Global dairy outlook: Cheese trade strong, SMP prices … dairy outlook: Cheese trade strong, SMP prices weak China, Levitt says, and a lot is going into foodservice, cheese for further

© 2017 CHEESE MARKET NEWS® — This is Cheese Market News’ E-subscription and may not be forwarded to anyone other than the intended paid subscriber without the express permission of Cheese Market News (For more information, contact [email protected])

Industry shares concerns at USTR hearing on NAFTAWASHINGTON — This week the Offi ce of the U.S. Trade Represent (USTR) held three days of public hearings regarding the upcom-ing negotiations of the North American Free Trade Agreement (NAFTA). The public hearings follow USTR’s 90-day notifi cation to Congress and Federal Register notice last month requesting public comment regarding intent to renegotiate NAFTA.

Among those who testifi ed at this week’s hearing were repre-sentatives from the National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the Consortium for Common Food Names (CCFN).

In his testimony Tuesday, Jaime Castaneda, senior vice president of strategic initiatives and trade policy, NMPF and USDEC, highlighted benefi ts of U.S. dairy trade with Mexico, concerns over trade barriers to Canada, and issues related to geographical indications (GIs).

Volume 37 June 30, 2017 Number 24

By Rena Archwamety

MADISON, Wis. — Global cheese trade and demand from developed markets are strong, while dairy demand from developing markets and prices for skim milk powder (SMP) remain weak, according to dairy market analysts. • Cheese, butterfat and SMP

“In the fi rst quarter of the year, cheese trade was up 3.3 percent. The EU had record exports in March. The U.S. was way up, and Australia had a de-cent month,” says Alan Levitt, vice president, communica-tions and market analysis, U.S. Dairy Export Council (USDEC).

Some of the largest growth is coming from South Korea and

Global dairy outlook: Cheese trade strong, SMP prices weak

China, Levitt says, and a lot is going into foodservice, cheese for further processing and other food applications.

“Over the past year or so, prices have been a little lower — that helps,” he says. “Other than that, there are broad structural trends — increased population, foodservice use and increased disposable income.”

Cheese exports from major suppliers were up 6 percent in the 12 months through April 2017, with a boost in buying from South Korea, China, Southeast Asia and South America, according to USDEC’s latest Global Dairy Market Outlook released last Friday.

Demand from the developed market, particularly U.S. and EU demand for cheese, milkfat and butter, has continued to show strong growth, accord-ing to Tom Bailey, executive director, dairy research, Rabo-bank North America. However, EU SMP intervention stocks remain, and demand from developing markets has been weaker. Countries such as the Philippines and Thailand have faced some political challenges, which have impacted consumer demand, he says. These factors have contributed to a notably wide spread between butter

and SMP in the market.“We have seen that spread

move — butter is 250 percent above the 10-year average of that spread — butter prices are very high compared to SMP at this point,” Bailey says. “That is, of course, because of lower demand in the developing mar-ket for protein products and the glut of SMP sitting in inventory.”

Levitt notes that from 2013-2016, more milk globally went into the build-up of SMP stocks than the milk equivalent of increased overall dairy trade.

“The intervention stocks are not on the market, but psy-chologically they hang over the market. Everyone knows if milk powder prices got higher, they could release those stocks,” Levitt says. “It defi nitely keeps a lid on SMP prices.”

In its Dairy Quarterly report for the second quarter of 2017, Rabobank notes that there is a global shortage of butterfat, forcing prices of butter and cream to exceptional levels, due to weak production growth in the EU and strong demand growth in the United States. The structural increase in demand for butterfat will take some time to resolve, Rabobank says, as prices need to adjust to refl ect changing consumption

patterns and new long-term in-centives are needed to encour-age the production of more fat.

In its latest global outlook, USDEC says it expects more butter production in Europe, the United States and Oceania in the second half of this year, which may alleviate some of the butter shortage but also add even more surplus skim.• Global markets

The global dairy markets still are trying to recalibrate, as a large amount of import demand has been lost from China, Rus-sia and Venezuela over the last three years, Levitt notes. This resulted from a burst in China’s buying bubble, economic chal-lenges in Venezuela and Rus-sia’s import embargo that has banned dairy products from the EU and other countries.

“Here is 10 to 12 percent of lost global demand they are trying to make up for, equiva-lent to about 1 million tons of tradeable product a year, just from those three markets,” Levitt says. “Other markets have increased to make up for it, but not enough. We have gone three years with pretty much no growth in trade because these big losses have been a wash with steady ongoing increases

Valley Queen to expand plant in Milbank, S.D.

A

INSIDE

Turn to GLOBAL, page 8 a

Turn to NAFTA, page 15 a

MILBANK, S.D. — Valley Queen Cheese this week announced that its board of directors has approved a $50 million investment in its facil-ity in Milbank, South Dakota.

The expansion, dubbed “VQ Next,” will increase the firm’s processing capacity by 25 percent to more than 5 million pounds of milk per day. All milk will be supplied from dairies within a 100-mile

Turn to EXPAND, page 15 a

Like us on Facebook and

follow us on Twitter!

WATCHMarket

Economists discuss outlook for U.S. dairy prices, exports Analysts anticipate volatility for butter, ample cheese stocks

Editor’s Note: Welcome to Market WATCH, our exclusive analy-sis of the market fundamentals that shaped the fi rst half of 2017 and a look ahead to the next six months. In this special section, we talk with market analysts about the state of the domestic and international dairy markets, the outlook for trade and exports, and what to expect with weather patterns in the months ahead.

By Alyssa Mitchell

MADISON, Wis. — After seeing record-high prices at the Chicago Mercantile Exchange (CME) for cheese in 2014 and butter in 2015, the U.S. dairy market has come more in line with international prices over the past year, bringing potential opportunities for exports, analysts say.

Much of the market chatter in 2017 has centered on ample U.S. milk production, high cheese stocks and a steady demand for butterfat around the world.• Butter leads the charge

“ Over the past decade, any meaningful bull market in dairy started with milk powders — that is not the case today,” says Dave Kurzawski, senior broker at INTL FCStone, Chicago.

Eric Meyer, president of HighGround Dairy, Chicago, notes U.S. butter came back into fashion, so to speak, in late 2014 as consumers began to

Turn to MARKET, page 7 a

✦ Guest column: ‘A common sense approach to dairy in school lunches.’ For details, see page 4.

✦ EU high court rules plant-based items can’t use dairy-specifi c names. For details, see page 5.

✦ World Dairy Expo contest entry booklets available. For details, see page 6.

✦ Dairy groups urge action against Canada. For details, see page 15.


MARKET INDICATORS

2 CHEESE MARKET NEWS® — June 30, 2017

DISCLAIMER: Cheese Market News® has made every effort to provide accurate current as well as historical market information. However, we do not guarantee the accuracy of these data and do not assume liability for errors or omissions.

STAFF SUBSCRIPTION INFORMATIONCheese Market News®, Publication #0598-030, (ISSN 0891-

1509), is published weekly by Quarne Publishing LLC, P.O.

Box 628254, Middleton, WI 53562; Phone 608/831-6002;

FAX 608/288-9093. Periodicals postage paid at Madison,

WI. Circulation records are maintained by Quarne Publishing

LLC, P.O. Box 628254, Middleton, WI 53562. POSTMASTER: Send address changes to Cheese Market News®, Subscriber Services, P. O. Box 628254, Middleton, WI 53562; Form 3579 requested; or call direct at 608/831-6002. All rights

reserved under the United States International and Pan-

American Copyright Conventions. No part of this publication

may be reproduced, stored in a retrieval system or transmitted

in any form or by any means, mechanical, photocopying,

electronic recording or otherwise, without the prior written

permission of Quarne Publishing LLC. Opinions expressed

in articles are those of the authors and do not necessarily

News®. Cheese Market News® does not endorse the products

of any advertiser and does not assume and hereby disclaims

any liability to any person for any loss or damage caused by

errors or omissions in the material contained herein, regard-

less of whether such errors result from negligence, accident

or any other cause whatsoever. Copyright 2017 by Quarne

Publishing LLC.

Subscriptions: $145 for U.S., second-class delivery;

International rate to all others. Printed in U.S.A.

Susan Quarne, Publisher (PH 608/831-6002; FAX 608/288-9093) email: [email protected] Kate Sander, Editorial Director (PH 509/962-4026; FAX 608/288-9093) email: [email protected] Mitchell, Managing Editor (PH 608/288-9090; FAX 608/288-9093) email: [email protected] Archwamety, Senior Editor (PH 608/288-9090; FAX 608/288-9093) email: [email protected] Awe, Assistant Editor (PH 608/288-9090; FAX 608/288-9093) email: [email protected]

REGULAR CONTRIBUTORSCreative Business Services, FCStone, International Dairy Foods Association, Eric Meyer, National Milk Producers Federation, Rice Dairy, John Umhoefer, U.S. Dairy Export Council, WOW Logistics, Edward Zimmerman

ADVERTISING/SUBSCRIPTION ORDERS & INFOContact: Susan Quarne - PublisherP.O. Box 628254, Middleton, WI 53562PHONE 608/831-6002 • FAX 608/288-9093

WEBSITE: www.cheesemarketnews.com

Dry Products* June 30, 2017

DRY BUTTERMILK(FOB)Central & East: $.8400-$.9100.(FOB) West: $.8200(-1)-$.9400; mostly $.8800-$.9200.

EDIBLE LACTOSE(FOB)Central and West: $.2950(-2 1/2)-$.5500; mostly $.3400(-1)-$.4400.

NONFAT DRY MILKCentral & East: low/medium heat $.8450(-2 1/2)-$0.9600(-2); mostly $.8800(-2)-$.9200(-1). high heat $0.9900-$1.0900(-1).West: low/medium heat $.8100(-4)-$.9500(-2); mostly $.8500(-3)-$.9300(-3). high heat $.9800-$1.0700(-2).Calif. manufacturing plants: extra grade/grade A weighted ave. $0.9024(+.0051) based on 7,660,873 lbs.

WHOLE MILK POWDER (National): $1.3000-$1.5500.

WHEY POWDERCentral: nonhygroscopic $.3500-$.5600(+1); mostly $.3900(-1)-$.4850.West: nonhygroscopic $.3800(-2)-$.5150(-1/2); mostly $.4100-$.4650(-1/2).(FOB) Northeast: extra grade/grade A $.3600(-3)-$.5250(-3/4).

ANIMAL FEED WHEY (Central): Whey spray milk replacer $.3000-$.4725(-3/4).

WHEY PROTEIN CONCENTRATE (34 percent): $.7400(-1)-$1.2350; mostly $.8000-$.9800(-1 1/2).

CASEIN: Rennet $2.7000-$3.0000; Acid $3.4000-$3.6500.

*Source: USDA’s Dairy Market News

Total Contracts Traded/Open Interest

Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.*Total Contracts Traded/Open Interest reflect additional months not included in this chart.

JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18MAR18APR18MAY18JUN18JUL18AUG18SEP18

CHEESE FUTURES* for the week ending June 29, 2017 (Listings for each day by month, settling price and open interest)

Fri., June 23 Mon., June 26 Tues., June 27 Wed., June 28 Thurs., June 291.6191.5801.6751.7111.7431.7451.7401.7251.7251.7221.7101.7141.7251.7361.7401.745

3,7733,8503,3032,7672,2322,4972,414

757697645535440405

756558

253/24,554

1.6291.5751.6691.7011.7351.7371.7301.7151.7251.7101.7101.7141.7221.7361.7401.745

4,1753,8803,3252,8202,2372,5102,408

757697654541449444

756558

381/25,136

1.6191.5931.7041.7301.7551.7451.7401.7251.7251.7221.7101.7141.7281.7361.7401.745

3,7733,7753,2332,7472,2452,4802,413

757697645531439393

756258

288/24,364

--1.5681.6561.6901.7251.7311.7231.7151.7161.7161.7051.7081.7231.7311.7351.740

--3,8983,3672,9442,2782,5422,433

757704667550455456

817578

761/21,326

1.6191.5791.6831.7181.7431.7451.7401.7251.7251.7221.7101.7141.7281.7361.7401.745

3,7733,8083,2242,7462,2322,4922,412

757697645535440393

756558

195/24,393


JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18MAR18APR18MAY18JUN18JUL18AUG18

DRY WHEY FUTURES* for the week ended June 29, 2017 (Listings for each day by month, settling price and open interest)

Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.*Total Contracts Traded/Open Interest reflect additional months not included in this chart.

