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October 2014  Issue No. 423

Inside this months issue...

Feature Story: Milk Prices About to Tumble from All-Time Peaks (p. 1):
    Read our story of the month here.

Almost Everything Going Wrong for U.S. Corn Producers (p. 1):
    The nation’s corn producers face tough times: a bumper harvest awaits, rail car shortages are holding up sales of old crop, and prices are falling.

Dairy Producers: Strategize Financial Transition from 2014 to 2015 (p. 2):
    We recommend numerous strategies for dairy producers as they transition from the financial best year ever to 2015’s uncertainties.

Dairy Farmers face HUGE 2014 Income Tax Obligations Unless Congress Boosts Section 179 Elected Depreciation (p. 2):
    As the law currently exists, elected depreciation allowances for 2014 revert back to $25,000. For the past few years, that allowable amount had been $500,000. Unless Congress restores the $500,000 allowance by year’s end … Uncle Sam may be the primary beneficiary of 2014’s dairy farming profits.

Sept 2014 Class III Price $24.60/Class IV Price $22.58 (p. 2):
    The September 2014 was the highest-ever Class III (cheese) milk price in the history of USDA’s federal milk order program.

Analyzing August 2014 U.S. dairy Protein Powder Output/Inventories (p. 3):
    Dairy protein powder output is up-and-down, depending on export orders for specific items. However, inventories are piling up dangerously.

Signing Up for Dairy Margin Protection Program Looks Wise (p. 3):
    Dairy farmers should take a very close look at signing up for the dairy margin protection program for 2015. If producers have the option to pay all premiums in 2014, aim high.

Warming to Dairy Producers: “Cheap” DDGs Pose Sulfur Toxicity Health Problems to Cows (p. 4):
    Collapsed export demand for U.S. dried distillers’ grains (DDGs) has dropped costs to domestic users. Dairy farmers should beware of putting undue quantities of DDGs in their herd’s rations – for fear of deadly sulfur toxicity.

Vilsack Morning to Impose New Tax for Second Beef Promotion Program (6):
    Behind the scenes, USDA Secretary Tom Vilsack has been involved with beef industry efforts to increase the $1/head assessment promotion fee tacked on sale of beef and dairy cattle.

2014 Corn Harvest: Crop Significantly Behind on Normal Maturity (p. 6):
    In late September, USDA estimated that the maturity of the 2014 corn crop was about ten percentage points behind normal. The biggest problem of slwo-maturing corn is in the Upper Midwest and Plains states.

Retail Sales Data Track Chobani Yogurt’s Rise & Fall (p. 7):
    Retail sales data for the past several years tracks the spectacular growth of Chobani Yogurt. But in mid-spring 2014, Chobani’s “Year over Year” sales growth turned negative – following the company’s reduction of serving portions and a price hike.

Wilson Dairy’s “Generation 3” Barley Sprouting System (p. 8-9):
    Writer Paris Reidhead pays a return visit to the dairy farm operated by Ken and John Wilson near Hammond, New York. The Wilsons now use their “third generation” of barley-barley sprouting to sustain their 130 Holstein milk cows.

Question & Answer Interview with Ken Wilson (p. 8):
    Ken Wilson answers questions about the operation of his latest barley-sprouting system and details the benefits to his milking herd.

Past Century’s Agricultural Depressions Stoked by Export Fever (p. 10):
    Pete Hardin details how short-term agricultural exports have fueled undue optimism (and excess capitalization) by U.S. farmers, at various times over the past century. The bottom line: our succession of agricultural depressions/recessions have followed. What’s ahead????

Bad Idea: Forcing Dairy Producers into “FARM” (p. 11):
    In response to recent videos of dairy cow abuses, National Milk Producers Federation is pushing a scheme to require all dairy farmers to comply with its “FARM” program. Bad idea!!!

Organic Valley’s Lawyer Takes the Helm at the OTA (p. 12):
    Melissa Hughes – the attorney for the Organic Valley co-op – is the newly elected chairperson for the Organic Trade Assn. OTA is promoting an industry-wise promotion check-off scheme.

Recent Study Suggests Artificial Sweeteners Alter Body’s Metabolism (p. 12):
    Scientists are discovering that artificial sweeteners negatively impact the human gut flora. Not good.

Cheese & Butter Prices Ease Back, But Demand Still Solid (p. 13):
    In the past couple weeks, CME prices for Grade AA butter and Cheddar cheese have slipped from all-time peaks. However, inventories remain relatively light and domestic demand is solid.

Northeast Chaos: Fluid Milk Sales and Yogurt Output Sharply Decline (p. 14):
    Northeast dairy marketers – especially in New York State – are facing burdensome supplies of farm milk. What’s wrong??? Regionally, fluid milk sales are way, way down (below national declines). And the much-ballyhooed New York yogurt industry has actually produced less yogurt every month for the past year, starting in September 2014. Why is NYS Ag & Markets hiding dairy statistics from 2012 and 2013???

Southeast Milk Litigation: Where is Dean Payment #3? (p. 14):
    Writer Julie Walker details the legal hassles behind issuance of the third payment to qualified persons in the Dean Foods portion of the Southeast Antitrust Litigation.

Is China “Gaming” U.S. Grain/Dairy Pricing Systems??? (p. 15):
    Pete Hardin lays out a black scenario comparing China’s habits as a major purchaser of U.S. grain and dairy. China’s “hot and cold” status as a buyer is threatening the value of U.S. assets devoted to these commodities. Coincidence? Or part of a darker plan to buy U.S. farm and food assets for dimes on the dollar???

Who’ll feed the refugees? What? (p. 15):
    As dairy commodities pile up in the U.S. and western Europe, Pete Hardin contrasts that “abundance” with the dire food needs of the hundreds of thousands of refugees being created by civil conflict and natural disasters. How to collect financial resources to acquire and properly distribute dairy products and food to those facing hunger?

“Tote” Label Tracks Milkfat/Salt Concoction from NZ’s Fonterra to Kraft Foods (p. 16):
    We reproduce the label from a 2200-lb. “tote” shipped from NZ to Kraft Foods in the U.S. This amalgam of milkfat and salt is designed to end-run U.S. tariffs. Different circus, same clowns … Fonterra selling “stuff” to Kraft Foods.

“Understanding Dairy Markets” – An Online Gold Mine of Dairy Data (p. 16):
    Contributor Jim Eichstadt details a Web site created by the University of Wisconsin-Madison dairy economist Dr. Brian Gould. That tool allows interested persons to generate their own insightful dairy data.


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