Dairy Profit Weekly Editor Dave Natzke reported in Friday’s DairyLine broadcast that the FDA’s annual report on milk drug residue testing had some good news. The number of milk samples testing “positive” for drug residues was a record low in 2011. Of nearly 3.8 million milk samples analyzed, just 1,079 (28 one-thousandth of 1 percent) tested positive and none of those positives were found in pasteurized milk and dairy products headed to consumers.

On the down side, he reported that consumers are getting less milk in fluid form. Based on government estimates, less than 28 percent of all milk marketed in 2011 was sold in gallon jugs and other packaged fluid products. “With dairy consumption inching upward, that means U.S. consumers are purchasing more cheese, butter, yogurt, dairy protein foods and other dairy products,” Natzke said.

Looking “back to the futures;” the average Class III milk price for the first six months of 2012 stood at $17.60 per cwt. on Jan. 6, $17.28 on Jan. 13, $16.81 on Jan. 20, $16.85 on Jan. 27, $16.35 on Feb. 3, (after factoring in the announced January Class III milk price) $16.19 on Feb. 10, $16.08 on Feb. 17, and was hovering around $15.71 late morning Feb. 24.

Speaking of milk prices; Dairy Profit Weekly reported that Vermont’s congressional delegation has introduced legislation to extend the Milk Income Loss Contract (MILC) program beyond its expiration date at the end of fiscal year 2012. The MILC Continuation Act of 2012 would extend MILC for one year at current levels. 

You’ll recall that the MILC payments are triggered when the Class I price in Boston falls below $16.94 per cwt. Currently, the base payment rate is any positive difference between $16.94 and the Class I milk price at Boston, times 45 percent. There is also a “feed cost adjuster,” increasing the payment when the price of a cwt. of dairy feed rises above its target of $7.35.

Set to expire Sept. 30, 2012, the potential payment total also takes a significant hit in its final month, when payments drop to 34 percent of the difference in the $16.94 per cwt. trigger and the actual Boston Class I price. Payments under the program are limited by production. Currently, producers are eligible to receive payments on up to 2.985 million pounds per fiscal year.

Meanwhile, the University of Wisconsin’s Dr. Brian Gould, updated his MILC payment projections. Based on Feb. 17 futures and Class I base price announcements, he projects producer payments of 8 cents per cwt. for February; 44.1 cents for March, 76.5 cents for April, 83.9 cents for May, 72.4 cents for June, 68.9 cents for July, 45.5 cents for August, 22 cents for September, 8.8 cents for October, 1.3 cents for November, and none for December.

Cooperatives Working Together (CWT) accepted 17 requests for export assistance this week to sell a total of 1.3 million pounds of cheese and just under 1 million pounds of butter to customers in Asia, Central America, the Middle East and North Africa. That raised 2012 CWT cheese sales to 24.5 million pounds and 19.9 million of butter to 16 countries.

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.