Fri., June 23 Mon., June 26 Tues., June 27 Wed., June 28 Thurs., June 2949.25046.00043.87541.50039.75039.42539.17538.02538.25038.25038.75038.30038.32538.00037.075

932789666622477468467122139116

806368

99

7/5,060

49.17046.25043.60041.00039.55039.42539.17538.02538.25038.25038.75038.30038.32538.00037.075

939792665622480466467124141118

826570

99

36/5,082

49.25046.30043.75041.05039.75039.42539.17538.02538.25038.25038.75038.30038.32538.00037.075

932787668621477468467122139116

80636899

37/5,059

--45.10042.32540.00038.50038.25038.00038.02538.25038.25038.75038.30038.32538.00037.075

--793664633481468467125142119

836671

99

77/4,163

49.25046.30043.87541.22539.75039.42539.17538.02538.25038.25038.75038.30038.32538.00037.075

932787667621477468467122139116

806368

99

1/5,058

CLASS III PRICE (Dollars per hundredweight, 3.5% butterfat test)

YEAR2011201220132014201520162017

JAN13.4817.0518.1421.1516.1813.7216.77

FEB 17.0016.0617.2523.3515.4613.80 16.88

MAR19.4015.7216.9323.3315.5613.7415.81

APR16.8715.7217.5924.3115.8113.6315.22

MAY16.5215.2318.5222.5716.1912.7615.57

JUN19.1115.6318.0221.3616.7213.2216.44

JUL 21.3916.6817.3821.6016.3315.24

AUG21.6717.7317.9122.2516.2716.91

SEP19.0719.0018.1424.6015.8216.39

OCT18.0321.02 18.22 23.82 15.46 14.82

NOV19.0720.8318.8321.9415.3016.76

DEC18.7718.6618.9517.8214.4417.40

(These data, which include government stocks and are reported in thousands of pounds, are based on reports from a limited sample of cold storage centers across the country. This chart is designed to help the dairy industry see the trends in cold storage between the release of the National Agricultural Statistics Service’s monthly cold storage reports.)

ButterCheese

35,148104,826

+985+1,952

31,36592,368

+3,235+4,490

+3,783+12,458

+10+4

Weekly Cold Storage Holdings June 26, 2017 On hand Week Change since June 1 Last Year Monday Change Pounds Percent Pounds Change

Monday Tuesday Wednesday Thursday Friday

Chicago Mercantile Exchange

June 26 June 27 June 28 June 29 June 30

Weekly average (June 26-30): Barrels: $1.3615(+.0105); 40-lb. Blocks: $1.5190(-.0490).Weekly ave. one year ago (June 27-July 1, 2016): Barrels: $1.6285; 40-lb. Blocks: $1.5830.

Cheese BarrelsPriceChange

Cheese 40-lb. BlocksPriceChange

Grade A NDMPriceChange

Weekly average (June 26-30): Grade A: $0.8445(-.0245).

Grade AA ButterPriceChange

Class II Cream (Major Northeast Cities): $3.0532(-.2889)–$3.4188(-.1843).

Weekly average (June 26-30): Grade AA: $2.6340(+.0440).

$2.6400+1 1/2

Sign up for our daily fax or email service for just $104 a year. Call us at 608-288-9090.

Cash prices for the week ended June 30, 2017

$1.3675NC

$1.5250 NC

$0.8425-1/4

$2.6250+1/4

$1.3500-2

$1.5100 NC

$2.6400NC

$0.8450 NC

$0.8450-1/4

$2.6225+3 1/4

$1.3700+1/4

$1.5100 -1 1/2

$0.8450 +1/4

$1.3675-1/4

$1.5250 -1 1/2

$1.3525+1/4

$1.5250 +1 1/2

$0.8450 NC

$2.6425+1/4


June 30, 2017 — CHEESE MARKET NEWS® 3

DISCLAIMER: Cheese Market News® has made every effort to provide accurate current as well as historical market information. However, we do not guarantee the accuracy of these data and do not assume liability for errors or omissions.

NEWS/BUSINESS MARKET INDICATORS

Cheese (Barrel and Block), Butter, NFDM, and Milk

3-year high, low, and average price

Daily prices and weekly averages

Rolling 1-month and 12-month trends

To receive this information daily, go to wowlogistics.com/dairydashboard.

Sign up now to get your daily

Dairy Dashboard

Data does not reflect current market prices.

Cheese (Barrel and Block), Butter, NFDM, and Milk

3-year high, low, and average price

Daily prices and weekly averages

Rolling 1-month and 12-month trends

To receive this information daily, go to wowlogistics.com/dairydashboard.

Data does not reflect current market prices.

For more information please visit www.wowlogistics.com

WASHINGTON — The total number of conventional dairy advertisements increased 19 percent last week from the prior week, says USDA’s Agricultural Marketing Service (AMS) in its latest weekly National Dairy Retail Report released June 23.

AMS says national conventional va-rieties of 8-ounce natural cheese blocks last week had a weighted average adver-tised price of $2.41, up from $2.30 one week earlier and $2.25 one year earlier.

Natural varieties of 1-pound cheese blocks last week had a weighted average advertised price of $4.15, up from $3.72 one week earlier but down from $5.17 one year earlier, AMS says, while 2-pound

Conventional dairy ads increase 19 percentcheese blocks had a weighted average advertised price of $6.01, down from $6.61 one week earlier and $6.28 one year ago.

AMS says natural varieties of 8-ounce cheese shreds last week had a weighted average advertised price of $2.31, up from $2.25 one week earlier and $2.24 one year earlier, while 1-pound cheese shreds had a weighted average advertised price of $4.24, up from $3.82 one week earlier and $3.54 one year earlier.

Meanwhile, national conven-tional butter in 1-pound packs last week had a weighted average ad-vertised price of $3.16, down from $3.39 one week earlier but up from $3.02 one year ago, AMS says. CMN

Class III: Price Skim Price Class IV:Price Skim Price Class II:Price Butterfat PriceComponent Prices: Butterfat Price Nonfat Solids Price Protein Price Other Solids Price Somatic Cell Adjustment Rate Product Price Averages:Butter Nonfat Dry Milk Cheese Dry Whey

Class & Component PricesMay 2017

$ 15.57/cwt.$ 7.38/cwt.

$ 14.49/cwt.$ 6.26/cwt.

$ 14.84/cwt.$ 2.4204/lb.

$ 2.4134/lb.$ 0.6956/lb.$ 1.7723/lb.$ 0.3196/lb.$ 0.00077/1,000 scc

$ 2.1644/lb.$ 0.8704/lb.$ 1.5390/lb.$ 0.5094/lb.

June 2017

$ 16.44/cwt.$ 7.22/cwt.

$ 15.89/cwt.$ 6.65/cwt.

$ 16.15/cwt.$ 2.7136/lb.

$ 2.7066/lb.$ 0.7384/lb.$ 1.7545/lb.$ 0.3014/lb.$ 0.00081/1,000 scc

$ 2.4065/lb.$ 0.9137/lb.$ 1.6293/lb.$ 0.4917/lb.

National Dairy Products Sales Report

Cheese 40-lb. Blocks:

*/Revised. 1/Prices weighted by volumes reported. 2/Sales as reported by participating manufacturers. Reported in pounds. More information is available by calling AMS at 202-720-4392.

Average price1 Sales volume2

Cheese 500-lb. Barrels:Average price1

Adj. price to 38% moistureSales volume2

Moisture content Butter:

Average price1

Sales volume2 Nonfat Dry Milk:

Average price1 Sales volume2

Dry Whey:Average price1 Sales volume2

For the week ended: 6/10/17

$1.7152 *11,721,705

$1.6330$1.5547

12,832,61234.88

*$2.3887*6,472,040

$0.921614,868,071

*$0.4993*6,631,364

$1.7057 13,504,666

*$1.5987*$1.5227

*11,656,724*34.90

*$2.4539*5,521,117

*$0.9198*12,005,019

*$0.4920*6,337,459

6/17/17 6/3/17

$1.6959 11,777,760

$1.5724$1.4957

11,094,95434.82

$2.55032,460,870

$0.921217,337,158

$0.47576,571,876

6/24/17

$1.6758 11,551,984

$1.6128$1.5371

11,961,19734.95

$2.32155,883,309

$0.896118,227,650

*$0.4992*7,081,206

Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com. *Total Contracts Traded/Open Interest reflect additional months not included in this chart.


Cash-Settled NDM*

JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18

JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18MAR18


Fri., June 23 Mon., June 26 Tues., June 27 Wed., June 28 Thurs., June 29


JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18MAR18APR18MAY18JUN18JUL18AUG18

Class III Milk*


Class IV Milk*

JUN17JUL17AUG17SEP17OCT17NOV17DEC17JAN18FEB18MAR18APR18

CME FUTURES for the week ended June 29, 2017


Cash-Settled Butter*

15.9816.7616.8816.9517.0617.1716.5616.1516.2416.4016.49

508489430430462365417117135176

95

91.10088.27589.25089.97591.12592.55094.10096.05098.275

1,043997950903556628641358217

242.675265.625268.925268.725264.500265.000250.000233.000231.500231.525

829912984

1,172900525469634529

0/3,818

285/6,649

17/6,005


5,5404,9024,1444,2103,0342,6642,527

814763656500506446124121

16.4415.8216.6016.7816.9716.9716.8216.5716.5016.4816.3716.4216.5916.7316.80

1,051/31,319

15.8916.7616.8816.9517.0717.1316.5616.1516.2416.4016.49

534489431430463365421117135176

95

35/3,850

91.37088.50089.90090.52591.40092.55094.12596.07598.200

1,195997943914556630640361223

91/6,836

240.650265.650268.500267.650264.600264.800250.000233.000231.500231.525

992913992

1,172900525469

634529

40/6,177

5,2314,8454,1254,1602,9822,6522,525

810746650498494434122109

16.3515.8816.6716.8717.0717.0616.9516.7016.6516.6516.5316.5316.6316.7316.80

537/30,733


16.3516.0516.9717.1617.2017.1216.9616.6816.6516.6516.5316.6016.6216.8116.83

5,2294,7774,0604,0962,9732,6072,506

800744650495494431118107

1,201/30,435

15.9816.6016.7716.8216.8916.9516.2616.0116.2716.4516.49

508489430430462365416117132176

95

3/3,814

91.10089.70090.50091.55092.80093.40095.20096.75099.150

1,0411,013

957866550632665335190

201/6,580

242.675263.425265.000265.000264.425261.825248.250233.000231.500231.525

829905979

1,162894526460

594125

186/5,945

--4,9564,2414,2363,0822,7012,564

813771662504510450130128

--15.7016.4116.5716.8216.8416.7516.5316.5216.5316.4416.4516.6216.8016.84

1,473/26,133

--16.7116.8416.8016.8816.8916.4216.0116.1616.2716.43

--489431437461365421117135176

95

10/3,321

--88.55088.90089.05090.00091.02592.50094.30096.875

--993943951599713700399224

870/5,917

--265.225267.500266.750265.025264.500250.000233.000231.500231.525

--914996

1,171920525469

634529

31/5,209

16.3515.8916.7716.9717.1217.1016.9816.7016.6516.6516.5316.6016.6216.7316.83

5,2254,8364,0914,1462,9762,6462,523

802746650496494431120107

835/30,637

15.9816.7616.8816.9517.0617.2216.5616.1516.2416.4016.49

508489430430462365417117135176

95

44/3,818

91.10089.20090.57591.57593.07594.02595.52597.850

100.000

1,0431,004

958872549637660337195

127/6,589

242.675266.675269.675268.900267.000265.000251.975233.000231.500231.525

829912981

1,172898525467634529

84/5,998

http://wowlogistics.com



Michael Dykes is president and CEO of the International Dairy Foods Association. He contributes this column exclusively for Cheese Market News®.

