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August 2014  Issue No. 421

Inside this months issue...

Feature Story: Top Springers’ Prices Climb to $3,600 at CA, MN Auctions in Late July (p. 1):

   Read our “Article of the Month” here. The headline says it all. The surge of dairy livestock prices has pegged top springers at $3,600 in two major dairy auctions (Escalon, CA and Zumbrota, MN) in late July. Dairy livestock values have climbed a50-175% (or more) in the past year.

“Milk Prices Might Crash, Lock in Your Margins” … and Other Baloney (p. 1):
    The experts have totally missed the 2014 run-up in farm milk prices, but keep bad-mouthing future milk prices. We advise dairy farmers to “ride the market” and not sign fixed-price deals for upcoming months’ milk prices.

Butter Output & Inventories Down: Recent Prices Peak & Fall Off Peak (p. 2):
    Butter cash market prices climbed above $2.60/lb, before retreating back to the $2.40/lb. range in early August. Production is down. Inventories are very tight. Looks like we’ll see imports entering the country, as recent months’ high U.S. prices preclude most exports.

July ’14 Class III Price Announced at $21.60 – Class IV at $23.78 (p. 2):
    Prices for Class III (cheese) and Class IV (butter-powder) milk increased slightly in July, compared to June 2014 prices used in USDA’s federal milk order program. Strengthening butter prices get credit for those increases.

B-I-G Deal: Agropur (Biggest Canadian Dairy Co-op) Buys Davisco (p. 3):
    Davisco Foods International now flies the Maple Leaf flag. Davisco – the leading U.S. firm developing whey and whey by-products – was transacted for an unannounced price on August 1. Interesting …

Watch Build-Up of U.S. Whole Milk Powder Supplies (p. 3):
    Global dairy protein powder prices are sliding backwards. U.S. dairy manufacturers have geared up to produce more WMP in the past year. But their warehouses are filling with unsold product in the past two or three months. Watch this one!

NY Dairy Farmer “Got the Shaft” from Dairylea on PI Count (p. 4):
    North country dairyman Don Dana put up a big sign on his barn alongside State Route 11, near Moira, New York. That sign reads: “Dairylea Cooperative got the gold mine. I got the shaft.” Dana is irked because Dairylea deducted $8,000 in quality penalties the last month in 2013 he shipped to that co-op. Those penalties were due to alleged high “PI” bacteria counts. Funny thing: Dana received a “Quality Milk Award” from Cornell University in 2013 for having ten months SCC counts below 200,000/ml.

Northeast Dairy Antitrust Case: Lead Plaintiffs Opposed, So Judge Denies Proposed Preliminary Settlement (p. 5):
    The Northeast dairy antirust case has fallen into legal limbo. Class Representatives (lead plaintiffs) informed their attorneys and court clerk in early July that they opposed the proposed settlement reached by attorneys for both sides that was submitted to the judge on July 1. The judge’s denial of the proposed settlement was scathing.

Five Pieces of the Weather/Crop Puzzle (p. 6-7):
    Writer Paris Reidhead explores the scientific community’s expertise on the related events involving weather patterns and agricultural crops (particularly corn).

Russia: Biggest Supplier of Potash (Critical Fertilizer) to U.S. (p. 7):
    As the U.S. and its allies in western Europe ratchet up the economic pressure on Putin’s Russia … and Putin responds with his own embargoes … a key fact in this interdependent world is that Russia is the biggest source of potash used by U.S. agriculture.

2014 Corn Outlook Cloudy After Roaring Start (p. 8-9):
    Contributer Jim Eichstadt takes a long look at many key events in the current U.S. corn market. Those matters include: current crop conditions, weather matters, global market conditions … all compounded by USDA’s struggles to release details of the new farm programs that were belatedly passed by Congress in early 2014.

Grain Producers Face Much 2014 Farm Program Uncertainty (p. 9):
    While USDA finalizes new program details for grain producers, Jim Eichstadt discusses what we do know about the new federal grain program. Details of the federal program are all the more important, due to sharp declines in corn prices and a bin-busting 2014 harvest.

Organic Dairy Production with the End in Mind (p. 10-11):
    Colorado veterinarian Arden J. Nelson delves deep into the changes in milk composition over the past 50+ years. He details how the ration of Omega-3 acid to Omega-6 acid has been dramataically changed, due to cows consuming less forage and more grain in their diets. Nelson then presents information about improved dairy cow breeding when cows are fed diets enhanced with Omega-3s. Further, he lists the top 10 causes of human mortality in the U.S. – while noting six of those top ten are linked to low Omega-3 levels.

Corporate Influence Eroding USDA’s Organic Standards (p. 12):
    Will Fantle of the Cornucopia Institute details a study of voting patterns by members of USDA’s controversial National Organic Standards Board (NOSB). While real organic farmers voted consistently to uphold strong standards, appointees with corporate backgrounds voted in favor of less strict oversight of ingredients and practices.

Empire Specialty Cheese Late Milk Payments (p. 13):
    Writer Nate Wilson revisits the bad boys at Empire Specialty Cheese in western New York. Seems that Empire was late paying for May 2014 milk deliveries to the Amish producers supplying that plant. The New York agriculture department is watching this situation, following a complaint about late payments.

Sept. Start for New NY Cheese Plant? No Construction Permits Issued Yet (p. 14):
    The “other half” of Nate Wilson’s reporting assignments this month. Empire Specialty Cheese is supposedly constructing a new cheese plant at the site of an closed meat packing facility in western New York. The project lined up numerous government grants – county, state and federal. As late as June 2014, a principle at Empire claimed the plant would be running by September 2014. But Wilson’s digging found that NO CONSTRUCTION PERMITS have even been issued yet for that project! Combined with late milk checks to its producers for May milk, Empire Specialty Cheese looks like a bunch of cash-flow challenged New Jersey creeps.

Proposed Northeast antitrust settlement: a crock (p. 15):
    Pete Hardin gives both barrels (.10-gauge slugs) to the unfortunately drafted proposed settlement of the Northeast dairy antitrust case. What’s particularly strange: secretive clauses (not disclosed in written materials provided to potential claimants that disallow farmers filing for damages claims to sue the defendants (DFA, DMS) or their agents, subsidiaries, etc. for anything that was done prior to 2014. Now, why the secretive prohibitions against future lawsuits? Hardin goes on to detail how a series of investor LLCs in western New York – operating over the past dozen-plus years – have bought up dairy farmers’ mortgages and driven virtually every such farmer into bankruptcy! These LLCs have Dairylea Co-op’s DNA all over them, Hardin asserts. Worse yet: land grabbed from bankrupted farmers has frequently ended up in the possession of big dairies with special relationships with Dairylea/DFA/DMS.

Methane Digester “Blows Its Top” in Dane County, Wisconsin (p. 16):
    A trio of methane digesters northwest of Madison, Wisconsin continues to have operating problems. The latest: one digester exploded and “blew its top” in early August. This event is just one in a long series of mechanical failures and broken pipes. Maybe taxpayers in Dane County are subsidizing a real stinker. What’s worse: USDA Secretary Tom Vilsack is moving ahead with long-intended plans to build methane digesters on many U.S. dairy farms.

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