New Date on China

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My that was fast. Probably depends on the owner of the ox being gored.

CME Profit

There is money to be made in derivatives:

http://cmegroup.mediaroom.com/index.php?s=43&item=3012

CHICAGO, April 29 /PRNewswire-FirstCall/ -- CME Group Inc. (Nasdaq: CME) today reported that first-quarter total revenues increased 7 percent to $693 million and operating income increased 7 percent to $415 million from the year-ago period. First-quarter 2010 operating margin was 60 percent, in line with first-quarter 2009. Operating margin is defined as operating income as a percentage of total revenues.

First-quarter net income was $240 million and diluted earnings per share were $3.62, both up 21 percent from the same period last year. First-quarter 2010 results included $6 million in non-operating income for the recovery of a bankruptcy claim and a $6 million reduction in certain tax reserves, offset primarily by $10 million of professional fees related to the company's joint venture with Dow Jones. These three items increased net income by $2 million. First-quarter 2010 figures include the results of Dow Jones Indexes beginning March 19, 2010.

"CME Group's discipline and focus helped deliver a strong quarter, and we see ongoing opportunities domestically and internationally to improve on this performance," said CME Group Executive Chairman Terry Duffy. "First-quarter operating income of $415 million and earnings per share of $3.62 were the best quarterly results since 2008. With volume, liquidity and depth of book improving across asset classes, CME Group is poised to continue to serve our customers worldwide and deliver sustainable financial results."

"The first quarter highlighted the resiliency of CME Group's business amid improving macroeconomic trends," said CME Chief Executive Officer Craig Donohue. "We achieved overall volume growth of 12 percent, and average daily volumes for our foreign exchange, metals and interest rate products grew by 75 percent, 52 percent and 33 percent, respectively. Building on the momentum of the first quarter, April volumes are up 28 percent from the year-ago period – a positive trend. In addition, we are successfully executing our long-term strategy to expand our global distribution network and client acquisition efforts, as well as our OTC clearing services initiatives in interest rate swaps, OTC FX and credit default swaps."

(click on link for more)

Net income ^ +21%

NFDM Prices

According to Dairy Market News:

MD_DA641
DA
MD DA641 California Manufacturing Plants - Nonfat Dry Milk

MADISON, WI. April 29, 2010 (REPORT 17)

CALIFORNIA MANUFACTURING PLANTS - NONFAT DRY MILK

WEEK ENDING PRICE TOTAL SALES

April 23 $1.0825 17,195,092
April 16 $1.1112 11,546,196

Prices are weighted averages for Extra Grade and Grade A Nonfat Dry Milk, f.o.b. California manufacturing plants. Prices for both periods were influenced by effects of long-term contract sales. Total sales (pounds) include sales to CCC. Compiled by Dairy Marketing Branch, California Department of Food and Agriculture

Source: Dairy Marketing Branch, California Department of Food
and Agriculture. Sacramento, CA.
Disseminated by USDA, Dairy Market News - Madison, WI

Meanwhile, Dairy Market News says in its Eastern report, "Good domestic and export demand continues to support the firm undertone of the market."

Maybe there is money to be made by someone!

China Story Getting About

IDFA has some on the China trade fiasco:

http://www.idfa.org/news--views/news-releases/details/4659/

They do not say so but, it is my understanding the problem relates to Johne's.
See: http://en.wikipedia.org/wiki/Johne%27s_disease

The largest export to China is whey. China takes nearly 30% of our whey exports. Watch for whey and NFDM prices to fall.

ADPI Meeting

I'm just back from Chicago, where I attended the annual American Dairy Products Institute meeting.

It is late, very late. The last 18 miles I did not see another vehicle on the road - kind of reaffirmed I was near home.

You could not have found a consensus of opinion among the attendees. Some of the presenters talked about the prices may have peaked. Needless to say risk management was advocated.

Others think prices are really going to take off in the second half of the year.

The China deal is very big on peoples minds. I should have quite a bit more on that in the next couple days.

I spoke to a young woman from China (looking to buy U.S.dairy products). She thought there would be no problem for her company. They have six companies which can repackage the products. They were very well connected, she assured me. Of course, that is not necessarily an official position.

China

The big news today is that China has notified the U.S. that beginning China will no longer accept American dairy imports. Needless to say this presents a problem to many including those who have products in containers which will not reach port by May 1,2010.

China is citing health issues. The outcome remains to be seen.