Perspective:Industry Issues

A common sense approachto dairy in school lunches

G U E S T C O L U M N I S T C M N E x c l u s i v e !

When you work on food and agricul-ture policy issues here in Washington, D.C., as I have throughout most of my professional career, the beginning of each new administration and a new Congress presents both challenges and opportunities. Who will the new president appoint to key positions at the Department of Agriculture, the Food and Drug Administration and other key agencies? Where will agriculture fi t in the policy priorities of the new Congress? Can we make progress on the issues that are important to our members?

For the dairy industry, early indica-tions are that both the Trump adminis-tration and the 115th Congress will take a common-sense approach to perhaps one of our most important nutrition issues — dairy’s value in schools.

This spring brought two positive developments for dairy companies that participate in the National School Lunch and School Breakfast Programs regarding milk options and sodium

reduction targets. Early in May Congress passed

and President Donald Trump signed an omnibus appropriations bill that included language to allow states to grant special exemptions from current USDA regulations to schools that want to offer 1 percent lowfat fl avored milk during the 2017-2018 school year. The omnibus appropriations bill also delays work on sodium-reduction guidance and maintains the current sodium levels established for school meals.

As one of his fi rst policy actions after being confi rmed Secretary of Agriculture, Sonny Perdue issued a proclamation in May that directs USDA to change existing regulations to provide schools with the discretion to serve 1 percent lowfat fl avored milk without a special exemption. It also said schools that meet sodium Target I for school years 2017–2020 will be considered compliant with USDA sodium require-ments. The secretary said these steps

are needed to give schools fl exibility in menu planning and to encourage student participation in nutritious and appealing meal programs.

The swift action taken by Secretary Perdue and congressional leaders, in-cluding Sen. Pat Roberts, is good news for all dairy as we work to achieve our shared policy goals.• A little background

To truly understand the importance of these actions, however, you need to look at the overly burdensome regulations that are currently in place and the un-intended consequences they produced.

USDA eliminated 1 percent lowfat fl avored milk as an option in school meals beginning July 2012, replacing it with fat-free fl avored milk along with offerings of lowfat and fat-free plain milk. In the fi rst two years after this popular option was removed from the program, 1.1 million fewer school students drank milk with their lunch. That translates into 187 million fewer half-pints of milk being consumed even though public school enrollment was growing. We clearly saw that when milk choices are limited, kids drink less milk.

Children and teens who do not drink milk at school fall short of get-ting the three servings of milk and milk products, including yogurt and cheese, recommended by the Dietary Guidelines for Americans. Less dairy means kids and teens are missing out on nutrients that are important for growth and development, like calcium, vitamin D and potassium. • Opportunities for all of us

School nutrition professionals wel-comed Secretary Perdue’s support for fl exibility as they strive to prepare and serve healthy meals that are appealing to students. These nutrition profession-als recognize the importance of practi-cal fl exibility under federal nutrition standards to help ease menu planning

challenges and appeal to diverse stu-dent tastes. After all, offering nutritious milk to school kids and teens does no good if they don’t drink it.

Fluid milk companies have stepped up to reformulate fl avored milks for schools that signifi cantly lowered sugar and reduced calories. Today, the major-ity of fl avored milk in schools has 150 calories or less with an average of 122 calories per 8 ounces. Added sugars have declined 55 percent in chocolate milk offered at school from 4.0 teaspoons in the 2006-2007 school year to 1.8 teaspoons in 2015-2016.

Cheese companies, too, have re-formulated to provide lower-fat and reduced-sodium cheese products to schools.

But the work continues. For the com-ing school year, we need to encourage states and school districts to imple-ment the new exemption program and to urge USDA to take immediate steps to change current regulations so that schools may serve lowfat fl avored milk, without a waiver, beginning in the 2018-2019 school year.

I believe that these early signals from the leadership in Congress and the Trump administration mean that dairy companies will be able to overcome burdensome rules to focus on providing products for school districts that are healthy, provide essential nutrients, and taste good.

It is rewarding to know that in some small way we are helping to give kids the chance to enjoy their favorite foods while getting the proteins, fats, calcium, vitamins and minerals they need to grow and learn. This is why I love doing the work that I do. CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily refl ect those of Cheese Market News®.

NEWS/BUSINESS

WASHINGTON — Citing the Trump administration’s policy to freeze pending new regulations and withdraw those it deems overly burdensome or unnecessary, the Natural Products Association (NPA) has fi led a formal petition requesting that FDA essentially shelve the Obama administration’s proposed fi nal rule on Nutrition and Supplement Facts labeling.

Natural Products Association is a trade association representing the natural products industry.

“We are heartened by the admin-istration’s pledge to weed out bad regulations that only end up costing consumers more money, and this one is exhibit A,” says Daniel Fabricant, Ph.D., president and CEO of NPA. “This rule was poorly-written, rushed, unneces-sary and should be shelved immediately. Labeling is extremely important, but

Natural Products Association wants to shelve Nutrition, Supplemental Facts labeling ruleslabeling changes posed by FDA must be material and based on scientifi c evidence or consumer empirical studies and not based on whim or the way the wind happens to be blowing.”

In a 25-page petition, NPA cites seven reasons it says FDA should stay the rule:

• Implementation of the fi nal rule is inconsistent with the administration’s regulatory agenda and directives;

• The food labeling fi nal rule pres-ents serious issues with respect to First Amendment protections for commercial speech;

• Inclusion of a Daily Value (DV) for added sugar in the fi nal rule but not in the proposed rule is an example of impulsive behavior to circumvent the public rulemaking process;

• FDA’s own consumer studies do not support the addition of added sugars to

the Nutrition Facts and Supplement Facts labels;

• Studies do not support FDA’s position to include added sugars as a new declaration in Nutrition Facts and Supplement Facts labels;

• The food labeling final rule’s change in how dietary fi bers are de-clared is unjustifi ed, unduly burden-some and does nothing to advance consumer health; and

• FDA failed to submit an economic impact analysis with this guidance to the Offi ce of Management and Budget, regarding the new cost burden to the food and supplement industries.

In addition to highlighting proce-dural and other fl aws in how the rule was promulgated, NPA says it disagrees with a new requirement that labels include daily values for “added sugars,”

since total sugars already are required on supplement labels.

“... If sugars somehow impacted health, the current declaration of total sugars in product labeling covers disclosure of this material fact,” the petition says. “FDA would have to show there is something fundamentally dif-ferent (chemically and physiologically) between an added sugar/carbohydrate and one naturally present in a product.”

NPA also challenges the rule’s new defi nition of dietary fi bers, saying it is selective, inconsistent and unsupported by scientifi c evidence.

“Notably absent from FDA’s list of ‘isolated or synthetic’ dietary fi bers are ingredients such as inulin and other plant fi bers,” the petition says.

To view the petit ion, v isit www.npainfo.org. CMN


NEWS/BUSINESSJune 30 2017 — CHEESE MARKET NEWS® 5

For more information please visit www.nelsonjameson.com

Coming SoonJune 2017

1-800-826-8302 nelsonjameson.com

Nelson-Jameson has been a leader in the food & dairy industry for 70 years

Nobody stacks up to us!

Request your FREE copy of our 2017-2018 Buyers Guide!

MARSHFIELD, Wis. — Nelson-Jameson Inc. this week announced the release of the 70th anniversary edition of its Buyer’s Guide.

This year’s catalog has expanded by more than 200 pages, including sig-nifi cant growth of the company’s color-coded and metal detectable programs among the thousands of other products for the food and dairy industry. Nelson-Jameson says its popular color-coded catalog is bound into the Buyer’s Guide once again, offering an additional 52 pages of color-coded products.

“How to Order” boxes, terminol-ogy and other guides are available

Nelson-Jameson debuts new Buyer’s Guidethroughout the catalog to help provide customers with a one-stop source to fi nd the right product for their applica-tions, the company adds. Overall, the new Buyer’s Guide includes nearly 900 pages of products, guides and technical information.

Nelson-Jameson’s product lines in-clude safety and personnel, production and material handling, sanitation and janitorial, processing and fl ow control, laboratory and QA/QC, and bulk packag-ing and ingredients.

For more information, contact cus-tomer service at 800-826-8302 or visit nelsonjameson.com. CMN

WASHINGTON — The U.S. Environmen-tal Protection Agency (EPA) recently an-nounced that it will delay implementation of amendments to its Risk Management Program (RMP), which regulates the dairy industry’s use of chemicals in refrigeration systems and wastewater treatment.

EPA says it delayed the amendments, set to take effect in June, until Feb. 19, 2019, to allow more time to address issues with the changes and to reconsider their implementation.

In comments submitted to EPA before

EPA announces delay in implementation of amendments to Risk Management Programthe decision, the International Dairy Foods Association (IDFA) called for the changes to be delayed and revised because they fall short of their intended goals of protecting communities from chemical accidents and would have a negative impact on the dairy industry.

IDFA has stressed to EPA its concerns that the changes could increase the threat of sabotage or vandalism and result in chemical accidents; impose signifi cant burdens on local emergency planning committees and local emergency respond-

ers; hinder the ability of dairy companies to fi nd qualifi ed, competent and indepen-dent auditors; and overlap with similar regulations issued by the Occupational Safety and Health Administration and the Department of Homeland Security.

“We’re pleased EPA has agreed to reconsider the last administration’s amendments to the RMP regulations,” says Emily Lyons, IDFA director of regu-latory affairs and counsel. “More time is needed to consider our industry’s many

concerns about the amendments and their implementation.”

Lyons notes there are ways to work to ensure the RMP is effective without causing undue burdens and potential harm to the industry.

“We look forward to working with EPA during the next 20 months to make sure our concerns are taken into account and to help fi nd better ways to be protective of the environment and communities,” she says. CMN

LUXEMBOURG — The European Court of Justice recently ruled that plant-based products cannot be mar-keted in the EU under dairy-specifi c terms such as “milk,” “cheese” and “yogurt.”

The judgment involves a case brought by German association Verband Sozialer Wettbewerb (VSW), whose responsibilities include combatting unfair competition, against German company TofuTown, which produces and distributes vegetarian and vegan foods including “Soyatoo Tofu butter,” “Plant cheese,” “Veggie Cheese” and other products.

In the June 14 judgment, the court said the law reserves the term “milk” only for milk of animal origin, and that legislation also reserves designations like “cream,” “chantilly,” “butter,” “cheese” and “yogurt” solely for prod-ucts derived from milk. The court’s decision prohibits TofuTown from using these dairy-specifi c terms in its labeling and advertising.

Offi cers from the National Milk Pro-ducers Federation (NMPF) last week met with their European counterparts

Plant-based items can’t use dairy-specifi c terms, according to EU high court ruling

in Denmark, Germany and France to discuss mutual issues of interest, includ-ing concern that imitation dairy foods are falsely marketing themselves in dairy terms, and NMPF applauded the European high court’s ruling. NMPF says it hopes this recent ruling will inspire FDA to enforce similar regulations on milk standards of identity in the United States.

