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September 2017 Issue No. 458

Inside this months issue …

Our stories of the month:
Butter: Demand Strong, But CME Prices Tumble Sharply      and
CME vs. AMS: Contrasting Weekly Cheddar & Butter Averages
Click Above for Stories of the Month.

Butter: Demand Strong, But CME Prices Tumble Sharply (p. 1):   
    We discuss contra-seasonal, recent butter pricing events at the Chicago Mercantile Exchange.  Story of the month, click above.

Early 2018: Likely Start for Walmart Fluid Plant in Fort Wayne (p. 1):
   When Walmart starts processing fluid milk at its brand new facility early next year, dairy will never be the same.  Fluid processors (primarily Dean Foods) will start chasing after other processors’ retail accounts.  Dairy Farmers of America is offering cheap Class III milk to Wisconsin plants from the Mid-East order.  Federal milk orders???

NMPF & USDEC Want “Free Flow” of Dairy Products from Mexico!!! (p. 2):
   Talk about dumber than a box of rocks.  At an August 2017 meeting with Mexico’s dairy organizations, representatives of the National Milk Producers Federation and the U.S. Dairy Export Council came up with a multi-part, joint resolution that calls for, among other foolishness, establishing free-flow of dairy products between the two nations.  Mexican milk entering the U.S.?  Say WHAT???

August 2017 Class III Price is $16.57 (+$1.12) (p. 2):
   The cheese milk price for USDA’s federal milk order program rose $1.12/cwt. in August.

“Something Big” Brewing in the Northeast … Merger?  Marketing Agency? (p. 3):
   The seriously troubled Northeast looks like its getting ready for some sort of consolidation of dairy co-ops.  Merger?  Marketing agency in common?  Agri-Mark and the St. Albans Co-op seem to be involved.  And of course, nothing “Big” happens in the Northeast without Dairy Farmers of America.  We’ll see …

2017 Forage/Corn Crops Are Problematic in NY, New England (p. 3):
  A cold, wet spring followed by a cool, wet summer has meant big setbacks for crops in New York State and New England.  In the coming months, dairy marketers in that area may honestly project a big drop in milk production, due to poor crops and limited financial resources on dairy farms.

DFA Knocking Off Small Co-ops in Northeast (p. 4):
  
Like ten pins, DFA is wiping out smaller milk marketing groups in the Northeast.  Threats of no milk markets if groups and individuals don’t join DFA are common.

July Milk Dumpage in FMMOs 1 &33 Down Dramatically (p. 4):
  What surplus?  Milk dumpage for both the Mid-East and Northeast federal milk orders was way down for July 2017.

DFA’s Garden City, Kansas Milk Powder Plant to Open (p. 4):
   The nation’s newest dairy processing plant – DFA’s milk powder plant in Garden City, Kansas, will open this fall.  Just what the nation needs … a milk powder plant smack dab on top of the fast-declining Ogallala aquifer.

FDA: “Enforcement Discretion’ for U-F Milk in Cheese Vats (p. 4):
   FDA will look the other way on use of ultra-filtered milk in the production of cheeses of a standard identity.

CME vs. AMS: Contrasting Weekly Cheddar & Butter Averages (p. 5): 
      In late August and early September, cash butter and cheese prices at the Chicago Mercantile Exchange headed south.  But the weekly dairy commodity price survey of manufacturers by USDA’s Agricultural Marketing Service didn’t go down.  Is this a short-term curio, or a sign of things to come??? Story of the month.  Click on story at top of the Web page.

Big Decisions in Long-Running Milk Powder Price Mis-Reporting Case (p. 5):
  
In late August, the Courts came down hard on Defendants in dairy’s long-running milk powder mis-reporting case.  The court let stand some aspects of RICO (anti-mafia) claims against Defendants DairyAmerica and California Dairies, Inc.  Defendants and their lawyers were sanctioned for misconduct.  The court did not grant requests to add California dairy producers to the Class.

“… we thought organic milk pricing would be different.” (p. 6):
   Organic dairy farmer Jim Goodman reviews pricing and marketing events in a retrospective look at organic dairy’s downturn.

Organic Producers Taking a Whipping on Price, Markets (p. 7):
  We cite numerous instances of organic dairy producers seeing their milk price drop, or else conventional producers in transition to organic having those transitions cancelled in mid-stream.

