Inside this month

May 2013 Issue No. 406

Inside this month’s issue...

U.S. & global Dairy Walking Tightrope with No Safety Net (p. 1):
Both the U.S. and New Zealand are coming off severe droughts. We analyze how severe droughts often carry a “long tail” that stretches into the next year’s milk output. Parts of the U.S. face serious alfalfa winterkill problems.

Wet, Cold Spring Clouds 2013 Crop Outlook (p. 1):
Writer Jim Eichstadt takes a long look at the package of factors weighing on U.S. farmers here in spring 2013. Increasing delays on spring planting are perceived to be reducing grain yields … question is, by how much?

USDA to Start Issuing MILC Funds; Tight Money Stalls Fieldwork (p. 2):
Writer Nate Wilson details how in his corner of western New York State, normal spring field work on local dairy farms is slow this spring, due to scarcity of money. Wilson reports that USDA has finally announced it will be issuing much-needed checks for the MILC safety net program.

April 2013 Class III Price $17.59 – Class IV Price $18.10 (p. 2):
Slight gains for the cheese and butter-powder milk prices in USDA’s federal milk orders … after five months of declines.

DFA Hammered by Record $133,000,000 Loss in 2012 (p. 3):
Small wonder that DFA was light on financial details at its annual meeting. The nation’s biggest dairy cooperative suffered its worst-ever bottom line in 2012: -$133 million. $212 million worth of litigation costs pulled down the year’s bottom line. Funny thing: at the 2012 annual meeting one year ago, CEO “Tricky Rick” Smith claimed that lawsuits against DFA were “ridiculous”. Well, DFA paid down $212 million worth of “ridiculous” last year … with plenty more cases facing DFA in court.

Reflecting Critical Global Dairy Situation (p. 3):
The recent American Dairy Products Institute’s annual conference drew a record 850 attendees. Key questions focused on what’s going on in the world’s dairy industry, from supply-demand standpoints.

NCIMS Again Rules Against 400,000/ml SCC for Grade A Milk (p. 4):
Once again, the National Conference of Interstate Milk Shippers voted against a proposal to reduce the legal limit for Somatic Cell Counts in Grade A milk at that group’s every-other-year conference in April.

Q1 2013 Cheese Exports & Revenues +8%: But NO Price Increases Per Unit (p. 4):
All the hoopla about U.S. dairy exports focuses on volume, but ignores prices per unit. In 2013’s first quarter, U.S. cheese exports and revenues rose 8%. But CME block Cheddar prices were up 14 cents per pound for the relevant time frame (Dec. 12 – Feb. 2013). U.S. butter exports for 2013’s first quarter were up 19%, but sales volume rose only 14%.

China’s Protein Supply (Dairy, Meat) Facing Serious Challenges (p. 5):
A serious of poultry and pork health problems have hit China, just at the same time China’s biggest dairy import supplier – New Zealand – has seen milk flow dry up. Bottom line: China’s supply of human-quality protein is becoming scarcer.

China’s Infant Formula Demand Spike Explained: More Babies! (p. 5):
One reason why the Chinese are scouring the world for quality infant formula products is because of a baby boom last year. The “Year of the Dragon” – which ended in early 2013 – is considered the best year for having a child in China. So many families planned accordingly …

MPC “GRAS” Safety Petitions Withdrawn Due to Infant Formula Questions (p. 6):
Two dairy groups – the American Dairy Products Institute and the U.S. Dairy Export Council – have temporarily withdrawn a petition seeking FDA’s consent for GRAS (safety) approval of Milk Protein Concentrate (MPC) as a food ingredient. The hold up: stricter rule concerning MPC use in infant formula products.

Would FDA GRAS Approval for Infant Formula Open Door for Substandard, Imported MPCs? (p. 6):
THE Question. The recently withdrawn petition seeking GRAS safety okay for MPCs was held up by questions regarding infant formula use – for good reason. Danger is: okaying MPCs would leave infant formula makers able to use imported dairy proteins … without the benefit from modern dairy production and sanitation. Contaminated dairy protein products in infant formulas have been linked to infant deaths in the past.

Feature Story: Analyzing Key ADPI Speakers’ PowerPoint Panels (p. 8-9):
The recent American Dairy Products Institute (ADPI) annual conference in Chicago (April 28-30) was loaded with speakers and valuable information. Our May feature story looks at some of the highlights here.

A2 Milk – New Chapter of Dairy Health from an “Old Gene” (p. 10-11):
Writer Paris Reidhead; takes us on a long, scientific trip through the genetics and potential health benefi8ts of “A2 milk.” A minority of U.S. dairy animals express proteins that seem to address some persons’ discomfort following milk drinking. Interesting!

SMA Bleeding Southeast Members’ Milk Checks (p. 12):
Writer Julie Walker profiles a scary current mess in the Southeast. The regional milk transportation superpool – the Southern Marketing Agency – has lost DFA as a member. Suddenly, hauling costs during the “spring flush” have climbed to the moon. What’s going on???

Commodity Prices Up/Down: Industry Gauging “Spring Flush” & Global Events (p. 13):
Dairy commodity cash prices at the Chicago Mercantile Exchange are up/down, given uncertainty about global weather events and their impacts upon milk out in major dairy nations/regions.

Chinese “Organic” Imports: Not Good Enough for Pet Food (p. 14):
At a Congressional hearing in early May, a stinging review of poor-quality food imports (including organics) from China was aired. Will Fantle from the Cornucopia Institute reports on this hearing.

California’s Feb.-Mar. 2013 Milk Flow: -4% (p. 14):
Milk production for the nation’s largest milk-producing state fell an average of four percent in February-March, according to USDA data (adjusting for 2012’s Leap Year). Dry soils don’t portend well for California’s production of crops in 2013.

Dairy just part of Farm Bill foolishness … (p. 15):
Pete Hardin scorns the current farm bill process as a subsidy for insurance company profits. Better than taxpayer-subsidized “Gross margin insurance” for dairy, the dairy industry should attain a fair price for producers from the market place. Trouble is: politicians would rather pass indirect taxpayer subsidies than see consumers pay full price at the supermarket!

Obama White House politics thick, troubling in D.C. (p. 15):
The latest scandal of siccing the IRS on “tea party” groups is just the latest in a recent series of wrong-headed White House endeavors.

Global Dairy Prices Continue to Beat U.S. CME Prices by Wide Margin (p. 16):
The most recent Global Dairy Trade auction conducted by Fonterra saw prices generally slip. However, these global dairy prices remain well above U.S. cash market prices.

Drought in NZ, Central U.S. Estimated to Persist Through 2013 (p. 16):
We cite forward projections by the Global Drought Monitor to show that coming months will show little relief for New Zealand’s drought. Meanwhile, the Central U.S. continues generally dry.