“The European Court of Justice did just what we’re asking FDA to do: Uphold and enforce current standards of label-ing for milk and milk products,” says Jim Mulhern, NMPF president and CEO.

“It is encouraging and appropriate that the court soundly rejected the argument that consumers understand the inherent composition and nutri-tional differences between real dairy products and plant-based imitators,” Mulhern adds. “None of the fake milk products provides the same high-quality nutrition package as real milk. It is past time that manufacturers of these products, which are concoctions of powdered plant ingredients and water, abide by existing standards, whether in Europe or the United States.” CMN

MIDDLEBURY, Ind. — The Michigan Milk Producers Association (MMPA)launched Heritage Ridge Creamery as its Middlebury, Indiana, cheese plant’s new brand this week during a commu-nity Customer Appreciation Day event.

The new brand, replacing what has been known as Deutsch Kase Haus, refl ects both the heritage of the plant in its Amish community and the robust 100-year history of MMPA as a farmer-owned cooperative, MMPA says.

“With our acquisition of the Indiana cheese plant last fall, we were enthused by the opportunity to diversify our product portfolio and develop a brand owned by our dairy farmer members,” says Joe Diglio, MMPA general manager. “Our new Heritage Ridge Creamery brand demonstrates our commitment in expanding our presence within the dairy industry while embracing the legacy of the community.”

Customers visited the Heritage Ridge Creamery store and were served

MMPA launches new Heritage Ridge brandfree ice cream made with a steam-powered engine and participated in activities for children and store specials during the event.

The Heritage Ridge Creamery brand will market cheese produced at the Middlebury plant and sold in the on-site retail store. An online store is currently in development and expected to go live later this year at heritageridgecreamery.com. The facility produces Colby in ad-dition to Colby-Jack, Cheddar, Pepper-Jack and other fl avors.

MMPA notes the acquisition last year positions MMPA to further explore ex-pansion opportunities at the Middlebury plant in the future, starting with the launch of this new brand and internal improvements in plant operations.

The facility currently processes approximately 400,000 pounds of milk per day into longhorn and deli horn cheeses and is operated by MMPA’s wholly-owned subsidiary Middlebury Cheese Co. LLC. CMN

http://nelsonjameson.com



NEWS/BUSINESS

For more information please visit www.cbs-global.com

319 N. Broadway, Green Bay, WI 54303 o: 920.432.1166 800.366.5169

f: 920.432.5456 www.cbs-global.com

SELLING YOURYOUR DAIRY BUSINESS IS OUROUR BUSINESS

For more information contact: Bob Wolter: 312.576.1881

[email protected]

Dairy Industry Transaction Specialists serving the U.S. since 1979

Creative Business Services understands the dairy industry. We have sold many dairy and cheese companies throughout Wisconsin and the Country. We maintain a long list of qualified buyers and sellers who are actively looking to purchase or sell dairy companies. In fact, we have many great offerings to share with you.

Allow us to help you find just the right match for you.

Bob Wolter

EVENTS

EAST AURORA, N.Y. — Cornell Uni-versity will hold a Preventive Controls Qualifi ed Individual Training: Preven-tive Controls for Human Food course Aug. 1-3 in East Aurora, New York.

The 2.5-day course is instructed by the Cornell Dairy Foods Extension and the Cornell Institute for Food Safety based on the FDA-approved Food Safety Preventive Controls Alliance curricu-lum. It will fulfi ll FDA requirements for the Food Safety Modernization Act’s Qualifi ed Individual Training, according to organizers.

The course will include opportuni-ties for participants to review the fi nal rule and participate in classroom ex-ercises with aim to better understand the regulation. At the conclusion of

Cornell’s Preventive Controls Qualifi ed Individual Training course to be Aug. 1-3

the course, participants will receive a certifi cate issued by the Association of Food and Drug Offi cials certifying their training as a Preventive Controls Qualifi ed Individual.

The course is suited for federal and state regulators and inspectors, management, production, quality assur-ance/quality control and maintenance personnel.

After June 30, the course fee is $780 for those in New York and $850 for those out of state. The course will begin daily at 8 a.m.

For more information or to regis-ter, visit dairyextension.foodscience.cornell.edu/content/fsma-preventive-controls-qualifi ed-individual-training-buffalo-ny-august-1-3-2017. CMN

NEW YORK — Two companies with ties to New York State agriculture will sponsor attractions at the New York State Fair’s Dairy Products Building this year. The fair will take place Aug. 23-Sept. 4.

Tully’s Good Times restaurants will sponsor the milk sold at the fair’s Milk Bar, while Wegmans Food Market will sponsor the American Dairy Associa-tion’s Butter Sculpture, according to Troy Waffner, acting fair director.

“We are proud to bring these fi rst-ever sponsorships into the Dairy Products Building as they will support our long-term plan to re-energize this vital piece of the fair,” Waffner says. “We thank them for their investment and want fairgoers and dairy farmers to know that our goal going forward, as stewards of New York agriculture, is to fi nd new ways to link more New Yorkers to our great dairy products as we have done with other New York products at the fair.”

New York State Fair announces companies that will sponsor Milk Bar, Butter SculptureThis year, the Tully’s logo will appear

on each of the 7-ounce cups of white or chocolate milk sold at the Milk Bar.

All of the milk and buttermilk prod-ucts sold at Tully’s comes from Central New York dairy processor Byrne Dairy. Byrne Dairy also supplies the milk for the Milk Bar, New York State Agriculture and Markets says.

The Butter Sculpture is created and operated by Syracuse-based American Dairy Association North East, which represents dairy farmers in New York state, according to New York State Ag-riculture and Markets. The butter used to make the sculpture comes from New York sources.

This year’s sponsor of the Butter Sculpture, Rochester-based Wegmans, is a long-time partner with the fair.

“These new partnerships are an exciting addition to this year’s fair and to the Milk Bar, which is a long-standing tradition for fairgoers,” says Richard A. Ball, state agriculture commissioner.

“We are pleased to continue our mission of promoting the very best of New York agriculture and shining the spotlight on our dairy industry at the Great New York State Fair.”

Longtime fair vendors Wahid Akl, David Tadros and Michael Tadros will operate the Milk Bar on behalf of the fair in 2017, according to New York State Agriculture and Markets. There, milk will remain 25 cents a cup, and the new operators are looking at ways to speed up the historically long lines for milk. They also will take over operation of the yogurt vending booth with an eye toward diversifying the products available there.

This year’s efforts mark the begin-ning of a multi-year process to provide upgrades to the Dairy Products build-ing and its programming in order to strengthen the promotion of New York dairy products, New York State Agriculture and Markets says. In ad-dition, the fair is purchasing the Milk Bar equipment and all other Dairy

Products Building assets offered by the former operator, New York State Dairy Exhibits Inc.

New York State Dairy Exhibits Inc. gave the state notice earlier this year that it would no longer be able to uphold its partnership during the fair based on the organization’s inability to raise enough revenue to cover costs without the state’s acceptance of milk price increases, ac-cording to Bruce Krupke, secretary and spokesperson for the organization and part of its board of directors. (See “New York State Fair’s Milk Bar faces future price uncertainty” in the Sept. 9, 2016, issue of Cheese Market News.)

“We amiably came to the agreement that we’d discontinue our partnership,” Krupke says.

The New York State Dairy Exhibits Inc.’s board of directors will convene later this year to discuss the organiza-tion’s future steps, as concessions from its fair operations served as its sole source of funding, Krupke says. CMN

MADISON, Wis. — Entry booklets for the World Dairy Expo Championship Dairy Product Contest have been sent out to dairy plants throughout North America. The contest, sponsored by the Wisconsin Dairy Products Associa-tion (WDPA), is the only dairy product contest of its kind in North America, due to the wide variety of dairy products eligible for judging.

Last year’s contest had a record 1,200 entries, and this year’s contest promises to be even bigger since it will include a wider variety of dairy products, such as cheese, yogurt, ice cream, sour cream, sour cream based-dips, whipping cream,

Entry booklets now available for World Dairy Expo Championship Dairy Product Contestgelato, sherbet, buttermilk, nonfat dry milk, butter, cottage cheese, whey, fl uid milk and an innovative category, WDPA says.

In addition to awarding 76 fi rst-place category trophies, there will be three Grand Champions: cheese & butter, Grade A products and ice cream.

A company may submit as many en-tries as it wishes. All entry forms must be mailed to WDPA by July 21. Once a company has submitted its entry forms and fees, it must ship its contest entries during the week of Aug. 14-18.

All cheese, butter, yogurt, sour cream, cottage cheese, sour cream

based-dips, buttermilk, whipping cream and fl uid milk entries will be shipped to Midwest Refrigerated Services in McFarland, Wisconsin, while ice cream, sherbet, gelato, dried whey products and creative/innovative technology entries will be shipped to University of Wisconsin-Madison’s Babcock Hall in Madison, Wisconsin.

Judging will take place on the fol-lowing dates:

• Aug. 22 — cheese and butter.• Aug. 23 — Yogurt, cottage cheese,

sour cream, fl uid milk, buttermilk, sour cream-based dips and whipping cream.

• Aug. 24 — ice cream, gelato, sherbet, whey products and creative/innovative technologies.

Judging on Aug. 22-23 will be held at Madison Area Technical College in Madison. Judging on Aug. 24 will be at UW-Madison’s Babcock Hall.

The winning entries will be auctioned off Oct. 3 at the World Dairy Expo in Madison. A portion of the auction pro-ceeds will be used to fund scholarships awarded to students pursuing careers in the dairy industry, as well as sponsor-ship of the National Collegiate Judging Contest.

If a company did not receive an entry form or would like more in-formation, please contact WDPA at 608-836-3336 or email [email protected]. Complete contest information can be found at www.wdpa.net. CMN

http://cbs-global.com



MARKETContinued from page 1

For more information please visit www.ricedairy.com

WATCHMarket

A COMPREHENSIVE NETWORK OF DAIRY SERVICE PROVIDERS

ricedairy.com | vaultdairy.com | ricedairyinternational.com

embrace full-fat dairy products. Demand for butterfat is growing at a fast pace, and supply concerns continue to keep the market well supported, he adds.

Meyer says the “international mar-ket is on fi re” as slower European Union (EU) milk production and stronger cheese prices have resulted in lower butter output and cream availability.

“This has sent prices sharply higher with no end in sight,” he says.

Turn to WATCH, page 8 a

“Assuming we can maintain this trend, I believe the Class IV

market will gain more ground on the Class III market.”

Andrew FaulmanRICE DAIRY

Kurzawski says fat is going to be the driver moving forward this year, noting with butter topping $3 per pound in Europe last week, the shift in butter quantity demand has surprised and will continue to surprise the dairy industry.

Meyer says HighGround expects a pullback in the coming weeks — with price volatility becoming violent at times — but stronger global butter prices to remain throughout 2017 until a better balance can be found.

However, “old school fundamentals” are not as relevant today as new global fundamentals, he adds.

“Buyers here, particularly for but-ter, seem willing to pay a higher price. They’re no longer shifting to margarine. It means a lot less elasticity in the butter price,” Meyer says.

Andrew Faulman, fl oor manager at Rice Dairy, Chicago, adds, “Assuming we

CME cheese trading moves into the electronic ageCHICAGO — Twenty years ago, Cheese Market News marked “the end of an era” for the U.S. cheese industry. On April 25, 1997, for the last time, traders bid on the open outcry system in Green Bay, Wisconsin.

The following week, trading began at the Chicago Mercantile Exchange’s (CME) spot cheese market in Chicago.

