USDA publishes final Class I rule

The U.S. Department of Agriculture has issued a final rule amending the definition of Class I fluid milk products in all Federal milk marketing orders effective Jan. 1, 2011.

These amendments, which were approved by producers, maintain the current 6.5 percent nonfat milk solid standard and incorporates an alternative 2.25 percent true milk protein criterion to determine whether a product meets the compositional standard for fluid milk products.

The new rule requires a milk product to have less than 2.25% protein, as well as less than 6.5% skim milk solids, in order to be exempted from Class I status on the basis of its skim solid composition. Previously, the product could be exempt with only a skim milk solids test below 6.5%. This closes a pricing loophole that encouraged some processors to formulate low-lactose milk products in order to get them priced as Class II products.

This rule also amends the fluid milk product definition to provide exemptions for drinkable yogurt products containing at least 20 percent yogurt (by weight), kefir, and products intended to be meal replacements. The decision clarifies how milk and milk-derived ingredients should be priced under all Federal milk marketing orders when used in fluid milk products.

FAO trims Russian wheat estimate a little more

The United Nations Food and Agriculture Organization has reduce its wheat-output estimate for Russia by 10% and has raised its export estimates for the U.S. by 43% The drought prompted FAO to cut its projection for the Russian wheat crop this year by five million metric tons to 43 million tons.

The new estimate is lower than the USDA projection of 45 million tons and the International Grains Council’s figure of 44 million tons. The Russian crop was 60 million tons last year.

As a result, the FAO raised its U.S. wheat exports estimate in this marketing year to 33 million tons, an increase of 10 million tons from its outlook in June.

Iowa egg investigation intensifies

The investigation continues into the two Iowa egg farms involved in that salmonella contamination recall. Federal agents visited both farms again this week as part of an investigation involving the criminal division FDA and the Justice Department. FDA Commissioner Margaret Hamburg told reporters, “There is a formal investigation going on that extends beyond the FDA inspections that are focused on farm practice.”

Some questions being raised about federal egg inspectors at the facilities. Earlier this week, officials from the Food and Drug Administration reported a number of violations at the two farms including rodents, maggots and wild birds in the barns. USA Today reports USDA Egg Graders were at both farms 40 hours a week even before the outbreak and questions why they didn’t see the problems. The rules state the buildings and outside premises must be free of conditions that harbor vermin but apparently there is some discrepancy as to the definition of buildings and outside premises. The article quotes USDA assistant branch chief in the egg grading program as saying “Under the USDA’s unwritten interpretation of the regulations, egg graders only look for vermin inside the specific processing building where they are based. The agency interprets outside premises as only the area immediately around the processing building’s loading dock and trash receptacle.”

The barns at Hillandale Farm are about 50 feet from the processing facility while at Wright County Egg the barns are about 50 feet apart but are connected to the processing plant. USDA spokesman Caleb Weaver said egg graders have no authority to look at the laying barns, even though they are connected to the processing facilities.

3G buys Burger King

Burger King Holdings Incorporated has agreed to be acquired by 3G Capital for $3.3 billion, giving the New York investment firm control over the second-largest U.S. hamburger chain.

The $24-a-share price is 46 percent more than Miami-based Burger King’s close Aug. 31, before reports of a deal surfaced. Under the terms of the agreement, Burger King can solicit superior bids through Oct. 12, according to a statement today. The transaction amounts to about $4 billion including debt.

Burger King reported total sales of $2.5 billion for the fiscal year ending June 30th, down 1.4 percent from the previous year and the second consecutive year-over-year loss.

3G is an investment vehicle whose main investors are three Brazilian business partners and at one point owned 4.2 million shares of Wendy’s/Arby’s but their June 30 disclosure statement showed they do not have those shares any longer. One of the main partners also owns shares of Anheuser-Busch InBev the world’s largest brewer.

California leads U.S. cheese production higher in July

Total cheese production in the U.S. in July was 882 million pounds, 4.7 percent more than a year ago. Italian type production increased 5.3 percent to 364 million pounds while American type output was 4 percent higher than July of last year at 369 million pounds and Cheddar production increased 2.6 percent to 276.5 million pounds.

Wisconsin total cheese production in July slipped 0.6 percent from a year ago to 221.7 million pounds. The Badger State saw a 2.6 percent increase in American cheese production to 73.7 million pounds, Cheddar output gained 3.3 percent to 56.4 million pounds while Italian production slipped 0.7 percent to 104 million pounds.

California total cheese production in July was 188.37 million pounds up 12.8 percent from a year ago. Italian type production in the Golden State jumped 16.8 percent to 116.17 million pounds while American production nudged 0.7 percent higher at 52.4 million pounds and Cheddar output dropped 9.1 percent to 27.3 million pounds.

Total cheese production in Idaho, 72.5 million pounds up 6 percent, New Mexico saw a 19.8 percent increase to 59.7 million pounds, New York slipped 1.4 percent to 58.6 million pounds and Minnesota lost 4.6 percent to 53 million pounds.

Total butter production in the U.S. in July was 111 million pounds, 2.9 percent less than last year. California saw a 10.8 percent increase to 41.646 million pounds but that was not enough to offset a 12.5 percent decline in the Atlantic Region and a 19.1 percent decline in the Central Region.

