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16 CapitalPress.com October 7, 2016 Dairy/Livestock Subscribe to our weekly dairy or livestock email newsletter at CapitalPress.com/newsletters CME cash dairy trade goes from pit to click By CAROL RYAN DUMAS Capital Press CME Group is replacing its open outcry spot call auctions for dairy products on its Chicago trading loor with live online trading. The auctions involve cash transac- tions for nonfat milk, cheese and but- ter. In December, CME will begin to transition the nonfat dry milk market to an electronic auction platform. The butter and cheese markets are expect- ed to transition during the irst quarter of 2017. The change is in response to re- quests from customers and dairy industry participants to use proven technology to increase the transparen- cy and accessibility of prices discov- ered during the dairy spot call auction sessions, said Tim Andriesen, CME Group managing director of agricul- tural products. “The transition to our electronic CME Direct Auction Platform will en- able both auction participants and ob- servers to more easily access informa- tion about spot dairy bids and offers as well as quantities in real time during the auction sessions,” he said. Based on customer feedback, CME believes the transition has the poten- tial to broaden industry participation in the spot call sessions, he said. Moving to current technology makes a lot of sense, said Mark Ste- phenson, director of dairy policy anal- ysis at the University of Wisconsin. “It’s possible that it will bring more liquidity into the market, and more liquidity is always a good thing,” he said. But he wonders if people will still be able to see the transactions and un- derstand who is buying and selling on the electronic platform. Trading on the loor is anonymous, but one can get a pretty good idea who’s being represented in the pit. Making an educated guess might not be as easy online, he said. During the electronic auction, trad- ing counterparties will be anonymous to both participants and observers, but the platform will enhance the transpar- ency of price discovery compared to the current spot call, Andriesen said. “Participants and auction observ- ers will be able to see the quantity and price of bids and offers for each spot call product in real time during the auction,” he said. Users will also be able to see the depth of the book — all bids and of- fers, not just the best bid and offer. “We believe this will result in broader customer and industry access to dairy spot call auction prices and trading,” he said. CME Group will only reveal the counterparty information to the other counterparty at the end of each ses- sion. That level of information will not be revealed publicly. In the case where a broker executes both sides of an order, he or she will know the respective counterparties be- fore the end of a session, he said. Dairy Markets Lee Mielke Cold Storage report depresses prices By LEE MIELKE For the Capital Press College students helping Idaho cheese plant expand offerings By JOHN O’CONNELL Capital Press SUGAR CITY, Idaho — A group of mechanical engi- neering students at Brigham Young University-Idaho are helping the owners of a local cheese plant renovate existing equipment to produce new products. The ive students, work- ing under Alan Dutson, the university’s mechanical engi- neering academic outcomes and assessment director, are working to upgrade the Nel- son-Ricks Creamery for their “capstone” project — which offers a real-world challenge in lieu of writing a thesis. It’s among several projects either in the works or in plan- ning to increase the old cheese plant’s proitability, produc- tion and visibility within the Eastern Idaho community. The capstone project should take another 12 weeks to complete and, if successful, will give the plant the abil- ity to pasteurize the cream removed as a byproduct of cheese production into mar- ketable dairy products — po- tentially butter, sour cream, yogurt and buttermilk. “The team working on the project is just getting start- ed with identifying customer John O’Connell/Capital Press Russell Aldredge, quality assurance manager with Nelson-Ricks Creamery in Sugar City, Idaho, shows a block of smoked cheddar his facility made as a sample to test making goat cheese. The plant is also poised to move into production of additional products, such as sour cream and butter, with help from Brigham-Young University-Idaho mechanical engineering students, who are working to retroit the creamery’s equipment for a class project. needs, etc., and hasn’t real- ly completed the main part of their project yet,” Dutson said. The cheese company opened in the late 1890s. With no successors in line to resume operations when they reached retirement, family members of the original own- ers sold the plant to the Cal- ifornia-based marketing, pro- cessing and wholesale cheese distributor Greenberg Cheese Co. in 2012. “It had been a long-time supplier of ours,” said Donald Greenberg, operations man- ager with Greenberg Cheese. “It was a good supplier, made quality cheese and had a fol- lowing across California, Arizona, Nevada, Utah and Idaho.” The original owners sent their cream to an afiliated butter plant in Salt Lake City for processing. Under its new ownership, Nelson-Ricks has sold cream at a loss to local hog farmers. The company breaks even on disposal of ex- cess whey, which area farmers apply to land as a fertilizer. It also plans to eventually heat- treat and condense whey for use as a high-protein nutrition supplement. Greenberg said the butter would meet speciications of whey butter, which can be sold at a