At the time, industry experts were unsure of what trading on CME’s market would do. According to CMN, some be-lieved it could lead to more trading and potentially lower prices, while others be-lieved it could lead to less activity because the industry wanted to know who was trading and that lack of knowledge could lead to stagnant or slow-moving prices.

Mike McCully, owner of the The Mc-Cully Group LLC, New Buffalo, Michigan, notes that in the days of trading at the National Cheese Exchange (NCE) in Green Bay, there was no anonymity and the names of sellers and buyers were posted publicly.

“This led to various allegations of market manipulation, none of which were ever proved,” McCully says. “But the political uproar was enough to have the NCE close with the cash cheese market moving to the CME. While the level of anonymity increased, most market participants were still able to fi gure out who was doing the trading.”

McCully says while some people

liked this, most participants in the cash market did not for one reason or another. Over the years, some companies that

were regular participants on the CME spot market decided to stop.

Turn to CME, page 14 a

https://www.ricedairy.com



WATCHContinued from page 7

For more information please visit www.themccullygroup.com

Contact Mike for his latest dairy market

outlook report

The McCully Group has worked with many of the top dairy companies in North America as well as major multi-national food companies. Client engagements include:

• Business consulting• Procurement and

supply chain strategies• Commodity risk

management

Mike [email protected] 312-646-0361www.themccullygroup.com

STRATEGIC CONSULTING FOR DAIRY AND FOOD COMPANIES

WATCHMarket

can maintain this trend, I believe the Class IV market will gain more ground on the Class III market,” he says. “Keep in mind this change in what product is premium is happening during a time of year when milk supplies naturally come under pressure and demand for cheese picks up for the summer grilling season.”

Phil Plourd, president of Blimling and Associates, Madison, Wisconsin, says anxiety will continue to drive the bus in the butter market.

“Domestic and international sup-ply concerns combined with sustained end-user demand for forward cover will keep the butter market supported and excitable,” he says.

Plourd notes that despite ample cream supplies, U.S. manufacturers did not signifi cantly increase production in April (the latest USDA butter produc-tion data available).

“Production during the month dropped 4 percent year-over-year, limiting the March-to-April inventory build,” he says.

Meanwhile, in addition to butter price strength in Europe, the seasonal production lull in New Zealand has decreased the availability of fat out of Oceania, and continued higher butter prices at New Zealand’s Global Dairy Trade auction only are adding fuel to the “short fat” story, Plourd adds.• Cheese stocks

CME Cheddar prices, meanwhile, have come under some pressure lately as stocks continue to mount here in the United States, Kurzawski says. He notes much of the milk production strength in the past six months has been in heavy cheese-producing regions of the United States.

He does anticipate some volatility.“The price of U.S. cheese is a terrifi c

bargain on the world stage right now,” Kurzawski says.

Sara Dorland, managing partner with Ceres Dairy Risk Management LLC,

GLOBALContinued from page 1

Turn to STOCKS, page 9 a

“As has been seen in the past, lower prices can

spur additional merchandising and featuring to drive

demand and sales.”

Mike McCullyTHE MCCULLY GROUP

Turn to SUPPLY, page 9 a

from Mexico, Southeast Asia and the Middle East. The normal historical growth rate for world trade is 3 percent a year, and we’ve gone three years fl at.”

Bailey says Chinese import demand continues to underperform on expecta-tions, which has been surprising since the Chinese milk supply has struggled recently, down 4 percent in 2016 year-over-year.

“Because China imports were lower than expected in the fi rst half of 2017, and their supply was very weak, we think they may be holding off until prices are lower,” Bailey says. “We think purchas-ing will increase signifi cantly in the second half of the year.”

Levitt says if Chinese demand picks up, it could help global trade resume to normal growth rates.

“I think we’d expect to be back to that 2-3 percent historical growth trend. So much of that depends on China,” he says, adding that from 2008-2014, China accounted for 45 percent of the growth in global dairy trade. “Any growth we see forward will be contingent on China continuing to carry most of the weight there. They just have this disproportion-ate effect on commodities, and dairy’s no exception.”

In its Dairy Quarterly, Rabobank says China is likely to increase imports by about 35 percent year-over-year in the second half of 2017, making China’s full-year import growth 19 percent year-over-year for 2017.

Demand in developing markets is ex-pected to remain weaker through the rest of the year, Bailey says, as geopolitical challenges likely will remain. However, in developed markets, particularly the United States and EU, demand is ex-pected to remain strong and will scrape

off some of the global surplus. • Supply side

During the fi rst part of this year, global supply underwent a much-needed contraction, shrinking about 0.5 percent Bailey says, which helped drive prices a little higher.

“Producers in New Zealand and Australia saw low margins for the past couple of years and culled their herds,” he says. “In Latin America, farmers also were impacted by low farmgate prices and geopolitical challenges ... in the

http://themccullygroup.com



For more information please visit www.highgrounddairy.com

• HighGround Dairy is an Independent Introducing Brokerage that allows clients to choose from a variety of clearing firms

• We adhere to the strictest confidentiality standards on behalf of our customers

• More than 15 years of experience in dairy commodity risk management

• Specializing in risk management education and developing customized hedging strategies and programs to meet client needs

Learn about our high-touch approach to client relationships and our commitment to meeting and exceeding your business and hedging goals.

Visit our website today and sign up for a free trial of our comprehensive dairy market intelligence package.

www.highgrounddairy.comDirect: 312-604-3080 | Toll Free: 877-206-4250

Disclaimer: HighGround Dairy is a division of HighGround Trading LLC (“HTG”). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves risk of loss and is not suitable for all individuals. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

New

Dairy Hedging ExpertiseDedicated to providing high-quality education, market analysis& brokerage execution to buyers and sellers across the globe.

Now Trading NZX & EEX Derivatives

Eric MeyerPresident

WATCHMarket

Seattle, says high cheese stocks do not seem to heavily impact prices lately. She notes this is due in part to the fact that much of that stock likely is cheese for aging programs versus fresh cheese.

“It’s easy for markets to discount the stocks reports — they refl ect inventory in aging programs,” she says. “The CME trades fresh cheese. Tightness in the fresh cheese market does not always coincide with lower stocks reports.”

She adds she also would not disre-gard the possibility of cheese prices near $2 in the second half of the year; however, it likely won’t be a straight path up.

Mike McCully, owner of The McCully Group LLC, New Buffalo, Michigan, says he anticipates cheese stocks will stay relatively high throughout this year, but on a days-of-supply basis, improv-ing demand should pull stocks down to more normal levels.

STOCKSContinued from page 8

Turn to DEMAND, page 10 a

“Exports should be higher as well, but the volumes are small relative to domestic demand,” McCully says. “As has been seen in the past, lower prices can spur additional merchandising and featuring to drive demand and sales. The retail grocery space has seen aggressive

“Buyers here, particularly for butter,

seem to be willing to pay a higher price. They’re no longer shifting to margarine. It means

a lot less elasticity in the butter price.”

Eric MeyerHIGHGROUND DAIRY

Turn to EXPORTS, page 12 a

SUPPLYContinued from page 8

EU, lower milk prices drove margins lower, and they saw a slowdown in supply growth. The Dutch had new regulations for phosphate, which had been a factor for supply there. Also the EU supply reduction scheme removed about 1 million liters of milk, which was another drag to supply.”

The United States, Bailey notes, was one of the only markets that continued to grow, buoyed by strong domestic de-mand, higher margins and good weather.

Given the current high milkfat and butter prices, Bailey says the industry hasn’t seen as much of a response at the farmgate level as one might expect as far as increasing fat components.

“The mentality of producers in the states has been more effi ciency, low-cost output versus a component-based output,” he says, adding that the industry over the last 10 or so years has built itself around a more protein-based output. “Now we need to balance that and get more fat out on the market, but this could take years not months to change as it comes down to changing the herd genetics.”

This can be done, Bailey explains, by adjusting feed in the short term to produce a higher milkfat percentage, and in the longer term working with genetics and different breeds.

USDEC notes in its global outlook that global production now is back in

expansion mode, and in March and April, production from the top fi ve production markets was up 1.1 percent year-over-year. USDEC adds that farmer confi dence is high as weather has been decent in supply regions and input costs are expected to remain low, setting up a scenario of strong supply growth from major suppliers in the second half of the year that could increase close to 2 percent, generating close to 200,000 metric tons of product for the export market. However, USDEC says world import demand would have to increase an ambitious 5 or 6 percent year-over-year to absorb that extra volume. • Current events

Levitt says there is lots of opportunity around the world for dairy exports in areas like the Middle East/North Africa and cheese exports to China, but U.S. exporters aren’t necessarily taking ad-

vantage of this growth potential since they tend to gravitate toward markets such as Mexico, which has both a prox-imity and tariff advantage.

While Mexico remains by far the top U.S. dairy export destination, Levitt notes that political tension and uncer-tainty around NAFTA has prompted some Mexican buyers to look into diversifying their supply a bit.

“From a business standpoint, it makes sense to start grooming other relationships in case the rhetoric heats up,” Levitt says, adding that this could be problematic for U.S. sales. “Even if, let’s say they decide to take 10 percent of cheese buying from the U.S. and buy from the EU instead. Then 12,000 tons of U.S. cheese would have to fi nd a home somewhere else. Even if at the margins

http://www.highgrounddairy.com



For more information please visit www.relco.net

WATCHMarket

USA | The Netherlands | New Zealand | Brazil | +1 320.231.2210 | www.relco.net

T H E R E L C O ® A D V A N T A G E

The weather variableBy Jon Davis, meteorology team lead for Riskpulse, based in Austin, Texas.

Riskpulse monitors weather and climate conditions around the globe and ap-plies that to the agricultural, energy and supply chain risk management sectors.

So far this decade, there have been distinct trends in summer weather conditions across the United States as well as the other mid-latitude areas of the Northern Hemisphere. The trends have included warmer temperatures and an increase in rainfall across this region of the globe. The warmer and wetter trend has been in place during the past three to four decades and accelerated during the current decade. Last summer (June through August) across the United States was the fi fth warmest in the past 122 years of offi cial records. The 2016 summer precipitation ranking was 99 on the 1-122 scale where 1 is the driest summer and 122 is the wettest.

The reason behind the warmer and wetter trends of late is elevated (warm)

sea surface temperatures (SSTs). The map above portrays the current SST anomalies, which for much of the globe are warmer than normal. The increase in global water temperatures has been steadily increasing since the middle of last century. The graph above portrays the average temperature of the global oceans for every January through April period since 1950. The steady increase in ocean temperatures has caused an increase in atmospheric temperatures and an increase in rainfall. In other words, this trend has added heat and moisture to the atmospheric equation.

The warmer and wetter trend has, for the most part, been favorable for agricul-tural production especially in the row crop areas of the mid-latitudes. Global

production of most grains and oilseeds has been at record levels during the past few years. So, from an agricultural standpoint, the warm and wet conditions have been

favorable for production. As for livestock, the warmer and wetter

summer trends have been detrimental as it Turn to WEATHER, page 11 a

competition this year, and that could help move additional cheese as well.”• NAFTA and the nonfat market

As a new administration settled into the White House earlier this year, the impacts have been felt most strongly in the nonfat milk market. President Trump’s comments on withdrawing from NAFTA caused some uncertainty for those who export to the region, although a full withdrawal from the agreement recently has been replaced with plans for renegotiation.

Faulman notes with Mexico being a large importer of U.S. dairy products, tensions between the U.S. and Mexican governments in late January seemed to shake up the U.S. nonfat market.

“It was that last week in January with tensions between Mexico and the new U.S. administration where the nonfat price moved below $1 on its way to 80 cents,” he says. “Since then, we have recovered a substantial amount of that break. However, we are still trading sub-$1.”

