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As printed in our October 10, 2015 issue...



SIGN-UP FOR 2016 MPP-DAIRY COVERAGE has been extended until November 20, 2015. The voluntary program, established by the 2014 Farm Bill, provides financial assistance to participating farmers when the margin - the difference between the price of milk and feed costs - falls below the coverage level selected by the farmer.

FEED COST FORMULAS in MPP-Dairy have drawn concern from the Northeast. Agri-Mark's Robert Wellington pointed out that Northeast farms paid at least 20 percent more for their feed than MPP indicated. A coalition of 18 Northeast House members pointed out the same situation to the USDA Secretary and Farm Service Agency administrator.

DAIRY CONTINUED TO STALEMATE TPP trade negotiations. A quota system remains the cornerstone of Canadian dairy policy, while the U.S. is concerned limited access to that market may upset domestic dairy product balance should New Zealand gain greater access to the States. Progress has been made with Japan on cheese and whey.

CLASS III FUTURES HELD STEADY at a $15.75 per cwt. average for October through March contracts through September trading. With butter demand strong, spot butter reached a record high of $3.10 per pound.

DESPITE STRONG DOMESTIC CONSUMPTION, cheese inventories have been building due to solid production in leading dairy states. Total cheese inventories were up 12 percent compared to the same time last year. Meanwhile, butter was up 21 percent over a year earlier but down 18 percent when comparing the recent two months.

BUTTER WILL REPLACE MARGARINE in 14,000 McDonald's across the U.S. in October. Based on projections from Dairy Management Inc., this could mean an additional 500 to 600 million pounds of milk equivalents annually. That would match U.S. butter exports last year.

FACED WITH LOW MILK PRICES, New Zealand and Australia could bump tariff quota limits on beef exports to the U.S. As that takes place, beef from both countries will be bonded or sent to storage for 2016 sales.

PROCESSED LEAN BEEF PRICES have hovered near record highs of $3 per pound as heavy dairy cull cows continue to fetch $1,500 or more. However, live cattle futures have been off 10 percent or more in the past three months, which could signal smaller beef checks in the future.

THE UPPER MIDWEST HELPED PUSH August milk flow up 0.8 percent nationally. South Dakota led all gainers, up 13.3 percent; Wisconsin, 4.8 percent; Minnesota, 4.7; Michigan, 4.1; and Iowa, 3.9.

TIGHTER MARGINS HAMPERED THE WEST as New Mexico milk flow fell 4.3 percent; California, (-3.4 percent); Oregon, (-2.8 percent).

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