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10 CapitalPress.com March 16, 2018 Dairy/Livestock USDA clears the way for California FMMO U.S. beef outlook Subscribe to our weekly dairy or livestock email newsletter at CapitalPress.com/newsletters guardedly optimistic By CAROL RYAN DUMAS Capital Press After a disappointing de- lay in the process of estab- lishing a federal milk mar- keting order for California, the state’s dairymen can look forward to a final de- cision soon. On Friday, a judicial of- ficer appointed by USDA to keep the process safe from legal challenges, ratified the hearing record and put the process back on track. That process started with a petition to USDA by three dairy cooperatives in Feb- ruary 2015. It was disrupted in February when two Su- preme Court cases involv- ing the Securities and Ex- change Commission called into question the appoint- ments of administrative law judges by federal agencies. While the case did not involve USDA directly, the outcome could call into question the appointment of the administrative law judge who presided over the California FMMO pro- cess. If the court were to find administrative law judges in the cases were not ap- pointed properly under the Constitution, it could impli- cate the FMMO and make it vulnerable to legal chal- lenges. Instead of moving for- ward with a final decision, USDA decided to appoint a judicial officer — who is not subject to the appoint- ments clause in the Con- stitution — to review the FMMO hearing record. Stephen Vaden, an attor- ney with USDA’s office of general counsel, said last month the cautious route USDA is taking would only delay the process one to four months. If USDA had ignored the potential threat to the ap- pointment of its administra- tive law judge and the court By CAROL RYAN DUMAS Capital Press Capital Press File Cows are milked at VanderWoude Dairy near Merced, Calif. The effort to establish a federal milk marketing order appears to be back on track. ruled against the Securities and Exchange Commission, the FMMO could have been vacated by the court, he said. That would set the pro- cess back to square one and push potential implemen- tation of the FMMO back three years, he said. Ratification of the re- cord by the judicial officer clears the way to move for- ward, said Geoff Vanden Heuvel, board member and economic consultant for Milk Producers Council. The delay was disap- pointing, but USDA cured the problem in less than 30 days, he said. “We expect news soon, he said. That news will be the final decision on how the FMMO would operate and what producers will be vot- ing on in a referendum to approve an FMMO for the state, he said. Establishing an FMMO for California has been a long road, rooted in pro- ducers’ frustration with milk prices significantly below prices in other states and the state’s failure to adequately address the issue. Producers have peti- tioned the California De- partment of Food and Ag- riculture for years to make changes to the state’s pric- ing system. With little to no success, they turned to the federal order sys- tem three years ago in the hope of securing equitable prices. Capital Press is waiting on a reply from USDA on when a final decision might be issued. Vaden said last month if ratification went smoothly, an order for Cali- fornia could be implement- ed by November. “We look forward to the process continuing to move forward as soon as possi- ble so California producers can have some certainty in their future,” said Annie AcMoody, director of eco- nomic policy for Western United Dairymen. U.S. cattle markets are showing positive momentum in the first quarter of 2018, following their second-most profitable year on the books. But the year ahead could slow the roll on favorable markets. Cattle prices for the year to date have been holding at, or above, expected levels, supported by a continuation of solid demand by both do- mestic and export markets, analysts at Rabobank stated in their most recent beef quarter- ly report. The slower-than-expected expansion in the U.S. cattle inventory in 2017 and the heavy front-end load of cattle on feed due to drought cre- ates a tighter than expected supply and brighter outlook for the second half of 2018, they said. But “while market tone has started the year with sol- id footing and continuation of profitability in all sectors, there are a number of poten- tial headwinds that could become driving issues as the year unfolds,” the analysts said. Those headwinds revolve around drought, increased production and trade. The foremost concern is drought, with 27 states show- ing some level of drought stress. Those states represent 76 percent of the cow popu- lation, Don Close, senior an- alyst with RaboResearch, told Capital Press on Thursday. Conditions have improved in many areas in the last cou- ple of weeks. But with that much of the cow population in areas at risk of drought liq- uidation, it’s really an issue that needs to be monitored, he said. Cattle on feed numbers are up 8 percent from year- ago levels, with aggressive placements of calves due to lack of winter wheat pasture. That’s not a show-stopper in itself because of the number of light cattle on feed that will be well distributed throughout the year, he said. “But if we start to build weight, total (beef) production will be a big concern,” he said. With good availability of feed grains at very attractive prices, it will be critical to avoid excess carcass weights in order to keep total beef pro- duction at manageable levels, the analysts said. The other uncertainty in the market is U.S. trade poli- cy. North American Free Trade Agreement negotiations are progressing slowly, and there is still discussion of reopening the U.S. trade agreement with South Korea. President Donald Trump’s intention to impose tariffs on steel and aluminum imports adds the concern of counter duties on U.S. agricultural ex- ports, Close said. In addition, the 11-mem- ber version of the Trans-Pa- cific Partnership was signed this week — without the U.S. While the U.S. continues to deal with tariff issues with Japan, the agreement is ex- pected to bring gains for other beef exports through reduced tariffs into Japan — a key global beef importer, the ana- lysts said. There continues to be chat- ter that Trump would be inter- ested in trade talks with those countries, but any trade deal would take a long time to ac- complish, Close said. But U.S. beef exports seem to be holding, and the U.S. is positioned very well as a glob- al supplier of high-value prod- uct, he said. “Without trade conflicts, I think exports will continue to grow,” he said. John Deere Dealers Dairy Markets See one of these dealers for a demonstration Lee Mielke Dairy prices see ups and downs By LEE MIELKE For the Capital Press ash dairy prices saw some ups and downs last week as traders absorbed Tuesday’s Global Dairy Trade auction. The Cheddar blocks climbed to $1.6025 per pound Monday, highest price since Nov. 28, 2017, but closed Friday at $1.57, up a penny on the week and 18 1/2-cents above a year ago when it bottomed out for the year at $1.3850. The barrels climbed to $1.5150 Tuesday, high- est since Dec. 18, 2017, but finished at $1.4975, up 2 1/4-cents on the week and 9 3/4s above a year ago. Eight cars of block sold on the week at the CME and 25 cars of barrel. The blocks were down 2 cents Monday and lost a penny Tuesday, slipping to $1.54. The barrels inched up a quarter-cent Monday and stayed there Tuesday at $1.50. Dairy Market News re- ports that spot milk into Midwestern cheese plants is ranging $2 to $3 under class, with some as low as $5 under. “Milk shipments were delayed early in the week, while mozzarella and pro- volone producers, currently reporting steady demand, are concerned about multi- ple winter storms affecting orders made by Eastern re- gion customers. Hard Italian orders are trending up, while barrel producers report de- mand as middling. Western cheese produc- tion is active as more milk is going to the vats, says DMN, and “the cheese market un- dertone seems unsettled.” C 11-2/102