Meyer says despite initial fears of Mexico pulling back on purchases due to the rhetoric coming out of Washing-ton, export numbers to the region have been good.

He adds, however, that he thinks long term, it has awoken a lot of Mexican buyers to the idea of not solely relying on the United States as a supplier.

McCully says U.S. nonfat dry milk prices are forecast to slowly move higher, approaching $1 once again.

“Demand has increased in recent months, but some of the buying was due to replenishing stocks,” he says. “This could limit further upside if buyers work off inventories instead of buying new product.”

McCully adds that “the big question”

Turn to NDM, page 11 a

DEMANDContinued from page 9

“Tightness in the fresh cheese market does not

always coincide with lower stocks reports.’”

Sara DorlandCERES DAIRY RISK MANAGEMENT

http://www.relco.net



WATCHMarket

For more information please visit www.kellertec.com

Ultra-Pure Lactose™ vs Conventional Lactose System

Comparable capital and operating costs

Virtually no sugar water to recycle: Lower energy costs Higher yields Higher evaporator and

crystallizer capacity Potential elimination of polyphosphate

Superior product quality: Pure, snow-white powder Clear and colorless in solution Low bacterial counts Premium price for edible product Pharmaceutical quality

901 Main StreetP. O. Box 158

Mantorville, MN 55955507.635.5600

[email protected] www. kellertec.com

TypicalEdible Lactose

Ultra-Pure Lactose™

(Both at 40% TS)

WEATHERContinued from page 10

has increased animal stress and reduced production for dairy cattle. This is due to a combination of a signifi cant increase in the warm, humid nights as well as heat stress during the periodic heat waves that develop more frequently.

The upcoming summer looks to continue this warm and wet bias for the United States as well as other areas such as Europe, Ukraine and central Asia. This portends to more favorable weather versus detrimental weather for the agricultural belts in the Northern Hemisphere. This does not mean that some regions won’t have issues with heat and dryness but rather, widespread major crop failures are not expected during the upcoming growing season.

There are some areas that need to be monitored for potential heat and dryness issues during the summer. These include:

• U.S. Northern Plains — Recent hot and dry weather has impacted this area and started to severely stress the spring wheat, oats and small grain crops in this region. This is a region that will likely continue to have some issues with crop stress and declining yields.

• Eastern Europe/Ukraine — While conditions are fi ne as of early June, the longer range computer models indicate that this area will be favorable for a ridge of high pressure to develop during the heart of summer. As a result, this increases the odds of heat and dryness issues during the growing season. The primary crops impacted are wheat, corn and other oilseeds.

• Australia — This is the only agricul-tural area in the Southern Hemisphere that is on our “watch list.” Recent and continued dryness in both the agricul-tural belts of southeast and southwest Australia have been very persistent

and show all signs of continuing. This is mainly a winter wheat and pasture issue as Australia heads toward, and through, the heart of winter.

As for the impact on animals this summer, the continued trend of warmth and wetness this summer will produce another season of enhanced heat stress. For the dairy cattle, the result will be decreased milk production in those ar-eas that are most impacted by extended periods of heat and humidity. To varying degrees, we expect some impacts in the United States, Europe and Asia this sum-mer as animals are stressed.

Important global regions that we believe have little agricultural risk include India, Southeast Asia, southern China, Western Europe and most of the central and eastern U.S. agricultural belts. Hence, we see no sign of large scale crop problems in these locales.

Finally, one of the reasons for the lack of severe agricultural problems stems from what is occurring in the central equatorial Pacifi c. Fears of an El Niño event (period of warmer than normal sea surface temperatures) earlier this year have waned, and we do NOT expect this event to be any more than a weak one — if that. Because of the lack of a strong or moderate El Niño episode, we do not see heightened crop risk in sensitive areas such as India, Southeast Asia, southern China and New Zealand.

All in all, the summer looks to feature a lack of serious global agricultural is-sues although there are certain areas to monitor as mentioned above. As for animals and forthcoming production, the trend of enhanced heat and humidity will lead to increased risk of animal stress and decreased milk production. CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily refl ect those of Cheese Market News®.

is what will the EU do with the massive stockpile of skim milk powder in inter-vention stocks.

“I believe this has been an overhang on the market, but as the inventory ages, its ability to be used in human applica-tions becomes less, so the price impact is likely lessened as well,” he says.

Plourd says he anticipates that nonfat buyers will continue to pick up second-half coverage, pressuring fresh prices higher in the meantime. However, sustained oversupply and seasonally stronger Oceania output will cap sig-nifi cant upside momentum, he adds.• Milk production, margins

The outlook for U.S. milk production remains strong for the second half of 2017, Plourd says. He notes with cow numbers up and the herd at its highest

level in more than 20 years, there is ample supply-side power to keep milk fl ows growing.

The regional divide persists, with weakness along the West Coast but con-tinued expansion elsewhere, he adds.

High milk production coupled with favorable producer returns indicates the global market needs milk, Kurza-wski says.

“Common sense says we’ll have about a 2-percent rise in production for 2017,” he says.

However, milk production may begin to ease over the long term, particularly with continued consumer concern over the use of hormones in milk and more companies moving away from using rbST in their production methods, Kurzawski adds, noting this likely will slow production a bit.

Meanwhile, heat also is beginning to be a factor, he notes.

NDMContinued from page 10

Turn to PRODUCTION, page 12 a

http://www.kellertec.com



WATCHMarket

For more information please visit www.pazingredients.com

PRODUCTIONContinued from page 11

Plourd agrees, noting hot and humid spells have the potential to knock back milk production.

He notes forecasts show a bias to-ward warmth over the next few months, and crop progress also will factor into the mix.

“It’s rare that markets don’t see at least one weather scare,” he says.

McCully says with average weather, however, another large crop of corn and soybeans is anticipated this year, which will put downward pressure on grain and feed prices.

“Overall, U.S. dairy farm margins are recovering from the dip in spring and are expected to remain positive through the rest of the year,” he says.• Looking ahead

Meyer notes that China, a larger player in the domestic dairy price surges of 2014 and 2015, seems to have been forgotten, but he says the country is beginning to re-enter the market.

“China is back in growth mode,” Meyer says, noting the country may not buy at the levels seen a few years ago, but demand is picking up. In addition, China also is buying more fi nished goods versus just milk powders, including cheese and cream — a change “the world needs to take note of.”

And with plenty of milk in 2017 and enough inventory to handle incremental exports opportunities if they arise, par-ticularly for cheese, the United States is well positioned to meet export demand, he adds.

Plourd agrees, noting with U.S. but-ter prices lagging below international values, exports of butter also are back on the table.

“That brings us back to end-user anxiety,” he says. “Buyers are becoming increasingly less patient ... less willing to wait for market breaks to get coverage bought. Without a slug of bearish news to calm supply fears, the market could remain jittery.”

Faulman says he anticipates butter

exports to pick up in the Middle East/North Africa region in the second half of the year, but exports to Europe likely will be limited due to butter specifi ca-tion differences between the United States and EU.

He adds that butter supplies likely will remain tight.

“At current prices, I don’t see sup-ply catching up to demand,” he says. “I believe it will take a shift in prices to the upside before we start to see supply/production catch up to current demand.”

Turn to AHEAD, page 16 a

EXPORTSContinued from page 9

we lose a little bit of share, it’s a problem. One-fourth of all our dairy exports go to Mexico. If we lose 10 percent of Mexico’s market, we would lose 2.5 percent of our total export.”

Bailey says though Mexico may be eyeing other market suppliers, Rabobank does not foresee any near-term changes in the U.S.-Mexico trade relationship.

“As we’ve seen from history, it takes years to negotiate agreements. Mexico is just over 80 percent self-suffi cient and very dependent on the United States. That’s unlikely to change, due to a lack

of access from competing markets,” Bailey says. “In our view, we’re looking at a NAFTA renegotiation where it will be status quo with Mexico in terms of dairy. I think Canada may be pressured more on dairy than in the past, though.”

U.S. exports to Canada have been a concern recently as Canada earlier this year implemented a new domestic pric-ing structure that makes ultrafi ltered milk and other dairy ingredients from the United States less competitive for Canadian buyers. This comes as U.S. processors had ramped up production and exports of ultrafi ltered milk for the Canadian market, growing from an average of 18 million pounds a year from 2010-2014 to 106 million pounds exported to Canada in 2016.

“If things go the way they look like they will go, volumes won’t be anywhere near that going forward,” Levitt says.

However, he adds that there are a lot of other dairy products the United States sells to Canada and the rest of the world, and other prospects look good for the future of dairy exports.

“On paper, margins in the U.S. are pretty good. Farmers are still adding cows. We’re still going to have milk supply come on because corn is cheap,” he says. “For U.S. exporters there would seem to be a decent opportunity. Prices are competitive now. If people take care of business, we should do pretty well.”

On a global level, Bailey describes the market as “in a state of purgatory.”

“Looking forward, I don’t see a lot of

upside,” he says. “Skim milk will have to clear before recovery ... there are a few upsides there, but I don’t think any of those upside dynamics could clear the hurdle that is EU intervention at this point.”

Bailey adds that there is likely to be a continuation of the butter/milkfat-pro-tein spread, with correction potentially beyond the 12-month horizon.

“There also will be a continuation of modest margins for most producers. While this won’t push them out of the market necessarily, it’s not an inviting industry at this point,” he adds. “We could see a continuation of consolidation of those willing to stay in it for the long-term — that could be both on the producer and processing side — as participants look for margins through scale.” CMN

“Domestic and international supply concerns combined

with sustained end-user demand for forward cover will keep the

butter market supported and excitable.”

Phil PlourdBLIMLING & ASSOCIATES

Value Added

Specializing in Non GMO WPC 80 product (hormone free & grass fed)

Over Two Decades of Experience!

[email protected] • www.pazingredients.com • 949.378.0815

• Organic Nonfat Dry Milk & Butter • Acid Casein• Butter (Imported & Domestic)• Caseinates (Sodium, Calcium, Potassium)• Dry Blends (Powder & Agglomeration)• Lactalbumin

• Milk Protein Concentrates (40%-80%)• Milk Protein Isolates• Rennet Casein• Whey Protein Concentrates (34%-80%)• Whey Protein Isolate

INTEGRITY • DEDICATION • SERVICE

YOUR PREMIER SOURCE FOR

Quality Ingredients & Functional Dairy Products

YOUR PREMIER SOURCE FOR


YYYYYYYYYYYYYYYYYYOOOOOOOOOOOOUUUUUUUUUUURRRRRRRRRRRRRRR PPPPPPPPPPPPPPPPRRRRRRRRRRRRRREEEEEEEEEEEEEEMMMMMMMMMMMMMMIIIIIIIIIIEEEEEEEEEEERRRRRRRRRRRRRRRR SSSSSSSSSSSSSSSSOOOOOOOOOOOOOOUUUUUUUUUUURRRRRRRRRRRRRRCCCCCCCCCCCCCCCCEEEEEEEEEEEE FFFFFFFFFFFFFFFFFOOOOOOOOOOOOOOORRRRRRRRRRRRRRR YYYYYYYYYYYYYOOOOOOOOOOUUUUUUUUURRRRRRRRRR PPPPPPPPPPPPPRRRRRRRRRRREEEEEEEEEEEEMMMMMMMMMMMMIIIIIIIIEEEEEEEEEERRRRRRRRRR SSSSSSSSSSSOOOOOOOOOOUUUUUUUUURRRRRRRRRRCCCCCCCCCCEEEEEEEEEEE FFFFFFFFFFFFFOOOOOOOOOORRRRRRRRRRRYOUR PREMIER SOURCE FOR


http://www.pazingredients.com/index.html



For more information please visit www.arenacheese.com

NEWS/BUSINESS

Come to the experts when you’re talking

Separators!

