THE LAND, OCTOBER 21, 2016
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October WASDE report indicates more cows, more milk The following marketing analysis is for for 2016 and 2017 were lowered due to the week ending Oct. 14. higher expected milk supplies. However, nonfat dry milk and whey will likely beneAmerica will have plenty of milk. The fit from increased competitiveness in U.S. Department of Agriculture again export markets, and stronger exports will raised its milk production forecasts for help support prices of those products. 2016 and 2017 in its latest World AgriThus, price forecasts for NDM and whey cultural Supply and Demand Estimates were raised from last month. report from a month ago, “as the cow inventory has grown more rapidly than Class III and Class IV milk prices were MIELKE MARKET previously expected. The higher cow lowered from last month as lower cheese WEEKLY inventories appear to reflect growth in prices more than offset the higher whey herds supplying expanding dairy product price in the Class III calculation and the By Lee Mielke facilities.” lower butter price outweighs the NDM price increase in the Class IV price. 2016 production and marketings were projected at 212.7 and 211.7 Look for the 2016 Class III price to billion pounds respectively, up 500 million pounds average around $14.35 per hundredweight, down 50 on production and 400 million on marketings. If cents from last month’s projection, and compares to realized, 2016 production would be up 4.1 billion $15.80 in 2015 and $22.34 in 2014. The 2017 average pounds or 1.97 percent from 2015. is expected around $14.65, which is down 80 cents 2017 production and marketings were projected at from what was projected a month ago. 217.3 and 216.4 billion pounds respectively, up 1.2 The 2016 Class IV price is anticipated around billion pounds on production and 1.3 billion pounds $13.70. This is down a dime from last month’s projecon marketings from last month. If realized, 2017 tion, and compares to $14.35 in 2015 and $22.09 in production would be up 4.6 billion pounds or 2.2 2014. The Class IV should average $14.20 in 2017, percent from 2016. which is down 15 cents from last month. Import forecasts for 2016 and 2017 were raised on Beef Magazine’s Nevil Spear writes an interesting higher expected imports of butter and several other perspective in his Oct. 10 website post. “The U.S. dairy products. Exports were forecast higher as dairy industry will likely produce in excess of 210 increases in Oceania prices and relatively low U.S. billion pounds of milk this year with only 9.3 million prices are expected to make the U.S. more competi- head. In other words, in just a little over 15 years, tive in world markets. the dairy industry has ramped up production by in excess of 25 percent with nearly the same number of Ending stocks were reduced as lower prices encourage increased demand from both export and cows.” domestic markets. Cheese and butter price forecasts ■ A 60-page analysis was made public, commissioned by the Consortium for Common Food Names, an international alliance of companies and organizations dedicated to preserving the right to use common food terms. The CCFN and the three major U.S. dairy trade associations, the National Milk Producers Federation, the U.S. Dairy Export Council, and the International Dairy Foods Association issued a joint press release stating that “Surrendering to a European Union seizure of common food names would cost the U.S. dairy industry billions of dollars, slash domestic cheese consumption and increase prices for consumers.” The analysis by Informa Economics warns, “The European farm policy agenda, which is focused on using geographical indications to unfairly grant European food producers a huge commercial advantage, would force farmers and food producers outside of Europe to rebrand familiar foods with unfamiliar names,” according to the analysis. “The resulting confusion in the U.S. domestic marketplace could shutter family farms, eliminate thousands of rural jobs and hurt the overall U.S. economy.” “The EU advocates extending GI protections beyond a small number of specialty foods to cover many food names that have little to no geographic identity and have long been commonly used by food producers around the world,” the press release stated. “At today’s prices, the decline in U.S. cheese
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consumption due to the loss of common food names could amount to $2.3 billion in lost sales in three years, and $5.2 billion in 10 years. It could push dairy farm balance sheets below the break-even point for six out of 10 future years, costing farmers a cumulative $59 billion in revenue and forcing several thousand family dairy farms out of business, the analysis added. Several members of Congress and Agriculture Secretary Tom Vilsack also reacted to the analysis. ■ USDA again offered to purchase up to $20 million of cheese this week to “provide assistance to U.S. dairy farmers.” This is in addition to the $20 million announced in August, but FC Stone’s Dave Kurzawski says details have yet to be ironed out. He says, “The larger question will be what the spec of that cheese will be. During the previous round of government buying back in September, the Commodity Credit Corporation only spent $7 million of the proposed $20 million. Part of that had to do with the spec of cheese as the call was for ‘consumer ready’ cheese, which presented some challenges to would-be sellers. The announcement this week simply said ‘cheddar cheese’ and that leaves a lot to be discussed when the solicitation is officially sent out in the coming weeks.” ■ There’s good news on the feed front. USDA’s Crop Production report forecasts corn production at 15.1 billion bushels. This is up 11 percent from last year, but down slightly from the September forecast. Based on Oct. 1 conditions, yields are expected to average 173.4 bushels per acre. This is down a bushel from the September forecast, but up five from 2015. If realized, this will be the highest yield and production on record for the United States. Soybean production is forecast at a record 4.27 billion bushels. This is up 2 percent from September and up 9 percent from last year. Based on Oct. 1 conditions, yields are expected to average a record 51.4 bu./acre, which is up 0.8 bushel from last month and up 3.4 bushels from last year. Cotton production is forecast at 16.0 million 480pound bales, down less than 1 percent from September, but up 24 percent from last year. Yield is expected to average 797 pounds per harvested acre, which is up 31 pounds from last year. ■ Dairy prices continued sliding the second week of October. Cash block cheddar sunk to $1.5175 per pound; but regained 3.25 cents on Oct. 14, closing at $1.55. The price remained unchanged on the week, but 11.5 cents below a year ago. The barrels dipped to $1.4475, but inched back a 1.25 cents on Oct. 14 to $1.46. This is 5 cents lower on the week, 18 cents below a year ago, and a larger-than-normal 9 cents below the blocks. Three cars of block traded hands on the week and 19 of barrel. Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. ❖