So much for globalism.

Why Bother?

http://www.naturalproductsmarketplace.com/news/2010/04/study-organic-rbstfree-milk-same-as-conventional.aspx

So here we have more of the same:

ITHACA, N.Y.—Researchers at Cornell University reported no meaningful nutritional differences between conventionally produced milk with no specialty labeling, milk labeled rbST-free and milk labeled organic in a recent Journal of Dairy Science-published study (Volume 93, Issue 5, Pages 1918-1925 (May 2010)). They all milks were similar in nutritional quality and wholesomeness.

They did find differences in fatty acid composition with organic milk, however. Organic milk was higher in omega-3s and saturated fat, and lower in monounsaturated fat, polyunsaturated fat and trans fat. Regarding the fat content, researchers said, “From a public health perspective, the direction for some of these differences would be considered desirable and for others would be considered undesirable; however, without exception, the magnitudes of the differences in milk fatty acid composition among milk label types were minor and of no physiological importance when considering public health or dietary recommendations.”

They investigated nutritional differences in specialty labeled milk, specifically to compare the fatty acid (FA) composition of conventional milk with milk labeled as recombinant bST (rbST)-free or organic. The retail milk samples (n=292) obtained from the 48 contiguous states of the United States represented the consumer supply of pasteurized, homogenized milk of three milk types: conventionally produced milk with no specialty labeling, milk labeled rbST-free,and milk labeled organic.

No statistical differences in the FA composition of conventional and rbST-free milk were found; however, these two groups were statistically different from organic milk for several FA. When measuring FA as a percentage of total FA, organic milk was higher in saturated FA (65.9 vs. 62.8 percent) and lower in monounsaturated FA (26.8 vs. 29.7 percent) and polyunsaturated FA (4.3 vs. 4.8 percent) compared with the average of conventional and rbST-free retail milk samples. Likewise, among bioactive FA compared as a percentage of total FA, organic milk was slightly lower in trans 18:1 FA (2.8 vs. 3.1 percent) and higher in omega-3 FA (0.82 vs. 0.50 percent) and conjugated linoleic acid (0.70 vs. 0.57 percent).

It should be noted the study was supported in part by the Monsanto Company; Cornell Agricultural Experiment Station; and the Cooperative State Research, Education, and Extension Service, USDA.

Here is the question, who will be convinced by this study? Further, why, after Monsanto sold Posilac to Elanco, is Monsanto still funding such stuff.

My guess it is to provide fodder for policy makers.

Livestock Dairy and Poultry Outlook from ERS

http://www.ers.usda.gov/Publications/LDP/2010/04Apr/LDPM190.pdf

The Nation’s dairy herd continues to contract on a year-over-year basis. However, milk per cow continues to rise incrementally. The April Milk Production report indicated that milk per cow was 51 pounds (lbs) higher in March compared with a year ago. Moderating feed prices for 2009/10 and the prospect of continued moderate feed prices into the next crop year have provided an incentive to increase output. However, lower milk prices have kept the milk-feed profitability ratio below 2.5. A milk-feed price ratio above 2.5 is considered necessary to begin any expansion. Although the U.S. dairy herd continues to decline, the rate of decline appears to be moderating. The March Livestock Slaughter report showed 223,000 dairy cows laughtered under Federal inspection in February, the second lowest total since last May. Meanwhile, producers added 3,000 cows in both January and February. For 2010, the U.S. dairy herd is expected to average 9,065,000 cows, a 1.5 percent decline from 2009, but somewhat higher than recent USDA estimates. Output per cow is projected at 20,950 lbs resulting in a forecast 189.9 billion lbs of milk in 2010.

The fact is, milk production is subject to revision and the milk per cow and number of cows is outright fiction.

NFDM Price?

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Today's NASS price for NFDM is $1.14 per pound. California's latest posted price is $1.11 per pound for the week ending April 23, 2010. Probably the powder listed by DairyAmerica was made last week. Obviously, from DairyAmericas's site, the powder is from California.

All of this raises an important question - what is the wholesale price of NFDM? The chances of having this question answered is virtually zero.

External Costs

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As someone from USDA recently pointed out to me, there are 3000 dairy operations which provide half the milk for the country.

As everyone knows there is a price for everything. There are, however, external costs to many things. External costs are born by others than the main people in the deal. Processors just love dealing with big farms and big farms think they have a God-given-right to expand.

