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