2012 is upon us and we all wonder what lies ahead. It’s a far different world than our fathers and grandfathers lived in and perhaps they felt the same on New Year’s Day, but I really do see us in a very different world.

If you’re still drawing breath and able to read this column then I think it safe to assume that you had your share of triumphs and trials in 2011. I had two major trials this year, the most recent being the passing of my wonderful mother on Dec. 28. Our family gathered in celebration of her life in Fond du Lac, Wis.

It is often easier to focus on the trials than the triumphs, but I want to tell the story of the silversmith, which has comforted me much over the years. Trials and tests are often referred to in scripture as a refining process and in the book of Malachi there’s a verse that says; “He will sit as a smelter and purifier of silver.” I learned that the smith must watch over the process to make sure not to leave the silver in the fire too long or the fire will ruin it, but if it’s not left in long enough, the fire will not burn away all of the alloys. Either way, the silver is worthless for fashioning it into something of use.

When asked how do you know how long to leave the silver in the fire, the smith replied, “I know the silver is ready to come out of the fire when I can see my image in the silver.”

The USDA announced December Federal order milk prices the last Friday of 2011 and the benchmark Class III price is $18.77 per cwt., down 30 cents from November, but $4.94 above December 2010 and equates to about $1.61 per gallon. The 2011 average is $18.37, up from $14.41 in 2010 and $11.36 in 2009. The December Class IV price is $16.87, down a dollar from November, but $1.84 above a year ago.

The Class IV averaged $19.04 in 2011, up from $15.09 in 2010 and $10.89 in 2009. California’s comparable 4a and 4b prices will be announced by the California Department of Food and Agriculture on Jan. 3.

Looking ahead, the Class III futures had the January 2012 contract trading late Friday morning at $17.21, February $17.41, March $17.46, April $17.40, May $17.20, and June at $17.13.

The four-week, NASS-surveyed cheese price averaged $1.8070 per pound, down 3.5 cents from November. Butter averaged $1.6119, down 17 cents, nonfat dry milk averaged $1.4201, down 3.2 cents, and dry whey averaged 65.38 cents, up 1.6 cents from November.

Meanwhile, trading at the Chicago Mercantile Exchange was pretty quiet the last week of the year. The 40-pound blocks of cheese closing at $1.5625 per pound, unchanged on the week, and 22 cents above that week a year ago. The 500-pound barrels closed Friday at $1.58, up 2 cents on the holiday shortened week and 24 cents above a year ago. That’s the second week in a row the barrels moved higher. Only one car of barrel traded hands on the week. The lagging NASS-surveyed U.S. average block price fell to $1.6977, down 7.6 cents on the week, while the barrels averaged $1.6356, down 7.4 cents.

Cash butter closed at $1.5950, also unchanged on the week, but 7.5 cents below a year ago. No spot butter was sold on the week. NASS butter averaged $1.5918, down slightly. NASS nonfat dry milk averaged $1.3766, down 6.5 cents, and dry whey hit 65.99 cents, up 0.4 cent on the week.

It was a bit of a lean week for dairy news specifically. The last Ag Prices report of 2011 was released Friday afternoon after our deadline. But, there was good news in improved October cheese and butter sales, according to USDA’s latest commercial disappearance data. American cheese demand gained 4.7 percent from a year ago and was 3.6 percent above previous-month levels. Total cheese use was 4.6 percent higher than October 2010. Nonfat dry milk use, however, lost 16.5 percent, while butter use rose 18.1 percent.

The CME’s Daily Dairy Report (DDR) points out that August to October cheese use was up 1.8 percent from the prior year and butter use was up 12.7 percent. Cheese and butter usage for the year was up 3.1 percent and 10.7 percent, respectively. This fact, says the DDR, helped counter the decline in fluid milk sales, which were off 1.4 percent in the first 10 months of the year.

The USDA’s weekly milk production update reports that milk processing patterns are shifting and following expected holiday patterns. Fluid milk accounts and smaller processors are taking more time off around the holidays and reducing their milk orders.

Schools and colleges closing for the holidays create the normal, expected backflow of milk. Other processors are increasing plant times to handle the increasing milk volumes. The expectations are that plants will be running near capacity, but will be able to handle the current milk supplies. 

Winter weather conditions were impeding transportation across several states in the South Central and Southwestern regions. The impact is intense for those areas, but returning to normal, according to USDA.

Many cheese buyers are positioning for the year-end inventory taking and waiting for the results of holiday movement before reordering, according to USDA’s Dairy Market News. Packagers and processors operated on abbreviated schedules during the holiday weeks, reducing bulk cheese needs. 

Cheese production has started to increase as holiday surplus milk volumes back into manufacturing channels to run as heavy as desired.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.