premium due its lower fat and higher protein content. He said it could take a couple of years for the plant to start branching into the new products. “We’re looking at the fea- sibility of each one to see which one we can do irst and quickly,” Greenberg said. The plant now produces cheddar and monterey jack as its staples, also making Gou- da, mozzarella and Parmesan — some in waxed wheels. Greenberg Cheese sells much of the plant’s production to California restaurants, but Greenberg hopes to build his network of Eastern Idaho buyers. Russell Alldredge, the plant’s quality assurance manager, said the plant plans to branch into making goat cheese, and will eventually procure about a third of its milk supply from area goat producers. He said the plant also intends to start contract- ing directly with local cow dairies and continue buying some milk from the surplus market. Alldredge said some lo- cal dairies closed during the cheese plant’s hiatus in 2012, and others are now committed to new buyers. “Now most of them are looking at wanting to come back with us,” he said, adding the company intends to work with area dairymen to build their herds with cows that pro- duce the best milk for cheese production. U.S. beef access to China could come quickly By CAROL RYAN DUMAS Capital Press While USDA says work re- mains to be done on a deal to restore U.S. beef access to Chi- na, a National Cattlemen’s Beef Association spokesman says it might not take long. “There’s not a set timeline … but when you look at how quickly China has worked with countries like Canada and Bra- zil to restore that access once they lifted their ban, I think this could be a matter of months,” said Kent Baucus, NCBA di- rector of international trade. The U.S. Meat Export Fed- eration wants beef to move as quickly as possible but just doesn’t have a timeline, said Joe Schuele, USMEF vice pres- ident of communications. “While this is an import- ant irst step in the process of resuming beef exports to Chi- na, USMEF understands that China must still negotiate with USDA the conditions that will apply to U.S. exports entering this market,” USMEF Presi- dent and CEO Philip Seng said in a press statement. The next step is for China’s food safety inspection agency to set the terms of trade, which means what the U.S. beef can and can’t contain and which methods of production are al- lowed, Baucus said. “We’re going to have to negotiate all that. So it’s really uncertain yet as to what the i- nal product will look like going into the Chinese market,” he said. The ban started with “the cow that stole Christmas” in 2003, he said. That discovery of bovine spongiform encepha- lopathy — mad cow disease — in a Washington state dairy cow closed many U.S. beef export markets overnight. Since then, restoring access has been a priority, and China is the latest market to reopen to U.S. beef, he said. Lifting the ban is a big de- velopment considering it’s taken 13 years and a lot of edu- cation to address all of China’s concerns, he said. The resumption of beef trade is great news for U.S. pro- ducers. China represents one- ifth of the world’s population 41-1/#04X with a middle class that’s larger than the entire U.S. population, he said. “This is not only a popu- lation that wants protein, they want beef, and beef demand in China has continued to grow,” he said. China’s imports of beef from other countries reached 495,000 metric tons in 2015, a 56 percent increase over 2014, according to USMEF. The country’s beef imports were a record $2.3 billion in 2015. In 2016, its imports are expected to increase to 825,000 tons, making it the second-larg- est beef importer in the world, according to USDA. Capital Press File China and the USDA are negotiating to reopen that nation to U.S. beef exports. A inal agreement could come in “a matter of months,” an NCBA spokesman said. ash dairy markets didn’t like what they saw in the latest Cold Storage data. Cash 40-pound block ched- dar cheese closed the following Friday at $1.5325 per pound, down 2 3/4-cents on the week, lowest level since June 27, 2016, and 21 1/2-cents below that week a year ago when they jumped 15 3/4-cents. The 500-pound cheddar barrels, after dipping to $1.46 Tuesday, rallied to close Fri- day at $1.51, unchanged on the week but 10 3/4-cents be- low a year ago, with 24 cars of block trading hands on the week at the CME and 40 cars of barrel. The irst two days of trad- ing in October left the blocks unchanged, as traders an- ticipated and then absorbed Tuesday’s Global Dairy Trade auction. The barrels lost 2 1/4-cents Monday and lost a penny Tuesday, slipping to $1.4775 per pound. Midwest cheese production is steady, according to Dairy Market News. “Milk intakes are relative- ly balanced and many manu- facturers are running near full production schedules. A few processors are looking for ad- ditional loads of milk to round out production, but spot loads are a little less available for discounted prices,” DMN said. “Retail and food service cheese orders are strong and have been building a little into the end of the year. All varieties of natural cheese have good demand.” Western cheesemakers are not having any problems get- ting enough milk for the vats. DMN says, “Cheese produc- tion is active and often running near full capacity. Retail and food service demand is irm. Industry contacts still report long inventories, but processors are turning the stocks.” Cash butter closed Friday at $1.8975 per pound, down 13 cents on the week and 60 1/4-cents below a year ago when it plunged 63 1/2-cents after jumping 41 3/4-cents the previous week. Eight cars were sold last week at the CME. C 41-1/#4N