The price to be paid by all, especially dairy farmers is seen in the above column from the Binghamton (NY) Press and Sun Bulletin

Ignorance of everything to do with producing milk has increased with fewer and fewer farms. This is probably not something which will go away with a few farm tours.

Mark Twain once told a story in which the punch line was "Its like milking a dry cow." think about the fact that most, if not everyone, in the audience understood what a dry cow was. A column, such as the one above, would not have seen the light of day.

The problem of ignorance is a direct external costs of expansion.

Butter Price

Butter, on the CME stayed at $1.57 per pound. Seems like good news until you realize world butter price, adjusted to 80% butterfat, is about $1.77 per pound.

With those numbers, no one should be surprised we exported in January and February of this year 41.1% more butter than the same first two months of 2009.

DFA/CME And the Winners Are?

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We really know nothing about the amounts the individual players made in the shenanigans DFA and associate made in 2004, manipulating the CME. We do know that DFA claimed to have helped dairy farmers.

Dairy farmers receive a blend price based on utilization. Actually, it is the blend priced based on "pooled" utilization in the Federal Orders. As can be seen in the above table from Federal Order One,the class three (cheese) milk was not pooled - which is also known as depooling.

However, the CME is also used to set wholesale prices and ultimately, retail prices. As can be seen from the above graph, the American public were the big losers.

Farmers should ask USDA how much longer they will cooperate, by way of the farm milk pricing formulas, with the plunder?

Perhaps it is time for consumer groups to ask the same question.

New Case

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A new case was filed on April 9, 2010 against DFA and others. The amount of information in the court documents is startling.

The CFTC agreement on December 16, 2008 lists Gary Hanman, Gerald Bos and two executives from Keller's creamery. But, in this case, on page 24, line 119, "Defendant Millar explained to John Wilson, DFA's Corporate Vice President of Marketing, that DFA should purchase CME spot cheese "strongly" at $1.80 per pound." Other DFA officials appear to have knowledge of the price manipulation.

On page 25, line 127, "The CME cheese price closed at $1.80 every day from May 21 to June 22, 2004. This is because DFA -- which already had too much cheese in would have to dump (largely overseas) but cheese it was purchasing -- had agreed with the other defendants to buy and fix the price at $1.80."

Dumping overseas, raises another question regarding the Cooperatives Working Together program. What was CWT's deal?

While DFA has alleged to have helped farmers milk checks with these dealings in 2004, DFA in fact, depooled, meaning that no benefit was seen by dairy farmers.

On page 36, line 194, "First, the CME is not a wrongdoer here but had statutory and other duties to investigate, prevent and punish manipulation. But the CME repeatedly made statements to the fact that the CME believed that their market had integrity and that there have been no manipulation." The court documents and goes on to quote an Andy Martin The Chicago Tribune (December 30, 2004).

This case is primarily an antitrust case involving price manipulation. However, on page 45 sixth claim "Violation of Racketeering Influenced and Corrupt Practice Act" otherwise known as RICO.

According to Wikipedia:

“The Racketeer Influenced and Corrupt Organizations Act (commonly referred to as RICO Act or RICO) is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91-452, 84 Stat. 922, enacted October 15, 1970). RICO is codified as Chapter 96 of Title 18 of the United States Code, 18 U.S.C. § 1961–1968. While its intended use was to prosecute the Mafia as well as others who were actively engaged in organized crime, its application has been more widespread.”

While USDA claims to not use the CME in pricing farm milk, the claim is merely a denial of the obvious. At some point, USDA needs to question the attachment of their formula to corruption.

CME & NFDM

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Some feel the CME has nothing to do with NFDM pricing. So, let me put out my thoughts on this.

As can be seen in the above graphs, the CME and other NFDM are highly correlated (.99) on an annual basis.

The next question is does CME follow or lead. As can be seen in the second graph, CME appears to lead.

The interesting part is how little NFDM is actually traded on the CME. In 2008 CME trades accounted for 4/100th of a percent of domestic NFDM.

CME only gets paid for actual trades and yet from 1998 through the third week in May 2008, only one load was traded. If the CME rouse was ineffective, the so-called trading would end very abruptly.

Some is getting a bang for their buck with NFDM on the CME.

NASS Survey

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In 1996, University of Wisconsin released an import report on cheese trading at the "National Cheese Exchange" in Green Bay, Wisconsin:

http://www.aae.wisc.edu/pubs/misc/docs/cheese.pdf

Just over a year later the traders fled to the arms of the CME where their trading could be more secretive.