We have been connecting the industry to the right separators for over 85 years!

Honest ideas; fair pricing; grassroots experience. It’s just good business.

Building a better bottom line by offering: • Separators • Installation & Start Up• Clarifiers • 24/7 Trouble Shooting• Centrifuges • Family Held Since Early 70s• “Unbeatable,” Competitive Pricing

Please call today for a custom quote. Dave Lambert at 920.863.3306 or Dick Lambert at 920.825.7468

GREAT LAKES SEPARATORS, INC.E1921 County Road J • Kewaunee, WI 54216 • 920.863.3306 Email: [email protected] • Fax 920.863.6485

PLANT MANAGERArena Cheese, Inc. is located in South Central Wisconsin, approximately 30 miles west of Madison, Wisconsin. Arena Cheese is a growing cheese manufacturer of award winning cheeses serving recognized regional and national grocers and distributors.

Responsibilities will include:• Direct and Coordinate production, maintenance and warehouse functions• Understand and implement continuous improvements for GFSI (BRC) compliance• Problem solving and trouble shooting• Planning, assigning and directing work• Training and developing personnel

If interested in this position, please forward resume to: Arena Cheese Inc., P.O. Box 136, Arena WI 53503 or email to [email protected]

Visit our website www.arenacheese.com

For more information please visit email [email protected]

HELP WANTED 7• HELP WANTED 7•

EQUIPMENT 1• EQUIPMENT 1•

C L A S S I F I E DA D V E R T I S I N G

COLUMBUS, Wis. — Sassy Cow Creamery, whose products are sold at retailers throughout Wisconsin and in northern Illinois, recently issued a voluntary recall of some of its fl uid milk and ice cream products due to possible improper pasteurization.

The fl uid milk under recall includes traditional, organic, whole, 2-percent, 1-percent, skim, half and half, heavy cream, whole chocolate and one-percent chocolate in gallons, half gal-lons, quarts, pints and half pints with sell by/best by dates of June 22-July 13. The ice cream recalled includes all fl avors in 3-gallon, 2.5-gallon, half gal-

Sassy Cow Creamery recalls milk, ice creamlon and quart sizes with best by dates of 10/21/17-1/23/18 and 3/21/18-6/23/18.

Sassy Cow says during routine inspection of its equipment, it was discovered that it could not prove with 100-percent certainty that every ounce of its products was fully pasteurized.

“We always want to error on the safe side out of care and concern for our customers as well as our peace of mind in the products we produce,” the company says in a statement on its website. “Our creamery has been working full time to replace all of the products we have issued a recall for as quickly as possible.” CMN

WASHINGTON — FDA has published a guidance for U.S. milk product, in-fant formula and seafood manufactur-ers interested in exporting to China. The guidance includes information on the new registration procedure under the memorandum of understanding (MOU) signed between the United States and China earlier this month. (See “United States, China sign agree-ment to exchange information, pro-vide access to market” in the June 16, 2017, issue of Cheese Market News.)

Available at www.fda.gov/Food/Guid-anceRegulation/GuidanceDocuments-

FDA publishes guidance on exports to ChinaRegulatoryInformation/ucm378777.htm, the guidance explains what information exporting establishments should provide to FDA to register under the new arrangement. FDA will use the information received to establish and update a list of eligible exporters in a manner consistent with the MOU, and the agency will update the list of establishments and products four times per year.

The MOU can be viewed at www.fda.gov/InternationalPrograms/Agreements/MemorandaofUnderstanding/ucm563361.htm. CMN

WASHINGTON — To celebrate the con-tinued culture of food safety across the industry, the International Dairy Foods Association (IDFA) is now accepting nominations for its 2018 Food Safety Leadership Award.

The 2018 award will honor an em-ployee from among IDFA’s membership who had demonstrated outstanding leadership in enhancing food safety, according to IDFA.

“As the rolling implementation of the landmark Food Safety Modernization Act continues this year, IDFA and our mem-

International Dairy Foods Association seeks Food Safety Leadership Award nominationsbers believe that maintaining a culture of food safety across the dairy industry has never been more important,” says John Allan, vice president of regulatory affairs and international standards, IDFA, who will oversee the selection process. “We know there are many deserving individu-als within our membership, and we look forward to recognizing one of these food safety leaders and highlighting his or her contribution to the industry.”

To qualify, the individual must be a current or recently retired employee of a dairy foods company that is a member

of IDFA or one of its constituent organi-zations: the Milk Industry Foundation, the National Cheese Institute and the International Ice Cream Association. The company must process, manufacture, market or distribute dairy products in North America, and the selected individ-ual will have demonstrated outstanding leadership and important contributions to the fi eld of food safety, IDFA says.

The winner and up to two guests will receive free registration, airfare and hotel accommodations for Dairy Forum 2018, where the winner will be

recognized during an awards ceremony. Dairy Forum 2018 will be held Jan. 21-24 in Palm Desert, California.

IDFA presented the inaugural award last year to Cornell University’s Dairy Food Extension Team. The award will alternate between honoring companies or groups in odd years and individuals in even years.

IDFA is accepting nominations through Sept. 8, 2017. The criteria for nominations are available at www.idfa.org/about-idfa/awards-recognition/food-safety-leadership-award. CMN

WASHINGTON — A petition recently submitted to USDA requests a national hearing to consider a new milk pricing formula.

The petition, which was submitted by the Pennsylvania-based Progressive Agriculture Organization (Pro-Ag) and is supported by, among others, the Na-tional Family Farm Coalition, National Grange and Family Farm Defenders, calls for abolishing the current federal order pricing formulas and replacing them with a new pricing formula to be developed that would consider the dairy farmers’ cost of producing milk.

“We are more than aware that every dairy farmers’ cost of production is dif-ferent,” the petition states. “However, we must remember that under the pres-ent pricing system, this same diversity in dairy farmers’ cost of production is different but the value of milk used for

Petition from ag groups requests national hearing to consider new milk pricing formulamanufacturing milk into dairy products is the same in all federal milk market-ing orders.”

The petition urges USDA to place a floor price under milk used to manufacture dairy products at $20 per hundredweight.

This could be done in two incre-ments, petitioners say. For the long term, the petition urges USDA to call a national milk hearing in locations where the average dairy farmer could attend.

The petition proposes four solutions:• Abolish the present pricing for-

mula used to price milk used to manu-facture dairy products;

• Consolidate the three classes of milk to manufacture dairy products into one class, a new Class II. The Class II price would be determined by using the national average cost of producing milk;

• Maintain the existing method of

determining the value of Class I milk in all federal orders; and

• Develop a new method to price milk.

USDA has 30 days to either deny, is-sue an action plan or request additional information for any petitions seeking to

amend a current federal order.In all probability, USDA can only

call a hearing for dairy farmers that ship their milk to bottlers or proces-sors that are regulated by one of the 10 federal milk marketing orders, notes the petition. CMN

mailto:[email protected]

https://www.arenacheese.com



For more information please visit www.ivarsoninc.com

WATCHMarket

Before the CME: A look back at U.S. cheese tradingCHICAGO — While CME daily dairy trading is moving into the digital age, the practice wasn’t always electronic, or even held daily.

The fi rst so-called “dairy board” was established in 1873, and one was established in Plymouth, Wisconsin, in 1879, according to “The Wisconsin Cheese Exchange,” an article written by then-Wisconsin Cheese Exchange President R.W. Leffl er and published in the July 1954 issue of the Journal of Dairy Science.

Essentially, these dairy boards were “no more than a marketplace where buyers and sellers of cheese might get together,” Leffl er wrote.

The boards saved time for cheese buyers who no longer had to travel from cheese factory to cheese factory in order to obtain cheese, Leffl er wrote.

After some time, cheesemakers saw an opportunity to improve their position by disposing of cheese through a form of auction, he adds.

“The cheesemaker or other factory representative would list his cheese upon a blackboard provided for that purpose, and then call for bids,” Leffl er wrote. “Both the offers and bids were termed ‘calls’ and the dairy board soon began to be termed ‘call boards.’”

The call board method trading was adopted at Plymouth in 1900.

Leffl er notes as time went on, buyers and sellers began developing contracts in which a dealer would agree to take the entire output of a factory for a speci-fi ed period of time, usually a year. They would agree to a price that was based upon prices paid week to week on some specifi ed call board in which both the

dealer and the cheesemaker had some confi dence, he wrote.

This eventually led to dealers some-times having too much cheese, and they too had the need to sell it, he adds.

In 1918, the Wisconsin Cheese Exchange was formed. In many ways, it was like other call boards.

“In one important aspect, how-ever, the Wisconsin Cheese Exchange marked a departure from its prede-cessor board, the Plymouth Central Call Board of Trade, and from other call boards,” Leffl er wrote. “Dealers for the fi rst time were accorded equal privileges with the cheesemakers. They were permitted to become members of the exchange, to sell as well as buy cheese upon it, and to have a voice in its management.”

In 1956, the exchange moved from

Plymouth to Green Bay, Wisconsin, and in 1975, it became known as the National Cheese Exchange.

Years later, due to pending Wisconsin legislation that could have prohibited trading against interest, the decision was made in 1997 to move the exchange to the CME in Chicago.

In 1998, CME’s board of directors then approved changing the cash cheese market from a weekly market to a daily market. Daily trading for cash cheese at the CME commenced Sept. 1, 1998.

According to an Aug. 7, 1998, ar-ticle in Cheese Market News, a driving factor in the change was the desire to increase activity in the futures markets. Many daily trading advocates also said trading every day could help eliminate dramatic price swings often seen during weekly trading, according to CMN. CMN

CMEContinued from page 7

Two decades later, the CME Group is transitioning its CME Dairy Spot Call for daily price discovery in physical dairy markets to an electronic, transaction-based auction, accessed through the CME Direct Auction Platform. This is replacing the physical spot market held via a limited open outcry session on the

company’s Chicago trading fl oor.Dairy products were transitioned to

the platform in three phases, with nonfat dry milk (NDM) starting in January 2017, butter in April and cheese this week.

“In response to requests from cus-tomers and dairy industry participants, we will begin to transition these markets to our transaction-based auction plat-form accessed through CME Direct,” Tim Andriesen, CME Group managing director of agricultural products, said

in announcing the change last fall. “We believe this will further enhance the transparency of spot dairy prices, while expanding access to a broader set of commercial customers, brokers and other physical market participants.”

McCully says the request from the dairy industry to move to electronic trading is a natural evolution in markets as witnessed in dairy futures as well as other fi nancial markets.

“One of the main reasons to move to

electronic trading is to improve anonym-ity.” he says. “The transition of NDM and butter spot markets to electronic trading has been positive for volume and participa-tion and the same is expected for cheese.”

The Dairy Spot Call is unique to CME Group and assists its customers with physical dairy market price discovery.

In an interview with CMN following the announcement last fall, Eric Meyer, presi-dent of HighGround Dairy, Chicago, said that as the market is evolving and chang-ing, taking things electronic opens the market to a broader group of participants.

Meyer notes that in this new model, trading will be completely anonymous, whereas previously, those present on the trading fl oor were able to observe the tenor and psychology of the market. Now trading will be identical for all participants across the board.

He adds this could change the behav-ioral dynamic of buying and selling cheese.

“There are some unknowns, but this is the direction CME is going, and we are going to embrace it and make sure our customers understand it,” he says.

Brian Rice, founder/principal of Rice Dairy, Chicago, told CMN that although support to digitize the CME spot call was not unanimous among all stakeholders, they all understand the extraordinary value that market provides to the dairy industry.

He adds that more industry partici-pation will enhance price discovery and sharpen the signal those prices send to the industry.

