Other Factors

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Friday USDA released "Milk Production" data for February 2011: http://usda.mannlib.cornell.edu/usda/current/MilkProd/MilkProd-03-18-2011.pdf


For the entire U.S. production was up 2% over February 2010. There were five states with production increases more than five percent. That is where it starts to get odd.

Two states separated by one river Kansas and Missouri were worlds apart on production. Both received the same basic price signal. Both states must have had similar weather.

Could it be other factors?

Milk Production Increases - Naturally

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Today, February 18, 2011, USDA NASS released it "Milk Production" report. Naturally, or perhaps not, milk production increased. See: http://www.usda.gov/nass/PUBS/TODAYRPT/mkpr0211.pdf

There were, according to the report, 14,000 more cows in January 2011 than in December 2010. Technology may not offer greater choices, if it is not so much a choice as coercion.

WASDE

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


Today USDA released its latest World Agricultural Supply and Demand Estimates (WASDE)report.

WASDE stated: “Milk production is forecast higher for 2011 based on higher-than-expected January 1 dairy cow and dairy replacement heifer estimates."
This seems to be an inability to connect the dots in this report. For corn, a primary component of dairy grain mix, WASDE stated:

“U.S. corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed, and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.”

Corn trading on the Chicago Board of Trade (CBOT) and near or over seven dollars a bushel for all three trading periods. The July 2011 corn price was $7.12 per bushel.
Ethanol futures soared to the highest price since July 2008, March 2011 ethanol futures closed at $2.457 a gallon. One bushel of corn is required to make about 2.75 gallons of ethanol. Recently, in America's cornbelt, the average ethanol distillery has been losing about nine cents per gallon.
So, with grain prices rising with apparently no end in sight, the prediction of increased milk production for 2011 is questionable.

Milk Production Up _ What's New

Milk production for the country was up 2.5% in December:

http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1103

Who knows what the figures actually are? But, dairy farmers have run up feed bills, let many bills go unpaid and eaten up years upon years of equity to continue to produce milk.

There are moral question to economic question which are being ignored.

Looking Good

New Zealand's ASB bank today stated:

Dairy prices continued to fluctuate through the early stages of 2010 but, since rebounding in early September, they have been largely stable. Stabilising prices have been good news for the market and also for NZ dairy farmers in terms of Fonterra payout. We are positive about the outlook for dairy in 2011. However, some pressure may come on prices if supply growth continues in the main producing nations in the Northern Hemisphere. The latest example is US milk production lifting 2.7% in November compared to a year earlier.

So there you have it. Our fault.

November Milk Production

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Today USDA released its "Milk Production" report. The report showed, surprise, surprise, that milk production was up in November 2010 by over 3%. The numbers can be argued until the cows come home. The numbers are not a precise measurement. Exact numbers are very difficult to come by.

There are some, many quite a few, who think all we need is supply management and the farm milk price will rise magically. First off, if the numbers are not precise, how can the supply be managed?

Perhaps more importantly, there is a genuine need for a small surplus. Milk supply varies day-to-day. But, the consumer expects to find the dairy product on the shelf. To insure the consumer is always supplied requires extra production.

The real problem is not the small "surplus," the real problem is the small surplus is the excuse to undercut dairy farm milk prices.

Essentially, the problem is a moral problem.

Milk Production

Naturally, contrary to virtually all early reports, milk production in the 23 lead dairy states was up an astounding 2.8% when compared to August 2009.

The latest report compares only the current August with August of a year ago. Comparing August 2008 with August 2010 shows an increase of only 3.3%. Not much of a gain in two years.

Notice though, there is no processor who is complaining about the flood of milk and begging for some form of supply management.

The export data, available through July, shows a very large increase in exports. For the fifth straight month cheese exports have been high. The July 2010 cheese exports were the highest for the past six years.

Milk price volatility has been huge in the last three years. The difference in the average "all milk" January - August, was $7.06 comparing 08 with 09. So, I would hope another hundred years or so of the same 'ol milk pricing system, people will find the is no relationship, to speak of, between price and production.

Milk Production

Friday the "milk production" report will be released. There is no telling what the story will be. But, at the moment Dairy Market News (DMN) reports today, September 15, 2010,the Northeast report states, "Strong Class I demand and continued declining milk production, along the seasonal trend, in the Northeast and Mid Atlantic regions has significantly reduced manufacturing milk supplies."

DMN also reports continuing high cream prices.

In the Central report DMN states, "For those manufacturers that were looking for
additional milk, volumes were not overly abundant. Pricing multiples
remained firm in the $2.75 - 3.00 per cwt over Class delivered."

So, the numbers Friday will be interesting.

History Part II

I can hire one half of the working class to kill the other half.
Jay Gould
US financier & railroad businessman (1836 - 1892)

Jay Gould could have been talking about dairy farmers but, it isn't the farmers that are the problem. The problem is the leadership, which includes land-grant experts.

A paper on the 196 Farm Bill written by Ed Jesse is available at: http://future.aae.wisc.edu/publications/mpb55.pdf

Jesse says in the paper:

"Upper Midwest objections to the Compact are grounded in its effect on the supply of milk for manufacturing purposes and the resulting effect on prices for manufactured dairy products."

"The Compact sets fluid milk prices higher than federal order minimums. This decreases fluid milk consumption and, through an increase in the blend price to producers, increases milk production. Larger production and reduced fluid consumption add to the supply of manufacturing milk, lowering manufacturing milk prices both inside and outside the Compact area."

As can be seen in the graph in the previous post, Jesse's argument is pure fiction.

Now, move ahead to the present.

See: http://www.agriview.com/articles/2010/07/08/dairy_news/dairy03.txt


The article is about supply management, which IDFA opposes as they did the Compact.

Here is Jesse:

Jesse said there are differences of opinion based largely on which region of the U.S. a producer lives and farms in. For example, Jesse said California is pushing supply control “hard” because “they’ve lost their competitiveness because of higher feed prices. They want to ensure that they can keep their market share by forcing others to cut back...”

Evidence of that “hard” push for mandatory supply controls is seen in the names of the authors and co-authors of the two versions of the Dairy Price Stabilization Act of 2010. Representative Jim Costa, a Democrat from California, has signed on.

The bills also have backing from senators and representatives from Northeast states, which, Jesse said, are also at a competitive disadvantage to Wisconsin and other Upper Midwest states when it comes to producing milk somewhat inexpensively. Senator Bernie Sanders, an Independent from Vermont, is the lead author of the Senate bill, while Senator Patrick Leahy, a Vermont Democrat, has also added his name to the legislation. Meanwhile, the House bill bears the names of Peter Welch, a Democrat from Vermont, along with the names of John Larson and Joe Courtney, a pair of Democrats, both from Connecticut.

“They’re fairly strongly in favor of this,” said Jesse, of the Northeast. “I think they see it as a way of n just like California n ensuring that they can continue to produce milk and support local communities. That’s not a bad objective, but at the same time, I think you have to consider where milk can be produced the most efficiently, and consider the movement of milk as opposed to the local supply...”

Jessie worries that a supply control program might hurt the growth in dairying that Wisconsin has enjoyed the last few years. And he said that Canada’s example shows that there is “no clear evidence” that a milk quota system helps retain dairy farm numbers.

"It's déjà vu all over again" as Yogi Berra used to say.

Basically, any plan which stand a real chance of putting more money in the farmer's pocket will be opposed by land-grant experts - who are on the public dole.