January 26, 2018
CapitalPress.com
21
Dairy
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Dairy
Markets
California dairymen petition for price increases
Lee Mielke
By CAROL RYAN DUMAS
For the Capital Press
C
heese and powder pric-
es strengthened during
the Martin Luther King
Day holiday-shortened week,
buoyed in part by last week’s
GDT. The Cheddar blocks
closed Friday at $1.5650 per
pound, up 11 cents on the
week but 13 1/4-cents below
a year ago.
The barrels finished at
$1.3450, up 12 3/4-cents on
the week, 19 cents below a
year ago, but an unsustainable
22 cents below the blocks.
Only 2 cars of block traded
hands last week at the CME
and 45 of barrel.
The blocks inched up a
half-cent Monday, as many
in the dairy industry are in
Palm Desert, Calif., attending
the International Dairy Foods
Association’s annual Dairy
Forum, but they pulled back
a penny Tuesday and slipped
to $1.56.
The barrels were up 2
cents on Monday, to $1.3650,
and stayed there Tuesday.
The December Milk Pro-
duction and Cold Storage
reports scheduled for release
Tuesday afternoon were re-
scheduled to Wednesday due
to the government shutdown
on Monday.
Cheese production is mixed
in the Central region, accord-
ing to Dairy Market News,
and some plants reduced out-
put to manage growing sup-
plies. Cheese sales were also
mixed and Midwestern barrel
contacts were “fretful, as pric-
es dropped and buyers waited
out continuing price slips or
are simply hesitant to take on
extra at this time.”
Block sales are generally
solid and beating some ex-
pectations but pizza cheese
makers are concerned regard-
ing inclement winter weath-
er affecting the Northeast,
where Super Bowl retail sales
are typically strong for many
Midwestern mozzarella and
provolone
manufacturers.
Milk prices have tightened
again.
Western cheese output is
active due to plentiful milk
supplies. Disruptions at sev-
eral processing facilities re-
leased more milk into the mar-
ket. Industry contacts say a
few larger cheese plants have
agreed to reduce down time
or juggle production sched-
ules in order to take the extra
loads of milk. Cheese demand
is fair. Manufacturers report
the pizza season has generat-
ed solid sales for mozzarella,
but retail demand is still tepid
for most cheese types. Cheese
purveyors would like to see
much stronger demand to
help reduce heavy inventories
but recent lower prices are
helping interest in the export
market.
Spot butter closed Friday
at $2.12 per pound, 4 cents
lower on the week and 13
cents below a year ago, with
10 cars trading places.
Monday left the butter
unchanged but it inched a
half-cent lower Tuesday and
slipped to $2.1150, lowest
CME price since May 9, 2017.
DMN says cream remains
readily available throughout
the Central region and but-
ter sales are generally on par
with expectations. Markets
are mixed. Some participants
expect butter to remain above
$2, while others are starting
to question its steadfastness,
says DMN.
Western butter sales are
quiet, but retailers continue
to restock shelves. Current
butter supplies are ample but
abundant cream at lower pric-
es is a big contributing factor
to increased butter output and
“butter sales will have to in-
crease substantially for a large
reduction in inventory.”
Tim Hearden/Capital Press File
Cows are milked at VanderWoude Dairy near Merced, Calif. Dairy groups have filed a petition with
the California Department of Food and Agriculture for an emergency hearing to consider increases
to the state’s milk prices for 12 months.
and where they’re likely to
go, said Lynne McBride, ex-
ecutive director of California
Dairy Campaign.
“Milk prices aren’t com-
ing close to covering milk
production costs, and it’s
threatening the future of
dairy operations across the
state,” she said.
Significant negative mar-
gins since January 2015 have
placed many producers in a
dire financial situation. The
overbase price at the end of
2017 was at its lowest level
since June 2016, and the fore-
cast is even more concerning,
the groups said.
The overbase price in De-
cember was $13.76. Current
commodity prices are yielding
an overbase price of $13.30
per hundredweight, with a
forecasted potential to fall
even lower, they stated.
“Compared to the latest
cost of production of $18 per
hundredweight released by
CDFA, this clearly illustrates
how the price of milk will be
insufficient to cover costs,” the
groups said.
It’s a grave economic situ-
ation. CDC members are con-
cerned about being able to stay
in the dairy business and wel-
come any relief, McBride said.
