In dairy politics; Western United Dairymen’s (WUD) federal affairs lobbyist, Charlie Garrison, writes in the Jan. 17 member newsletter that California’s two Senators and several members of the state’s House delegation have joined together to introduce the “Agricultural Worker Program Act of 2019.”

The bill would create a “blue card” program for improperly documented farmworkers who have a significant history of employment on farms in the U.S. and would allow eligible workers to work in agriculture for up to five additional years and then adjust to lawful permanent residence, or “green card,” status. It would also offer protection for spouses and children already physically present with the worker. In addition to Senators Dianne Feinstein and Kamala Harris, more than half of the Democrats in the California House delegation are listed as original cosponsors of the bill. WUD says it will evaluate this and all other immigration reform legislation.

And, as Congress prepares to review a new trade agreement replacing NAFTA, the U.S. Dairy Export Council (USDEC) charged in a posting on its website that the U.S. dairy industry “remains wary that a Canadian protectionist pricing policy could return under another name.”

In an interview with Farm Journal Editor Rhonda Brooks, U.S. Dairy Export Council President and CEO Tom Vilsack stated; “We need some reassurance that the terms and conditions of the U.S-Mexico-Canada trade agreement are actually implemented. Canada has to be more transparent with its activities relative to the dairy market. We've seen for far too long Canadians agreeing to do one thing, and then utilizing a loophole or utilizing some tactic to basically sort of disregard what they've previously agreed to. We need to have a better understanding of exactly what the Canadians were doing in terms of the Class 7 elimination,” Vilsack charged. He said it's great that it's going to be eliminated but not if it's been replaced with something else by another name.

He said “The same is true with market access; do we really have that market access? Are we going to play some of the same games that have been played before?” He asked.

The second Global Dairy Trade auction (GDT) of 2019 got another boost in its weighted average of products offered, jumping 4.2 percent, following the Jan. 2 gain of 2.8 percent, and the biggest increase since Feb. 6, 2018. It also represented the fourth consecutive session of gain.

Sellers brought 61.5 million pounds of product to the market, down from 63.2 million on Jan. 2 and the lowest amount since July 17, 2018. All products offered except rennet casein were in the black, led by skim milk powder, up 10.3 percent, after it climbed 7.9 percent in the last event and 3.4 percent in the event before that. Lactose followed, up 7.9 percent. Butter was next in line, up 4.6 percent, after a 3.9 percent climb last time. GDT Cheddar was up 4.2 percent, following a 3.2 percent increase, and anhydrous milkfat was up 3.2 percent following a 3.9 percent gain. Whole milk powder rounded up the gains with a 3.0 percent increase after it was up 1.2 percent in the last event.

FC Stone equates the GDT 80 percent butterfat butter price to $1.8860 per pound U.S., up 8.2 cents from the last session. CME butter closed Friday at $2.24. GDT Cheddar cheese equated to $1.5893 per pound, up 6 cents from the last event and compares to Friday’s CME block Cheddar at $1.40. GDT skim milk powder averaged $1.0907 per pound, up from 99.82 cents last time and the first time it topped $1 per pound since June 20, 2017. Whole milk powder averaged $1.2597, up from $1.2269. CME Grade A nonfat dry milk closed Friday at $1.03 per pound.

Week three of 2019 became week four of the partial government shutdown. So far, the dairy industry has been deprived of the November Dairy Products report, the January World Agricultural Supply and demand Estimates, monthly U.S. trade data from the Bureau of Census, weekly dairy slaughter data, the month’s Livestock, Dairy and Poultry Outlook, and grain stocks data. Next will be the December Milk Production and Cold Storage reports scheduled for Jan. 23 and 24 respectively.

Secretary of Agriculture Sonny Perdue ordered many Farm Service Agency (FSA) offices to reopen temporarily to perform “certain limited services for farmers and ranchers,” and “assist with existing farm loans and to ensure the agency provides 1099 tax documents to borrowers by the Internal Revenue Service’s deadline.”

But FC Stone dairy broker Dave Kurzawski played down the loss of information from the missing USDA reports in the Jan. 21 Dairy Radio Now broadcast. “The markets do a pretty good job of determining whether buyers are panicking in the country or sellers are panicking in the country,” Kurzawski explained. He admitted that the USDA data is important and “gives us a good frame of reference for what’s going on out there,” but “The markets reflect what is actually happening in the country and if there’s too many people selling cheese, the market will go down, it doesn’t take a USDA report to figure that out.”

“The data is also aged,” he said, “And while I’d rather be in a world that had the data than not, I don’t think that it’s as critical as we initially thought.” Of more importance to Kurzawski for example is the loss of “E-Verify,” the web-based system that allows enrolled employers to confirm the eligibility of employees to work in the U.S. That is very important, according to Kurzawski who agrees that for now, the shutdown has replaced the issue of the tariff wars but that issue hasn’t gone away and says we will address that again in the future.

Dairy Market News reports that Central cheese production has scaled back since the holidays as regional producers manage post-holiday inventories. Spot milk prices ranged $2 under to 50 cents over Class. But the gap between block and barrel prices drew more attention. DMN says barrel producers who can shift production to other varieties and/or sell milk back on the spot market are doing so. Block producers are reportedly concerned and “suggest that even though there is a chance barrel prices could ascend to meet block prices, the inverse possibility of block prices declining to converge with barrel prices creates hesitant buyers and a generally inferior market dynamic.”

Western cheese makers continue to run their vats at or near capacity, as there’s plenty of milk. Mozzarella demand is solid due to the football playoffs and pizza season, according to DMN, “However, the winter holiday season that generates peak consumption is a memory and processed cheese demand continues to struggle.”

The retail cheese market is seasonally slower, and some contacts suggest sales are lagging while others say demand is as would be expected, but production is outpacing demand. Stocks are weighing heavily on cheese prices and end users report getting many offers for consideration. The spread between block and barrel prices has western manufacturers “adapting to this through a number of means, using risk management strategies or offsetting the milk intake costs with greater value generation in the whey protein complex,” says DMN.

FC Stone’s Early Morning Update Friday candidly stated; “At the moment there seems to be no light at the end of the tunnel for the cheese market. It sounds as though milk flows are strong enough to keep Class IV plants full at the moment and still leave plenty of excess available for milk to make its way into cheese plants. That’s tough to determine for certain, but that seems to be the chatter out there today. The bearishness that’s so prevalent in the Cheese and Class III markets is what makes it difficult to be bullish on dairy products at the moment. With barrels at fresh lows and Class III at a big discount milk should be moving away from the plants but that doesn’t seem to be happening in a meaningful enough way for now.”

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.