“Why does this matter? Price inef-fi ciencies serve as a fi nancial drag, challenging capital allocation decisions along the whole value chain,” Rice says.

Turn to ELECTRONIC, page 16 a

http://www.ivarsoninc.com



EXPANDContinued from page 1

NEWS/BUSINESS

For more information please visit www.cheesemarketnews.com

*

CHEESE MARKET NEWS® SUBSCRIPTION FORM:1 Year Rates (52 issues) 2 Year Rates (104 issues) ELECTRONIC 1 Year Rates (52 issues)

$145 (2nd Class) $200 (1st Class/Canada) $205 (2nd Class) $325 (1st Class/Canada) $145 (Email Only; Without Mail Service) $330 (International) $525 (International) $210 (Email With 2nd Class Mail Service Only)

Please contact me for complete advertising details

NAME: ____________________________________________________

TITLE: ____________________________________________________

COMPANY: ________________________________________________

ADDRESS: ________________________________________________

CITY: _________________________ STATE: ____ ZIP: ___________

PHONE: ( ______) _____________________ DATE: _______________

EMAIL (Required): _________________________________________

METHOD OF PAYMENT (U.S. Funds Only):

Bill Me PAYMENT Enclosed

Payment by Credit CardVISA MasterCard American Express

CARD NUMBER: ___________________________________________

EXPIRATION DATE: ________________________________________

SECURITY CODE: _________________________________________

SIGNATURE: ______________________________________________

For immediate service, call (608) 831-6002, email [email protected] or fax your subscription to (608) 288-9093.SUBSCRIBER SERVICES • P.O. Box 628254 • Middleton, Wisconsin 53562

E-mail: [email protected] • Website: www.cheesemarketnews.com

More News, More Solutions, More Choices!

Yes, please send me the Exclusive 2017 Key Players Reprint for only $35! Released 6/1/17.(Credit Card Prepayment Only)

radius of its processing facility.Valley Queen notes the expansion is due

to increasing demand for its dairy products as well as a growing milk supply from the dairies located in the I-29 corridor.

The company says the expansion project will occur within Valley Queen’s existing footprint at the Milbank facility and will maximize the effi ciency of exist-ing operating systems. The project began in March and is expected to be complete in the second half of 2018.

Valley Queen says it plans to hire 25 additional employees — a 10-percent increase to its existing workforce — to build its team to handle the additional manufacturing capacity.

“This project is another example of the company’s ongoing commitment to the success of its customers, employees and dairy producers,” says Doug Wilke, CEO, Valley Queen Cheese.

Valley Queen is a family-owned and operated dairy manufacturer produc-ing natural cheeses, dried lactose, WPC-80 and anhydrous milkfat that is marketed and utilized by private label and nationally branded consumer food companies. CMN

“The importance of our relationship with Mexico cannot be overstated,” Castaneda says. “In 2016, we exported $1.2 billion worth of product to Mexico. Our sales to Mexico support tens of thousands of U.S. farming, food manu-facturing and related jobs across this country.”

He adds that to strengthen the NAF-TA agreement, much of the work done in rules areas in the now-abandoned Trans-Pacifi c Partnership (TPP) would be ideal “jumping off” points in areas such as sanitary and phytosanitary (SPS) issues and GIs.

“The latter issue holds particu-larly strong signifi cance right now since Mexico is actively involved in negotia-tions on GIs and related issues with the EU and the EFSA bloc of countries,” Castaneda says, adding that the United States cannot see a replication of the GI restrictions in the CETA agreement between Canada and the EU.

Adding to this, Castaneda says that for years, Canada has used tariff and nontariff measures to impede dairy trade, including its recent use of these measures to restrict access into its own market and policies that dispose of Canada’s excess milk powder onto global markets at low prices.

“Canada’s actions are impairing not only bilateral trade but also un-dermining the global export markets that are essential to our farmers and manufacturers’ ability to keep their doors open,” he says.

Also on Tuesday, CCFN Senior Direc-tor Shawna Morris testifi ed that any new NAFTA negotiations should include specifi c due process provisions on GIs and should safeguard common food and beverage names.

“CCFN and our allies want nothing more than to be able to enjoy the same

rights that other agricultural exporters expect — the right to retain the ability to export our safe products — and to be afforded the same type of intellectual property (IP) system safeguards that are regarded as commonplace for other forms of IP. Nowhere is this more important than in the NAFTA regions,” Morris says.

For Mexico, where common food names currently are at risk on multiple fronts where IP and due process protec-tions are not being respected, Morris says, “We must require that Mexico uphold the letter and spirit of its NAFTA market access commitments by ensur-ing it does not impair the value of its prior market concessions to the U.S.”

For Canada, she says CCFN urges the administration to pursue a pledge to hold U.S. products harmless from the imposition of new barriers to trade established under CETA. She says TPP’s IP Chapter text on GIs is a positive start-ing point from which to build further.

“Including this language will signifi -cantly benefi t U.S. exports to our NAFTA partners and, equally as important, will serve as a key precedent for future trade agreements with third countries,” Morris says.

Last week, the Congressional Re-search Service (CRS) published a report on NAFTA and U.S. agriculture that highlights the success of U.S. dairy exports in North America. The report warns that a NAFTA withdrawal or failed renegotiation could be harmful to U.S. agriculture because Mexico is looking to fi nd alternative suppliers for some imported products, such as dairy, from New Zealand and Europe. The CRS report also notes that the elimination of tariffs and quotas for dairy products to Canada is unfi nished, and the removal of these barriers would help market integration between the United States and Canada. Additionally, it suggests updating NAF-TA’s sanitary and phytosanitary provi-sions, addressing concerns over GIs, and Canada’s new milk pricing policy. CMN

NAFTAContinued from page 1

WASHINGTON — An international co-alition of 10 dairy industry organizations this week signed a joint letter urging their respective trade ministers to inter-cede in the dispute over Canada’s dairy policies and “pursue all avenues avail-able to challenge these measures, in-cluding WTO dispute settlement and bi-lateral trade agreement relationships.”

The U.S. dairy sector, represented by the International Dairy Foods Association (IDFA), the National Milk Producers Fed-eration (NMPF) and the U.S. Dairy Export Council (USDEC), joined seven other dairy groups from Argentina, Australia, the European Union, Mexico and New Zealand. The coalition is insisting that Canada remove its recently-implemented policies that they say facilitates the dumping of Canadian dairy products in the international market while making already prohibitive Canadian restrictions on dairy imports even more onerous.

In February, Canada implemented a special milk Class 7 pricing policy that lowers milk ingredient prices for Cana-dian processors. The U.S. dairy groups say this policy resulted in the cancellation of purchases by Canadian cheesemakers of U.S.-sourced ultrafi ltered milk. It also allows Canadian exporters to sell milk proteins globally at a much lower price, undercutting exports from the United States and other countries.

“IDFA will use every opportunity to urge administration offi cials and legisla-tors who are working to modernize the North American Free Trade Agreement (NAFTA) to tackle these unfair, ille-

Dairy groups urge action against Canadagitimate and protectionist policies,” says Michael Dykes, president and CEO, IDFA.

Jim Mulhern, president and CEO, NMPF, says “Canada’s revised dairy policy amounts to a ‘beggar-thy-neighbor’ ap-proach, damaging not just its neighbor to the south, but also causing harm to other major dairy exporting countries around the world. This policy must stop now, before any more damage is done to American farmers and those from other nations seeking to compete on a level global playing fi eld.”

Tom Vilsack, president and CEO, US-DEC, adds, “Canada has been adopting policies that run counter to our longstand-ing agreements and upending what has until recently been a mutually benefi cial trade relationship. Our trade agreements must be honored and not ignored — or worse — by our closest neighbor.”

The letter was sent to U.S. Trade Representative Robert Lighthizer, as well as trade and economic leaders in Argentina, Australia, Mexico, the EU and New Zealand. In addition to the U.S. dairy groups, the letter was signed by CEOs of the European Association of Dairy Trade, European Whey Products Association, Eu-ropean Dairy Association, Dairy Compa-nies Association of New Zealand, Camara Nacional De Industriales de la Leche, the Centro De La Industria Lechera and the Australian Dairy Industry Council.

“Canada’s increasingly protectionist policies are diverting trade with attendant global price-depressing impacts, and are in confl ict with the principles of free markets and fair and transparent trade,” the letter says.

Earlier this month, USDA Secretary Sonny Perdue conducted a series of meetings with Canadian offi cials, rais-ing the points of disagreement and reinforcing that these issues need to be resolved, particularly in light of the renegotiations of NAFTA. CMN

https://www.cheesemarketnews.com/order.html



AHEADContinued from page 12

For more information please visit www.devilletechnologies.com

FAM DEVILLE Shredders and Dicers produce a perfect cut quality; are cleaner, smarter and more efficient.

We cater to cheese processing companies that demand sanitary, durable, practical and efficient food cutting equipment. Our advanced technology is designed to improve your processing and your bottom line. In addition to increased capacity, you get better cut quality, less waste,

impeccable hygiene and assured employee safety, all while reducing your labor and maintenance costs. Contact us for a consultation or demonstration with one of our product specialists to discuss how we can help you achieve your goals.

Are You Really Cutting It?

Less waste

Better cut quality

Increased capacity

Impeccable hygiene

Assured employee safety

Sept. 19-22, 2017 Chicago, IL Come see us at booth 746

Sept. 25-27, 2017 Las Vegas, NV Come see us at booth 7406 1.866.404.4545 www.devilletechnologies.com

FAM machines distributed by Deville Technologies.

FAM Hymaks FAM CMD-3DFS40 FAM Flexifam FAM CHS-2D

WATCHMarket

Kurzawski agrees, noting there simply isn’t the capacity currently to keep up with current butter demand around the world.

“There’s talk of protein demand and you see more companies building milk powder plants, but then demand continues for fat and butter, but you don’t really hear about new butter plants going up,” he says.

With this in mind and the surging butter prices in Europe, Kurzawski says he does anticipate an uptick in butter production in the EU in the second half of the year.

“This could alleviate some of the butter price strength, but I still see $2.30-$2.70 butter in the U.S., even possibly $3,” he says.

McCully also notes an uptick in milk production in Europe and New Zealand in the second half of the year may help to alleviate some of the global butter shortages, but it may be 2018 before the impact on prices is seen.

Meanwhile, the United States is well positioned to be a key player in the cheese export market in the second half of the year, Kurzawski says.

“Regardless of whether or not the U.S. dollar value declines fur-ther, cheese export demand will likely improve materially during the second half of 2017,” he adds. CMN

“Regardless of whether or not the U.S. dollar value declines further, cheese export demand will likely improve materially during the second half of 2017.”

Dave KurzawskiINTL FCSTONE

ELECTRONICContinued from page 14

“Enhancing the price signal of CME spot will not cure all issues of pricing dairy in the U.S., but this does present an opportunity for material progress. This opportunity can only be realized if more companies begin to participate; electronifi cation alone will not enhance

the price discovery in CME spot.”The transition of the CME Dairy Spot

Call to the electronic CME Direct Auction Platform has no impact on the availability and accessibility of dairy futures and options products, which are listed with and subject to the rules and regulations of the CME, CME Group notes.

CME Group adds that its Direct Auction Platform is an innovative and proven transaction-based auction

platform for trading and price discovery in physical spot markets. It provides realtime order management, order his-tory, confi rmations and a full audit trail.

Auction times also were revised to accommodate a 5-minute break be-tween each electronic auction.

Cheese barrels and blocks now trade between 11 a.m. to 11:10 a.m.; butter trades at 11:15 a.m. to 11:25 a.m.; and NDM 11:30 a.m. to 11:40 a.m. CMN

http://www.devilletechnologies.com