USDA then devised the NASS survey for dairy pricing as a smoke screen to hide the fact that the same factors were in charge.

As can be seen in the above graph the only difference between CME and NASS is a few days. That is because the plant uses CME price to quote to a customer and NASS surveys the product when it goes out the door - hence the delay.

Without the CME there would be no NASS.

In 1998 another report was released detailing the benefits of the cash cheese market:

http://www.aae.wisc.edu/fsrg/publications/Archived/wp-116.pdf

Free Market?

Today, April 16, 2010, the price of cheese, both blocks and barrels, fell once again on the CME. In total there were three players. Jerome was a seller of both blocks and barrels. For blocks there were no buyers and Jerome’s offer drove blocks down by 1 1/2 cents.

With barrels, Gavilon and Schreiber were the buyers. Barrels fell 1 3/4 cents.

The pattern in cheese trading is lopsided. There is no one who represents the interest of either the public or the dairy farmer. All of the players have an interest in low farm milk price. So, no one can say in this thinly traded market, the thinness doesn't matter as there are “countervailing forces."

Part of the problem we are dealing with is ignorance of what constitutes a market. Most people think the function of the market as determining supply and demand. However, particularly in today's age computer data, without any CME, a computer program with accurate input could determine supply/demand.

Supply/demand can be perfectly balanced and that says nothing about price. The price could be either high or low.

If we look at Adam Smith’s, the so-called father of capitalism, writing, there is an often quoted phrase, "invisible hand." The implication of "invisible hand" is that through the market system determining price, there is a public benefit.

Further, there is a general understanding that the market system provides efficient allocation of resources.

F.A. Hayek, won the Nobel Prize in economics in 1974 for his explanation of how the market works. In his essay, "The Use of Knowledge in Society", Hayek says:

“The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources--if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.”

The last sentence is the key to understanding markets.

Francis Galton was an early English statistician.

According to Wikipedia:

“In 1906 Galton visited a livestock fair and stumbled upon an intriguing contest. An ox was on display, and the villagers were invited to guess the animal's weight after it was slaughtered and dressed. Nearly 800 gave it a go and, not surprisingly, not one hit the exact mark: 1,198 pounds. Astonishingly, however, the mean of those 800 guesses came close — very close indeed. It was 1,197 pounds.”

The point here is, I think, the price system, a real price system, is heavily dependent upon a large number of players to arrive at what Adam Smith called, "the invisible hand."

The few players on the CME are incapable of setting aside their own self-interest and considering the self interest of others.

A market system is a very complex system and is much, much more than simple absence of government intervention. Cheese pricing on the CME is flawed beyond recognition as anything relating to market price. What is presently called a “free market” on the CME is neither free, nor a market.

Cheese Price

Cheese fell again on the CME. Both blocks and barrels appear to have been dropped by Jerome's offers.

On the other hand, here is the price data for Cheddar in Oceania, courtesy of Dairy Market News:

MD_DA128
DA
MD DA128 Cheddar Cheese - Oceania

MADISON, WI. April 15, 2010 (REPORT 15)

OCEANIA
INFORMATION GATHERED 04/05/2010 - 04/16/2010
U.S. DOLLARS PER METRIC TON, FOB PORT

CHEDDAR CHEESE: Oceania cheese markets are generally steady with prices
unchanged to higher. Recent strength in most manufactured dairy product markets
is giving strength to the cheese market. Milk production is trending lower
seasonally with New Zealand's output sharply lower. This is causing milk
handlers to direct available milk volumes to products of most need or best
return.

39% MAXIMUM MOISTURE: 3,800 - 4,100

If you average the data, the prices translates to $1.79 per pound. The value in DMN report $3800-4100 is per metric ton (2204.6 pounds)

CME Mysteries

Today, Jerome, naturally, continued to drive both block and barrel down.

Oddly, butter rose to $1.56 a pound (blocks are $1.4325/lb.). Dairygold sold the butter and Schreiber bought all the loads.

Schreiber is a huge company (6000 employees)which mainly focuses on cheese. That is not to say Schreiber has no interest in butter. Schreiber is a world player, with a plant in India (How interesting).

Needless to say the world price for butter is just under $1.80/lb when adjusted to 80% bf.

Although there is little future in running the price of cheese down, and Schreiber is a common player in that process, Schreiber may be considering the future (not futures)regarding supply of cream.

