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CapitalPress.com
December 23, 2016
U.S. dairy outlook a little brighter, analyst says
By CAROL RYAN DUMAS
Price outlook for U.S. dairy
Capital Press
Lower global milk pro-
duction, fewer available dairy
products for export and high
demand for butter and cheese
in the U.S. and EU are im-
proving the outlook for U.S.
dairy farmers, according to
the latest industry quarterly
report from Rabobank.
Milk supplies from dairy
export regions overseas have
fallen 2.6 million tons in the
second half of 2016 year over
year, and volumes available for
export are down 4.5 million
tons.
Low milk prices around the
globe and weather challenges
and high feed costs in different
regions have reduced milk pro-
duction in all the major export-
ing countries except the U.S.
Item
Q2 2016
Q3 ’16
Q4 ’16*
Q1 ’17*
Q2 ’17*
Dollars per pound
Nonfat dry milk
AA butter
Block cheddar
Whey powder
$0.76
2.08
1.43
0.25
0.85
2.22
1.70
0.29
0.92
1.92
1.70
0.35
Class III milk
Class IV milk
$13.20
13.18
16.08
14.75
17.06
13.88
1.12
2
1.68
0.35
Q3 ’17*
Q4 ’17*
1.04
2.15
1.71
0.37
1.04
2.03
1.71
0.38
16.65
15.85
16.66
15.34
1.11
2.08
1.68
0.35
Dollars per hundredweight
Sources: USDA; Rabobank
15.91
15.88
16.09
16.14
*Estimated or forecast
Strengthening
producer
margins in the U.S. has made
it the only major export region
able to compensate for tight-
ening global supplies, with ex-
ports up 19 percent in the third
quarter of 2016 compared with
a year earlier, the analysts re-
ported.
Capital Press graphic
The U.S. market has kind of
isolated itself from internation-
al prices, insulated by domestic
butter and cheese demand, said
Tom Bailey, a senior analyst
with the bank’s food and agri-
business research and advisory
team.
Dairy farmers are seeing a
return to profi ts, but it’s only
marginal, he said.
“It’s not going to get people
overly excited; the market is
still fragile,” he said.
Product prices in 2017
will be better, and it looks
pretty good for U.S. dairy
producers, but there will
still be a few things to keep
an eye on, he said.
Clearing EU intervention
stocks that are overhanging the
market in the face of weak de-
mand for milk powder will be
a challenge, he said.
The EU recently tried to
sell some of its nearly 400,000
tons of skim milk powder. It
hoped to sell about 20,000 tons
and only sold 40 tons, he said.
A strengthening U.S. dollar
could also be a challenge to
U.S. exports.
However, the U.S. will be
the only export surplus market
with a growing milk supply,
the analysts said.
Signifi cant recovery of
global production and volumes
available for export will be de-
layed until the second half of
2017 when the new Oceania
season commences, they said.
The U.S. will fi ll some of
the gaps left in global cheese
and butter shortages. And with
fewer U.S. imports, solid do-
mestic demand growth and
continued draw-down of in-
ventory, the U.S. should fi nd
itself in a fairly well-balanced
domestic market for most of
2017, the analysts reported.
World prices for dairy prod-
ucts have rocketed upward,
driven by butterfat demand.
Cheese and butter prices will
continue to climb, but more
stagnant prices are expected
for milk proteins.
“The story really is we’ve
(passed) the low point in the
market for now and we’ll be
trying to fi gure out mid-lev-
el pricing over the next 12
months,” Bailey said.
Washington’s winter outlook turns colder Storms boost S. Idaho snowpack
‘Weak’ La Nina
carries punch
By JOHN O’CONNELL
Capital Press
By DON JENKINS
Capital Press
A new federal forecast says
the odds now favor a cold and
wet winter throughout Wash-
ington, a change from previ-
ous outlooks.
The National Weather
Service’s Climate Prediction
Center on Thursday released
its U.S. forecast for January,
February and March.
The center noted that the
biggest change from Novem-
ber’s outlook was the increased
probability of cold weather
in Washington. Plus, West-
ern Washington, like Eastern
Washington, can now expect
above-average precipitation.
Previously, the center said
it was a 50-50 bet which way
Washington’s winter would tilt.
The center described the swing
toward a harder winter as a
“modest” change in the odds.
“It’s not really a strong fore-
cast. It’s just a nudge that way,”
Washington State Climatolo-
gist Nick Bond said Dec. 16.
Still, the revised outlook and
Don Jenkins/Capital Press
Snow blankets a farm Dec. 15 in southwestern Washington. The
state can expect a colder and wetter winter than average, accord-
ing to a Climate Prediction Center outlook.
early snowfall bodes well for
summer irrigation, he said.
