Page 10 Dairy Star Second Section Saturday, January 17, 2015

The Mielke Market Weekly By Lee MielkeIs it silver lining or aluminum foil?

Gertken Dairy Sales & Service

Distributor of Bio-Vet Products - Notch Equipment on handPhone (320) 597-2207 Cell (320) 249-8237

www.gertkendairysales.comemail: agds@meltel.net

PORTABLE CATTLE CROWDING TUB SYSTEM WITH SCALE READY FLOOR - NOW ROAD LEGAL WIDTH!

Real-Tuff For-Most Manual & Automatic Head Gate Available

Display lot in Albany, MN North side of I-94

WATER FOUNTAINS GALLAGHER SCALES CALF HUTCHES & SHELTERS CORRAL PANELS SELF STANDING PANELS WINDBREAKS FEEDER WAGONS SKID LOADER ATTACHMENTS CATTLE CHUTES & HEADGATES DAIRY & BEEF SEMEN & SUPPLIES CREEP FEEDERS & SELF FEEDERS

REDMOND SALT & MINERALS

There was more hope for a turnaround in the international dairy market this week as the Glob-al Dairy Trade (GDT) auction start-

ed 2015 on an up note. Tuesdays weighted average for all products jumped 3.6 percent, following a 2.4 percent gain in the December 16 event. All of the products offered were up. The uptick was led by butter, up 13.2 percent, fol-lowing a 10.4 percent boost in the December 16 event. Next was buttermilk powder, up 10.5 percent, following a 9.5 percent drop the last time. Anhydrous milkfat was up 6.8 percent, following a 10.8 percent gain last time. It was followed by rennet casein, up 4.2 percent, after a 4.5 percent gain last time. Cheddar cheese followed, up 3.2 percent, after it inched 0.6 percent lower last time. Skim milk power was up 2.8 percent, after a 3.2 percent drop last time, and whole milk powder brought up the rear, up 1.6 percent, following a rise of 1.4 percent last time. FC Stone reports the average GDT butter price equat-ed to about $1.6141 per pound U.S., up from $1.4264 in the December 16 event. Contrast that to CME butter which closed Friday at $1.54 per pound. The GDT Ched-dar cheese average was $1.4015 per pound U.S., up from $1.3615. The U.S. block Cheddar CME price closed Friday at $1.59 per pound. GDT skim milk powder, at $1.0821per pound U.S., was up from $1.0521, and the whole milk powder average at $1.0464 per pound U.S., was up from $1.0298 in the last event. The CME Grade A nonfat dry milk price closed Friday at 98 3/4-cents per pound. The Daily Dairy Report points out that There is growing concern about Oceania milk output falling at the end of the season as hot, dry weather conditions continue to spread. With the 2012-13 drought still lingering in the minds of buyers, weather concerns and low prices could be sparking purchases as insurance against what could lie ahead. The U.S. Dairy Export Council (USDEC) reported in its latest Global Dairy Market Outlook that U.S. exporters focused on the Western Hemisphere in November, help-ing to offset a continued slowdown in shipments to Asia. It reports that exports to Mexico were up 15 percent from last year and shipments to South America topped $30 mil-lion for the rst time, led by gains in sales to Peru, Brazil and Colombia. Sales to the Caribbean were the most in 18 months. Exports to Southeast Asia and China were the lowest since early 2013 and shipments to the Middle East/North Africa (MENA) region were down 66 percent. In all, exporters shipped 147,879 tons of milk pow-ders, cheese, butterfat, whey and lactose in November, down 7 percent from a year ago but down just 1 percent from October (on a daily-average basis). Total exports were valued at $500.5 million in No-vember, down 14 percent from last year and about the same as October (daily-average). That brought year-to-date U.S. sales to $6.63 billion, up 9 percent versus 2013. Meanwhile; the National Milk Producers Federation (NMPF), U.S. Dairy Export Council (USDEC) and In-ternational Dairy Foods Association (IDFA) joined other food and agricultural organizations in support of addition-al changes in U.S. policy to facilitate U.S. dairy exports to Cuba and permit open travel for all Americans to that nation. The dairy organizations are members of the U.S. Agriculture Coalition for Cuba, a coalition of more than 30 trade associations and companies championing an end to the U.S. embargo against Cuba. The dairy groups say one of the biggest impediments to trade is the lack of nancing to allow for payment in a manner that it is commercially viable. They stressed the importance of policy changes that would remove costly and unnecessary burdens on U.S. agricultural exporters by allowing payment to pass from Cuba directly to U.S. banks in place of the current requirement that payments be routed through banks in other countries. NMPFs Jim Mulhern urged members of Congress to seek changes in policy that would remove travel restric-tions and reform nancing rules for U.S. food products destined for Cuba. NMPF believes that unilateral U.S. government actions should not hinder U.S. dairy exporters from selling their products to any nation, said Mulhern. We look forward to expanding our ability to more easily provide the Cuban people and those Americans wishing to travel to Cuba with the nutritious and safe foods that we produce in such abundance here in the U.S. USDECs Tom Suber said The U.S. has been forced to largely cede this neighboring market to our competi-tors. Cuba has been importing approximately $200 mil-lion worth of dairy products in recent years, but virtually none of that has come from our exporters due to the re-strictions they face in trading with Cuba. Youll recall that November 2014 milk production

