Dairy in the News
Dairy in the News. I’m Greg Martin with today’s Line On Agriculture.
It has been a difficult time for the dairy industry. After dairy prices peaked last year - the market has collapsed to historically low levels well below the cost of production. One expert on dairy markets has said a loss in dairy exports is one factor. Exports are down in 2009 - and the U.S. Dairy Export Council’s Margaret Speich says things are starting to turn around - but next year still looks challenging.
SPEICH: We have seen our exports since February pick up and in fact in July for example our exports of milk powder were the highest posted but they’re still down significantly from last year. Our cheese exports were up in July but still down overall about 13% and the total milk solids production going to exports from January through July of this year stands at 8.5%, that’s still very strong but it’s down from 10.8% last year.
Meanwhile House and Senate negotiators are reportedly close to signing off on an ag spending measure that includes emergency aid for the nation’s dairy farmers. The compromise would provide 290-million dollars in direct payments and another 60-million dollars for USDA to buy cheese and other dairy products. But would a government purchase have the desired effect? Alan Levitt - Editor of the CME’s Dairy Dairy Report.
LEVITT: I’ve seen some estimates - $60-million dollars would maybe buy 40-million pounds of cheese which from the people that I’ve talked to here at Expo, I mean some of the cheese people they’re sitting on, the inventories are huge. A lot of people have bought ahead for the 4th quarter and the big holiday season so whether $40 million would be enough to move that market given where it’s at – I’m not convinced of that.
And once the temporary measures stop - what happens to the market? Levitt says he doesn’t expect the market will drop back to a dollar cheese again.
LEVITT: These temporary measures may be enough to get us through where the supply/demand shifts enough. Like I said, we’re still sitting on huge inventories but we’re going to work through those, milk production has finally turned the corner and it’s going negative now so give that a few more months of negative production and eventually that will flow through to cheese and cheese production will be down and eventually we’re going to get there and these measures may be enough. I don’t think we’ll get back to a dollar cheese.
That’s today’s Line On Agriculture. I’m Greg Martin on the Northwest Ag Information Network.