“I think you have to expect
that we’ll have a good snow-
pack coming out of this win-
ter. I’m ready to be wrong. In
this business, you have to be,”
Bond said.
As of Friday, snowpacks
around the state were at least 75
percent of normal, according to
the Natural Resources Conser-
vation Service.
The snowpack in the Olym-
pic Mountains was 170 percent
of normal. Olympic Peninsula
farmers depend on snow melt-
ing into the Dungeness River
for irrigation. The snowpack
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Henry’s Fork and across
Southern Idaho have al-
ready received their full De-
cember precipitation for the
fi rst 19 days of the month,”
Abramovich said. “Anything
else is going to keep adding to
the snowpack, which is good
news.”
Abramovich expects the
cold and wet weather pattern
to persist and noted storms in
the forecast are predicted to
blanket Central Idaho with 20
inches of snow.
He said the wet pattern has
mostly missed Idaho’s North-
ern Panhandle, which had re-
ceived just a third of its usual
monthly snow total through
Dec. 19.
For the long term,
Abramovich said the Pacif-
ic Ocean is coming out of a
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John O’Connell/Capital Press
Snow dusts the foothills of Kinport Peak in the City Creek area
above Pocatello, Idaho. Mountain snowpacks throughout South-
ern Idaho are above normal following recent December storms,
improving the water outlook.
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was less than 10 percent of nor-
mal during the 2015 drought.
Bond said that a “weak” La
Nina — a cooling of the Pacifi c
Ocean — is having a stronger
than expected infl uence on the
weather. La Nina years typi-
cally, but not always, produce
cooler and wetter Northwest
winters. Climatologists predict
that La Nina will yield to neu-
tral conditions over the next
three months.
“It’s possible we’ll end up
having a remarkably cold win-
ter. It’s not out of the realm of
possibility,” Bond said.
Below-average tempera-
tures would be a big change
from November. Based on
records dating back to 1885,
Washington had its warmest
November ever, according to
the federal National Centers
for Environmental Education.
The Climate Prediction
Center’s new three-month
outlook also predicts be-
low-average
temperatures
in the Idaho panhandle. The
odds are equal for above- or
below-normal temperatures in
the rest of Idaho, Oregon and
Northern California.
IDAHO FALLS, Idaho
— December snowstorms
have padded a below-average
snowpack throughout South-
ern Idaho, bringing accumu-
lation to above-normal levels
in many areas, and well above
normal in the Eastern Snake
Plain.
“Ten days ago, we were
below average on a lot of
snow (survey) sites in the Up-
per Snake. Now we’re above
average in the majority of
them,” Lyle Swank, water-
master for the Upper Snake
region, said on Dec. 19.
Swank said the Lewis Lake
Divide snow survey site in the
Upper Snake headwaters in
Wyoming increased its snow-
pack from having the equiva-
lent of 6.7 inches of water on
Dec. 14 to 10.3 inches on Dec.
19.
“That’s a pretty good
storm for this time of year,”
Swank said.
Snake Plain snow survey
sites above Palisades Res-
ervoir increased from 75 to
80 percent of normal to 128
percent of normal during the
same time frame, Swank said.
“It’s a much brighter out-
look than we’ve had in some
other recent years,” Swank
said, adding the water outlook
can change rapidly this early
in the winter.
Ron Abramovich, Idaho
water supply specialist with
USDA’s Natural Resources
Conservation Service, said
snowpacks are average or
above throughout Southern
Idaho.
“Most of the basins from
52-7/#8
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strong El Nino pattern, which
results in above-normal
streamfl ow in Southern Idaho
two-thirds of the time during
the following year.
“It ends up being a very
active weather pattern, which
is what we’re seeing right
now,” Abramovich said. “It’s
all good news, and we’ve got
more storms coming, so it will
be a great Christmas present.”
Wes Hipke, managed aqui-
fer recharge coordinator with
the Idaho Department of Wa-
ter Resources, said the state
needs a wet winter, with the
Upper Snake Reservoir sys-
tem now at just 45 percent of
capacity.
“There’s still a lot of reser-
voir to fi ll up, but it’s looking
awesome,” Hipke said.
Hipke said continued wet
weather could open the pos-
sibility of reservoir fl ood-con-
trol releases in the spring,
enabling the state to put new
Upper Snake aquifer recharge
infrastructure to use. Man-
aged recharge involves in-
jecting surface water into the
aquifer through unlined ca-
nals and spill basins to build
groundwater levels.
Unfortunately, Hipke said,
a recent cold spell has frozen
canal headgates, reducing
winter recharge in the Lower
Snake River.
“We’re not ramping up as
quickly as I’d hoped,” Hipke
said.
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