a year ago. Output per cow averaged 1,851 pounds in the 23 states, up just 6 pounds.
California output was below year ago levels for the ninth consecutive month and down considerably at 3.4 percent, due to 12,000 fewer cows milked and a 50 pound loss per cow. Wisconsin was up just 0.8 percent, on a 15-pound gain per cow. Cow numbers were again unchanged from a year ago.
Texas took top honor as having the biggest increase, up 10 percent, thanks to 30,000 more cows and a 65-pound gain per cow. Idaho was up 0.2 percent, on 4,000 additional cows but output per cow was off 10 pounds. Michigan was up 3.4 percent, thanks to a 40-pound gain per cow and 6,000 more cows.
Minnesota was up 3.2 percent on a 70-pound gain per cow, but cow numbers were down 4,000 head. New Mexico was up 4 percent, thanks to 13,000 more cows milked. Output per cow was unchanged. New York was off 0.4 percent on a 20-pound loss per cow, but cow numbers were up 4,000. Pennsylvania saw a 1.7 percent increase, thanks to 35 pounds more per cow offsetting a loss of 2,000 cows.
Washington State was down 0.7 percent on a 15 pound loss per cow. Cow numbers were unchanged. Most analysts viewed the report as slightly bullish.
Cheese stocks remain high
That bullish sentiment was countered somewhat by the latest Cold Storage report. While Americans continue to chew through U.S. butter and cheese supplies, it wasn’t as much as expected and cheese stocks remain well above those a year ago.
Sept. 30 butter stocks were 256.9 million pounds, down 23.3 million or 8 percent from August and 12.2 million pounds or 4.5 percent less than September 2016.
American type cheese, at 777.8 million pounds, was down 23.2 million pounds or 3 percent from August but 35 million or 4.7 percent above a year ago. The “other” cheese category showed stocks of 502.4 million pounds, down 3.3 million pounds or 1 percent from August but 35.8 million or 8 percent above a year ago.
The total cheese inventory stood at 1.31 billion pounds, down 27.8 million pounds or 2.0 percent from August but 70.2 million or 6 percent above a year ago. Pundits view the report as bearish on butter and neutral on cheese.
Cash dairy product prices took the reports in stride and ended Oct. 27 mixed. The block Cheddar closed at $1.7450 per pound, up 7.5 cents on the week and 1.5 cents above a year ago. The barrels finished at $1.7050, up 6.5 cents on the week and 10.75 cents above a year ago. Sixteen cars of block traded hands on the week at the CME and 10 of barrel.
Midwestern cheese contacts tell Dairy Market News that mozzarella and provolone sales are meeting or exceeding expectations, while Cheddar and traditional cheesemakers report that demand is steady to slightly higher.
Milk is available for cheese processing, according to DMN, and some contacts report that cheesemakers are using nonfat dry milk to fortify cheese and “that is putting some pressure on milk prices. Cheese inventories remain long, but there seems to be some relief in sight, as strong demand and discounts on aging inventories have helped clear a bit of storage space.”
“Western cheese makers say year-to-date sales have been strong and holiday orders are providing support to current price levels,” DMN said. “There is solid demand for mozzarella due to the pizza season, the time when schools are in session and football games are played out each week. Although inventories are a bit heavy, they do not appear to be a major concern for the industry right now and demand is keeping pace with cheese production. It appears the current domestic appetite for cheese, coupled with interest from international markets may be able to pull stocks a bit lower. There is hope this will continue through the major fall holidays. A number of contacts are closely watching how cheese supply and demand will play out over the next month. Manufacturers are wondering if the trend will continue and cheese stocks can be brought low enough to lay a solid foundation for further stability in cheese markets, or whether this demand will wane and the cheese industry will face adversity as it moves toward a new year.”
Cash butter prices decrease
Cash butter fell to $2.2550 per pound on Oct. 24, lowest price since May 11, then climbed back to $2.31 on Oct. 26, but closed on Oct. 27 at $2.3025, down 4.75 cents on the week but 37.75 cents above a year ago, when it jumped 16.5 cents to $1.9250. Forty-four cars exchanged hands on the week at the CME.