Establishing a federal milk
marketing order for California
to bring its milk prices in line
with other dairy producing re-
gions in the U.S. remains a top
priority. Dairy producers have
shown strong support for that
process. But until that can be
implemented, milk prices re-
main under the state system,
she said.
“We as an organization felt
it was critical to take any ac-
tion we could to improve milk
prices in the short term,” she
said.
“WUD filed the petition be-
cause we cannot sit idly while
prices drop and more produc-
ers go out of business. These
are very difficult times that
producers are struggling with,”
AcMoody said.
The groups pointed out that
depressed margins over the
last three years have taken a
toll on the state’s milk produc-
tion, which has declined year
over year in 32 of the past 36
months.
They are proposing to
increase Classes 1, 2 and
3 by 60 cents per hun-
dredweight, Class 4a by
10 cents and Class 4b by
40 cents.
CDI to close Los Banos cream cheese plant
By CAROL RYAN DUMAS
Capital Press
California Dairies Inc.,
the largest dairy cooperative
in the state, is closing its
cream cheese and Neufcha-
tel manufacturing facility in
Los Banos on March 17.
Andrei Mikhalevsky, the
co-op’s CEO, cited the de-
clining volume of milk in
the state and the high cost
of operating the facility in a
press release about the clo-
sure.
CDI had in recent years
been processing as much as
2.5 million pounds of milk
per day at the plant. That
volume dropped signifi-
cantly in 2017, which was a
major driver in the decision
to cease operations, Brooke
Bennett, CDI director of
communications, said in an
email to Capital Press.
“Unfortunately, the de-
clining volume of milk in
California is affecting the en-
tire dairy industry, and CDI is
not immune,” Mikhalevsky
said.
Milk production in Cal-
ifornia in 2017 was nearly
2 percent lower than 2016,
Bennett said.
When asked about excess
milk available elsewhere,
she said CDI is a farm-
er-owned cooperative and its
first priority is to profitably
market its members’ milk.
In addition, “Made from
Real California Milk” is a
core component of CDI’s
product labeling, she said.
The Los Banos plant
has been in operation since
1925. It was first operat-
Grass Expertise.
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Caldwell, Idaho • Alan Greenway, Seedsman
Cell: 298-259-9159 • MSG: 298-454-8342
ed by San Joaquin Valley
Dairymen. The high cost of
operation is due to its age,
she said.
The decision to close the
plant was made to strengthen
the cooperative by optimiz-
ing the operation of CDI’s
remaining processing facili-
ties, she said.
“While closing a plant
is never an easy decision
to make, and impacts many
valued employees, our mem-
ber-owners benefit from a
more profitable and finan-
cially stronger cooperative,”
she said.
The closure will affect
more than 60 employees,
and CDI is committed to
supporting them through the
transition, CDI stated.
The Los Banos plant
manufactured all of CDI’s
cream cheese and Neufchat-
el production. In conjunction
with the closure, CDI will
exit the cream cheese and
Neufchatel business but will
continue to operate its other
five manufacturing facilities.
The cooperative manu-
factures fluid milk products,
butter and milk powder, with
annual sales of more than $4
billion across all 50 states
and more than 50 foreign
countries, Bennett said.
It is co-owned by more
than 400 dairy producers
who ship 17 billion pounds
of milk annually, producing
43 percent of California’s
milk.
Over 40 Years
Experience
Alan Greenway,
Seedsman
4-1/108
By LEE MIELKE
Western United Dairy-
men and the California Dairy
Campaign have filed a peti-
tion with the California De-
partment of Food and Ag-
riculture for an emergency
hearing to consider increases
to the state’s milk prices for
a period of 12 months.
The groups are propos-
ing temporary increases that
would raise the overbase, or
pool, price about 35 cents
per hundredweight of milk.
“California dairy families
have suffered severe eco-
nomic hardship in the last
three years. As a result, many
have gone out of business or
acquired massive debt on top
of eroded equity,” the groups
stated in the petition.
California lost 42 dairies
between 2015 and 2016, An-
nie AcMoody, WUD director
of economic analysis, told
Capital Press.
“We don’t have data for
2017 yet, but I expect the
trend will continue,” she
said.
While an additional 35
cents won’t solve the prob-
lem, it might prevent some
further losses of dairies, she
said.
Milk prices are signifi-
cantly under cost of pro-
duction, and there’s a lot of
concern from dairymen on
where those prices are now
4-3/102
Cheese,
powder
prices
rebound
Capital Press
4-3/100