News?

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Prices on the CME fell again today. But, the import/export data released today looked positive.

Transparancy?

The CME Dairy Dairy Report said today: "After blocks climbed 24¢ in 11 days – mostly on unfilled bids – buyers remained absent today. A single load was offered 2.75¢ lower without a hit."

The load was offered by Grain Millers, Inc. http://www.grainmillers.com/company.aspx


Grain Millers is in Minnesota. Grain Millers makes no dairy products: https://info1.cfsan.fda.gov/milk/mkex/ims/imssl-ce.cfm#MN

So, what or who makes Grain Millers have direct communication with the deities of dairy to set the price of farm milk?

Latest WASDE

You have to wonder how many reading this report will contract some of their milk?

http://www.usda.gov/oce/commodity/wasde/latest.pdf

The milk production forecast is raised for 2010 as the pace of herd reduction is reduced from last month. Dairy exports on a skim-solids basis are lowered due to weaker-than-expected sales early in the year. Both fat and skim-solids basis imports are reduced from last month due to weaker-than-expected imports of cheese. Fat and skim stocks are forecast higher for 2010 as cheese stocks have not declined as expected. Product price forecasts are generally lowered from last month as milk production is forecast higher and demand is weaker than expected. The cheese price is reduced as stocks remain high. The butter price forecast is about unchanged from last month as stronger prices in the first half of the year may largely be offset by lower second-half prices as butter production increases. The nonfat dry milk (NDM) price is forecast lower as export demand lags. The whey price is lowered slightly. The Class III price is reduced due to lower cheese and whey prices while the lower price
forecast for NDM results in a reduced Class IV price. The all milk price for 2010 is forecast at $15.45 to $15.95 per cwt.

No Free Lunch

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Wal-Mart is one of those places where it costs to save: http://projects.flowingdata.com/walmart/


America was once a nation known for making things. No more.

Some think China has been the big beneficiary of Wal-Mart. Probably China will pay a different price.

Cheap has a costs, and the current dairy policy could have been put together by Wal-Mart shoppers.

And Now For Something Completely Different

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Who knows? Maybe it is inertia. Maybe it is the engineers on the gravy train. Perhaps it is just too much to expect a full and complete discussion? This agenda looks like more of the same.

Who Did It?

If you look at the last "Cold Storage" numbers you will see that the numbers for January were revised downward, and not just a little.

Furthermore, virtually all the "wrong" data came from the "Mountain" region. There are very, very few plants which would be part of the NASS survey. NASS likes to not let on but, I think there are only two.

So, how much were the numbers off? 172.5 truck loads! Some mistake!

USDA ERS tells me the "Commercial Disappearance" numbers will be revised.

You could make up a believable scenario that the numbers were a deliberate attempt to justify crashing farm milk price.

Additionally, many people rely on those numbers because they are supposed to be accurate. Besides, they are the only thing out there.

More on Salaries

The feature article in the March 2010 issue of The Milkweed is on salaries for many "friends" of the dairy farmer. Here's the link: http://www.themilkweed.com/Feature_10_Mar.pdf

Steve Taylor did a good article in Lancaster Farming.

In the April 2, 2010 issue of Farmshine Sherry Bunting added to the information: "According to Charity Register, the average CEO salary paid by non-profits was $160,000 in 2008." Good work.

One more thing, the idea and the heavy lifting for the story came from a reader.

Prices Up

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Note: a metric ton equals 2204.6 pounds.


Today Fonterra held its latest Internet auction known as globalDairyTrade. Fonterra's first auction was held in July 2008. The latest results are encouraging.

All prices were up. Anhydrous milkfat increased 21.9% to close at $2.19 a pound. Skim milk powder (SMP) was up 25.5% to close at average price of $1.67 per pound. SMP is essentially the same as nonfat dry milk powder (NFDM), except that SMP has a specific protein level, whereas NFDM is manufactured to a moisture standard.
Note should be taken that on the same day Grade A NFDM closed at the Chicago Mercantile Exchange (CME) for $1.23 a pound - 26.3% less than Fonterra's auction.

Whole milk powder (WMP) settled up 21% higher, at $1.80 per pound.
The latest Dairy Market News International report, dated April 1, 2010 priced Oceania Cheddar at an average price of $1.75 per pound, with a high range of $1.86 per pound. Block Cheddar clothes on April 6, 2010 at $1.48 per pound on the CME.