Finally … USDA “Discovers” Fraudulent Organic Grain Imports from Turkey (p. 7):
  Organic grain industry sources report that USDA has announced fraudulent grain imports from Turkey have entered the U.S.  This move comes after many months of concerned organic farmers pointing out the problems … and nearly three months after a blockbuster expose by the Washington Post.

Clover Sonoma: San Francisco Bay Area Processor Changing with the Times (p. 8-9):
    We profile Clover Sonoma, a major dairy processor in the SF Bay Area.  Clover Sonoma has recently undergone a name change, to identify better with the North Bay ambiance.  And Clover Sonoma has rolled out a line of “Non-GMO” half-gallons.

Clover-Stornetta was First Dairy in California to Offer Consumers “rbGH/rbST-free” Milk (p. 8):
   Once a pioneer, always a pioneer.  In 1994, Clover Sonoma’s predecessor – Clover-Stornetta Farms – was the first dairy processor in California (indeed, west of the Mississippi) to disallow producers use of Posilac® -- Monsanto’s milk inducing, biotech hormone.   We review some of that history.

New York Organic Grain Dealer Uses QuickScan® to Insure Organic Grin Integrity (p. 10):
  
Paris Reidhead reports on his discussions with NY organic grain farmer/dealer Sumner Watson on the importance of testing imported grain to assure quality.

Human “Help” Intensified Hurricane Harvey’s Clout (p. 10):
   Human factors. Including lax urban planning, helped worsen the impact of Hurricane Harvey in the Houston, Texas area.

Dairy Farmers Can Now Opt Out of MPP (p. 11):
  Recent moves by Congess and enacted by USDA will allow dairy farmers who entered five-year contracts for the Dairy Margin Protection Program to notify USDA they want out without penalty.  Savings: $100/yr. for not having to continue in a worthless gov’t program.

2016: U.S. Fluid Milk Sales Tumbled Below 50 Billion lbs. (p. 11):
  Down, down, down.  For the first time in many decades, total U.S. fluid milk sales fell below 50 billion lbs. last year.

“… we thought organic milk pricing would be different.” (p. 6):
   Organic dairy farmer Jim Goodman reviews pricing and marketing events in a retrospective look at organic dairy’s downturn.

Farmer Optimism Continues to Fade in Latest Ag Confidence Survey (p. 12):
  Writer/dairy farmer Jan Shepel details a recently released Ag Confidence Survey that shows America’s farmers are losing confidence in prices in their various sectors.

Comment Period Open on WI DNR Manure Spreading Rules (p. 12):
  The public has the opportunity to comment on revised manure spreading rules proposed by the Wisconsin’s Department of Natural Resources.

Dairy Commodity Price Gyrations Cause Confusion (p. 13):
    Up and down price movements of dairy commodities in cash market trading at the Chicago Mercantile Exchange are starting to defy logic.  Some point to market disruptions caused by adverse weather.  But others suspect that CME’s shift to electronic trading n late June 2017 may be the culprit.

Dairy Livestock Prices Generally Soft, Except for Jerseys (p. 14):
   In general, prices for dairy livestock are flat at best, except for Jersey animals.

Barron’s Columnist Doesn’t Get Dairy (p. 14):
  
We all make mistakes, but …  In late July, Barron’s columnist Chelsea Dulaney really goofed.  In writing about a pending surge in commodity Cheddar prices, she recommended that investors could hope on that uptick by buying stock in Dean Foods.  Trouble is, Dean Foods doesn’t make or sell cheese.  And when disappointing second quarter earnings came out in August, Dean Foods’ stock continued its nose-dive … having lost half its value from early January 2017 through late summer.

Letter writer is barking up the right tree … (p. 15):
   Pete Hardin responds to a letter writer’s puzzlement about reasons for aberrations in trading since the start of electronic-only dairy commodity trading in late June 2017.

Dairy exporters must cope with Trump’s bluster against buyers (p. 15):
  Just this year, Donald Trump has blustered against just about every major buyer of U.S. dairy commodities – China, Mexico, Canada and South Korea.  At what point do export buyers start to view the U.S. as an unstable supplier … or do they ignore the blather coming from the White House?

The Tale of Two Milk Companies: a1 Milk Company and Dean Foods (p. 16):
  Pete Hardin compares the contrasting stock fortunes of two dairy firms – The A2 Milk Company, LTD., and Dean Foods (this nation’s largest fluid milk processor).  One firm has seen its stock value virtually double since mid-spring 2017.  The other has seen its stock value drop by 50% during 2017.  Why?


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