Retail butter reports were mixed this week, according to DMN. Some producers reported that demand continues robustly, while others say sales are slightly under expectations.
Butter production remains active, but some producers have been selling excess cream in lieu of churning. Cream is available for Central butter makers and cream offers from South and Mid-East sellers are noticeably up. Cream supply seems adequate, butter output remains active ahead of the holidays, and demand is generally solid.
CME Grade A nonfat dry milk closed on Oct. 27 at 75 cents per pound, up a penny on the week but 10.5 cents below a year ago, with 16 cars sold on the week.
The Daily Dairy Report’s Sarina Sharp wrote in the Oct. 20 Milk Producers Council newsletter that the European Commission added further pressure to the milk powder market by selling 40 metric tons of skim milk powder (SMP) out of its Intervention program. Sharp said “the volume represents a drop in the bucket relative to Europe’s immense SMP stockpile,” but the Commission accepted a bid well below the maximum price for Intervention purchases.
She added, “Until now, the Commission has been so reticent to depress the milk powder market that it has offered product at laughably high prices. The Commission has clearly lowered its sights. This week’s sale represents a marked shift in tactics and lends credence to the rumors that the government is inclined to revoke the Intervention program’s minimum price structure. The Commission’s de facto SMP floor price may indeed be a thing of the past.”
On the Oct. 30 Dairy Radio Now broadcast, Highground Dairy broker Eric Meyer said the EU’s Intervention program has more than 800 million pounds of skim milk powder in storage and we compete with that, plus New Zealand, for powder sales, so “prices are back to historic lows.”
The bright side, he said, is that butter prices remain high and global stocks are relatively tight. He adds that, while European prices are coming off dramatically high levels of $3.80 per pound two months ago, a “market correction,” similar to what has happened at the CME has occurred, but he believes we could be seeing more years ahead of a bull market for butter.
Meyer’s biggest concern, heading into 2018, is the amount of milk that is going to be coming out of Europe over the next six months. He reported that output was up over 3 percent in August and he fears that we may be seeing increases of 4 or 5 percent ahead and “that has the potential to really weigh down our prices here in the first half of next year.”
CWT is still moving exports
Cooperatives Working Together (CWT) continues to move product offshore, accepting 14 requests for export assistance on the week from Dairy Farmers of America, Northwest Dairy Assoc. (Darigold) and United Dairymen of Arizona to sell 1.7 million pounds of Cheddar, Gouda and Monterey Jack cheese and 144,403 pounds of butter to customers in the Asia, the Middle East and North Africa.
The product has been contracted for delivery through January and put CWT’s 2017 exports at 57.895 million pounds of American-type cheeses, and 4.7 million pounds of butter (82 percent milkfat) to 21 countries on five continents.
The sales are the equivalent of 640.15 million pounds of milk on a milkfat basis.
FC Stone echoed some of Eric Meyer’s concerns in its Oct. 25 Early Morning Update, reporting that combined milk production from the world’s top five exporters was up 2.3 percent in August, which is diminishing the importance of the lower-than-expected U.S. production numbers released by the USDA.
It added, however, that “Chinese imports were much stronger than the plus 12 percent that we expected. Looks like whole milk powder volume from New Zealand dropped off significantly, but a bump up in product from Australia (the United States and Singapore, too) helped make up for it. It’s very tempting to point to this and call it bullish, but how bad does demand have to be elsewhere to have China consistently hitting plus 30 percent while prices are falling?”
The USDA’s latest Crop Progress report shows 38 percent of U.S. corn has been harvested, as of the week ending Oct. 22, up from 28 percent the previous week, but 21 percent behind a year ago and 21 percent behind the five-year average. Sixty-six percent is rated good to excellent, up 1 percent from the previous week but 8 percent behind a year ago.
The report also shows 70 percent of the soybean crop is harvested, up from 49 percent the previous week, 4 percent behind a year ago, and 3 percent behind the five-year average.