There is something very wrong with dairy trading at the CME.

Bain & Company

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The folks at Dairy Management Inc. have handed quite a bit of dairy checkoff money over to Bain & Company to put together a fancy report which recommends exporting dairy products as the key to the kingdom. Fancy that!

Whocouldaknowed

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In the above table from the Census Bureau is clear evidence that the cream has been rising to the top. Like they say about the present financial crisis - whocouldaknowed?

You can see too, more money went to the top corresponding with the ending of milk price parity - whocouldaknowed?

Here is a link to Reagan's signing statement: http://www.presidency.ucsb.edu/ws/index.php?pid=43375

I am pleased to sign today a bipartisan farm bill that recognizes both our reliance on the American farmer and the limits of government.

This legislation is the result of many months of hard work, both in the Congress and in the administration. There are many in the House and Senate who deserve credit for their efforts, but in particular I would like to thank Senators Jesse Helms, Bob Dole, and Dee Huddleston, and Representatives Kika de la Garza, Bill Wampler, and Tom Foley for their leadership. This bill provides needed assistance to our farmers and ranchers, benefits consumers, and is responsible from a budget perspective.

The strength of our economy is our reliance on the marketplace. All Americans are gripped today by a painful recession. Our agricultural producers—the farmers and ranchers who are our mainstay feel the sting of high interest rates and inflation the same as any other business man or woman. Returning to the principles of free enterprise will return us all to prosperity.

The Agriculture and Food Act of 1981 recognizes the importance of the marketplace and emphasizes the great export potential of American agriculture. This bill will help farmers expand foreign markets and enhance our already positive agricultural balance of trade. I would like to challenge America's agricultural community to take full advantage of these export incentive provisions. I believe we can increase our agricultural exports 42 percent by 1984. That would mean $64 billion in agricultural trade—an increase of $19 billion pouring directly into our agricultural economy.

To this day there are those who think elimination of parity was wonderful. Although, I suspect there are fewer today than in recent years. And, how about exporting our way to prosperity - sounds like an echo.

Positive News

The National Restaurant Association publishes regularly a Restaurant Performance Index. The latest news release can be found at:http://www.restaurant.org/pressroom/pressrelease/?ID=1895

We all need some good news and this report says in part:

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 100.1 in January – up 0.2 percent from December and its third gain in the past four months. In addition, the Expectations Index crossed above the 100 level for the first time in 9 months, which signifies expansion in the forward-looking indicators.

Restaurant operators remain relatively optimistic about sales growth in the months ahead. Thirty-three percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), compared with 35 percent who reported similarly last month. In comparison, 22 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, and 21 percent reported similarly last month.

Restaurant operators are also cautiously optimistic about the direction of the economy in the months ahead. Twenty-nine percent of restaurant operators said they expect economic conditions to improve in six months, and 18 percent expect economic conditions to worsen during the next six months. Last month, 34 percent of operators said they expected the economy to improve in six months, and18 percent expected economic conditions to deteriorate.

With a relatively optimistic outlook for sales and the economy, restaurant operators’ plans for capital expenditures ticked upward this month. Forty-three percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 39 percent who reported similarly last month.

Since quite a bit of dairy is consumed in restaurants, it is nice to see the future is projected to be better.

Predictions

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At one time Cornell University was predicting a 98% adoption of Monsanto's product "Posilac", which is now owned by Elanco. Monsanto put up quite a bit of money to promote rbST through an organization AFACT.

Long before rbST was approved, the public voiced opposition to the product. Public be damned was the attitude.

Now it is comforting to see that California dairy farmers participating in the survey cared about the public. The study, "Update on rbST Use in the California Dairy Industry", by Henry An and Leslie J. Butler.

The authors conclude, "Results from our latest survey show that rbST is being used on the smallest share of dairy operations since its commercial introduction in 1994."

We will need the good will of the public if we are to get out of this farm milk pricing mess.

Dairy Product Report

Today, USDA release its "Dairy Product" report: http://usda.mannlib.cornell.edu/usda/current/DairProd/DairProd-04-01-2010.pdf

The report shows cheese production up 1% over February 2009. Again, these are not precise measurements, however, there were a number of disruptive storm which, perhaps, sent more milk to the cheese vats.

Interestingly, MPC production was down. Rumor has it, the profit just isn't there - how odd. At the same time MPC imports for January, the latest month available, were also down.