totaled 15.5 billion pounds, according to preliminary data, up 3.5 percent from a year ago. USDAs Dairy Products report issued Tuesday shows where it went and one place the extra milk didnt go was the churn. November butter output, at 136 million pounds, was down 5.7 percent from October and 4.7 percent below November 2013. A good share of it hit the dryer. Nonfat dry milk pro-duction totaled 151 million pounds, up 11.5 percent from October and up 48.9 percent from a year ago. Milk also owed to the cheese vat. Italian production hit 410 million pounds, down 3.7 percent from October but was up 5.1 percent from a year ago. American cheese output hit 372 million pounds, down 2.9 percent from October but 4.5 percent above a year ago. Total cheese output amounted to 949 million pounds, down 3.3 percent from October but 2.9 percent above that of a year ago. HighGround Dairys Eric Meyer views the data as neutral for butter and bearish for the rest. He reports that butter production did show a 4.3 million pound downward revision for October and November marked the fourth consecutive month running behind prior year levels. But with the chatter of cream availability in December, the lack of export sales and what appeared to be a normal drawdown in stocks from the Cold Storage report last month, we do not believe there is anything to get worried about with signi cant upside risk on butter prices That said Global Dairy Trade results this week has butter priced in the low $1.60s per pound so there may be support from dairy buyers that want to own product and build inventory at below average levels. It does not mean there has been a change in the bearish trend, according to Meyer. Cheese production remained solid and inventories were strong in November signaling that current spot pric-es are fair. But there is nothing in this reports data that would suggest a sharp move higher or lower from todays levels. However, after the losses posted in December and during the rst few days of 2015, it would not surprise us to see last minute Super Bowl orders or end-users build-ing inventory to cause a slight bounce in CME spot prices, Meyer said. Cash cheese prices at the frozen Chicago Mercan-tile Exchange inched higher the rst full week of 2015. The block Cheddar closed Friday at $1.59 per pound, up 2 cents on the week but 61 cents below a year ago when they jumped 15 3/4-cents. The Cheddar barrels nished at $1.5450, up a half-cent on the week and 61 1/2-cents be-low a year ago when they jumped 24 cents. They are now 4 1/2-cents below the blocks, a spread that typically runs 3-5 cents. The lagging National Dairy Products Sales Re-port (NDPSR) U.S. average block price hit $1.6111, down 2.3 cents, while the barrels averaged $1.5672, down 2.2 cents. Dairy Market News (DMN) says With the holiday season over, Midwest cheesemakers are cautiously look-ing forward, wary of getting too far over the tips of their skis, but aware of the volume of milk owing behind them which must be reckoned with. The current situa-tion is unusual for early January. Milk volume available to cheese remains unusually high. Cheese production is ahead of orders for many plants, due to higher than typical milk production for January. This week some milk spot loads in the Midwest moved at $6.00-$6.50 below class, keeping cheese production very high in many plants. Sales are mixed. Cash butter closed Friday at $1.54 per pound, down 1 1/2-cents on the week, 13 1/2-cents below a year ago when the butter gained 10 1/2-cents, and is at the low-est level it has seen since December 31, 2013. Five cars traded hands this week. NDPSR butter averaged $1.6166 per pound, down 4.2 cents. Central butter production is exceeding incoming or-ders, resulting in inventories to grow moderately, reports DMN. Given current cream prices and availability many manufacturers are processing internal cream supplies and looking to obtain cream in the spot market. Export orders are light, while imports continue to come into the U.S. Cash Grade A nonfat dry milk closed the week at 98 3/4-cents per pound, down 11/4 cents and the lowest since August 6, 2009. Three cars were sold in the spot market this week. NDPSR powder averaged $1.1395, down 3 cents, and dry whey averaged 59.41 cents per pound, up 0.8 cent. Dairy prices have fallen signi cantly from record highs in September but holiday demand has prevented a catastrophic freefall. We looked at the latest commercial disappearance data with the Dairy and Food Market Ana-lysts Matt Gould in Fridays DairyLine. I asked if there a silver lining or is it aluminum foil? I think well have to go with the aluminum foil, Gould replied and he began by detailing butter. Looking at the three month numbers from November backward, Gould reported butter demand was down 15.5 percent

from a year ago, after trailing 16.7 percent in October.He said demand has fallen away as retailers passed on the higher prices and butter exports were not much of a factor. Looking at nonfat dry milk, Gould stated that com-mercial disappearance was up 7 percent in November andthe fourth month in a row it was above 5 percent however, thats not keeping up with the growth in nonfat production and American cheese has seen a similar situation. It was up just 0.3 percent in November far from the 3.5 percentgrowth in American cheese output. When asked about imports affecting this scenario,Gould answered, Thats why there isnt a silver lining.He reported that imports of butterfat totaled about 3 mil-lion pounds last week and that was in addition to the 1 million the week before so with demand stagnant and imports coming in, prices are weaker, he said. The weaker prices will of course restore demand butthat takes time, Gould warned. U.S. demand is robust do-mestically, according to Gould, food service sales are very strong, he said, but The issue is with exports and exportorders are usually booked three to six months in advance so lower prices will bring back demand but it will takethree to six months of lower prices in order for to meet that demand, he concluded. The California Department of Food and Agricultureannounced their February Class I milk price Friday at$17.08 per hundredweight for the North and $17.36 for the South. They are down $2.41 and $2.40 respectivelyfrom January and $6.03 and $6.02 respectively below February 2014. This is the fourth month in a row the ClassI has dropped, falling on the heels of a plunge of $4.23 inJanuary, and is the lowest California Class I price since June 2012. The Federal order Class I base price will be announced by USDA on January 22. In politics; the new Congress in Washington meanssome big changes in the Agriculture Committees, accord-ing to the International Dairy Foods Association (IDFA). Aposting on the IDFA website, www.idfa.org , reports that the 114th Congress was sworn intoof ce with 12 new senators and nearly 60 new representa-tives, ushering in Republican control of the Senate and some signi cant changes on both the Senate and House Agriculture Committees. Senator Pat Roberts (R-KS) will take over as chair-man of the Senate Agriculture Committee, following the decision by Senator Thad Cochran (R-MS), the SenateAgriculture Committees top Republican in the 113thCongress, to assert his seniority and take over the gavel on the Senate Appropriations Committee. Roberts will be joined on the Agriculture Commit-tee by four new Republicans: Senators Joni Ernst of Iowa,David Perdue of Georgia, Ben Sasse of Nebraska and Thom Tillis of North Carolina. Senator Debbie Stabenow(D-MI) will remain the top Democrat on the committee,becoming the ranking member. No new Democrats will be joining the committee. Representative Mike Conaway (R-TX) will take overas chair of the House Agriculture Committee, replacingRepresentative Frank Lucas (R-OK) who had reached his term limit. Eight new Republican members will join the com-mittee: Representatives Jackie Walorski of Indiana, Ralph Abraham of Louisiana, Rick Allen of Georgia, Mike Bostof Illinois, Tom Emmer of Minnesota, John Moolenaar ofMichigan, Dan Newhouse of Washington and David Rou-zer of North Carolina. Another signi cant change to the committee includesthe announcement by Conaway that the subcommitteesof the House Agriculture Committee will be reorganized.Dairy issues will fall under the jurisdiction of the Sub-committee on Livestock and Foreign Agriculture, which will be chaired by Rouzer of North Carolina. Representative Collin Peterson (D-MN) will remainthe committees ranking member. Other Democratic mem-bers have yet to be announced, but they are expected to benamed soon, according to the IDFA.