Other product production compared to a year ago:

• Nonfat dry milk, 132 million pounds down 1%
• Skim milk powder, 22.6 million pounds up 61.3%
• Dry whey, 87.5 million pounds, down 6.5%
• Lactose, 78.2 million pounds, up 27.8%
• Whey protein concentrate, 34.9 million pounds, down 0.8%
• Regular ice cream, 79 million gallons, down 6.3%
• Low fat ice cream, 41.2 million gallons, up 6.3%
• Sherbet, 4.64 million gallons, down 9.1%
• Frozen yogurt, 7.57 million gallons, down 4.6%

Read the full NASS report here:

Soybeans, corn close firm on technical buying, outside markets

Soybeans were higher on technical buying and outside market direction with the Dow and crude oil higher. There really wasn’t much fresh news, but there are continued yield uncertainties and Egypt bought 100,000 tons of new crop U.S. beans ahead of the open. USDA’s next set of supply and demand projections is out Friday, September 10 at 7:30 AM Central. Soybean meal and oil were modestly higher following the lead of beans. Also, weekly soybean meal exports were solid.

Corn was higher on technical buying and spillover from the outside markets. Demand looks good with a strong week for new crop export sales and Egypt picking up 120,000 tons of 2010/11 U.S. corn ahead of the open. Similar to beans, there are yield uncertainties ahead of those upcoming supply and demand estimates. Contracts were down for most of the session on harvest pressure prior to making another new set of 14 month highs late in the day. Ethanol futures were higher.

The wheat complex was mostly higher on fund and technical buying. According to Russian Prime Minister Vladimir Putin, Russia will continue to suspend grain exports until the end of next year’s harvest. Russian President Dmitry Medvedev stated there are no concerns over food shortages. Additionally, there are continued delays in Russia’s winter planting, along with dry conditions in portions of Argentina’s and Australia’s wheat growing regions. However, contracts were below the day’s highs, pulled down late by profit taking. European wheat was higher on that Russian news; November Paris was up .9% and November London was 1% higher. Tunisia bought 50,000 tons of optional origin wheat.

Cattle and hog futures gain ahead of the holiday weekend

Cattle country was at a standstill on Thursday afternoon possibly suggesting business is done for the week. The trade volume totals seem especially short in Texas and we could see another round of regional business before traders break for the long weekend. On the other hand impressive gains in futures should work to reinforce higher asking prices. Through mid afternoon on Thursday  USDA Mandatory reported negotiated sales were confirmed at 121,497 head for the week. Unsold cattle are probably priced around 99.00 plus in the South where bids were at 97.00, and 152.00 to 153.00 bid in the North where asking prices are at 155.00 plus. Thursday’s cattle kill was estimated at 130,000 head, 2,000 more than last week and 1,000 greater than 2009. Boxed beef cutout values are generally steady on very light demand and light to moderate offerings. Choice boxed beef was up .29 at 162.91, and select was down .11 at 156.75.

Chicago Mercantile exchange live cattle contracts settled 22 to 77 points higher in light to moderate trade. October futures are now running about $1.00 over the cash price which is traditionally in line with normal pricing patterns. Fund buying and spreads were the major features of Thursday’s session. October settled .70 higher at 88.45, and December was up .72 at 101.32.

Feeder cattle finished the day 25 to 100 points higher on the lack of substantial upward movement in corn and spillover support from the live cattle pit. September settled at 114.75 up .87, and October was .65 higher at 115.50.

Cattle receipts at the Huss Platte Valley Auction in Nebraska on Wednesday totaled 1800 head. Compared with two weeks ago, based on a narrow test steers trended fully steady and heifers were steady. Demand and trade activity was moderate to good. Slaughter cows and bulls trended fully steady. Feeder cattle medium and large 1; 618 steers averaging 871 pounds traded at 113.46 per hundredweight. 144 heifers weighing 828 pounds brought 108.73.

Barrows and gilts in the Iowa/Minnesota direct trade closed 1.10 lower, and the West was down .95, with both at 76.92 on a carcass basis, the east was .11 lower at 76.98. Missouri direct base carcass meat price was steady to 1.00 lower at 73.00 to 74.00.Thursday’s hog slaughter was estimated at 410,000 head, 2,000 less than last week and 25,000 fewer than last year. Iowa barrows and gilts last week averaged 265.6 pounds, 1 pound lighter than the previous week, and1.4 pounds below 2009.  The scale house is having a tough time finding the seasonal bottom as smaller market hogs reflect the ravages of the hot summer as well as very current finishing floors.

Pork carcass cutout value gained 1.65 to close at 92.32. Pork trading was slow to moderate, with light to moderate demand and offerings.

Lean hogs settled 67 to 147 higher on fund buying activity. The expectation that pork markets may stabilize at the end of the week helped to draw light commercial buying into the market, especially given the additional reduction in average hog weights this past week.  October settled 1.47 higher at 76.42, and December was up 1.27 at 74.15.

Closing Grain and Livestock Futures: September 2, 2010

September corn closed at $4.33, up 3/4 cent
September soybeans closed at $10.07 and 1/2, up 3 cents
September soybean meal closed at $302.20, up 30 cents
September soybean oil closed at 39.66, up 11 points
September wheat closed at $6.80 and 3/4, up 5 and 1/4 cents
October live cattle closed at $98.45, up 70 cents
October lean hogs closed at $76.42, up $1.47
October crude oil closed at $75.02, up $1.11
December cotton closed at 89.49, up 208 points
September Class III milk closed at $16.13, down 6 cents
Dow Jones Industrial Average: 10,320.10, up 50.63 points

Vilsack disputes Bloomberg article

A recent article in the publication Bloomberg Businessweek insinuated that Ag Secretary Tom Vilsack wants to take the five billion dollars currently spent on direct payments to farmers and put it into “rural initiative” programs, including broadband grants and nutrition programs.

Vilsack says he was interviewed for the Bloomberg article, but he tells Brownfield at no time did he call for five billion dollar cuts to farm programs.

“If you look at the transcript that we provided, there’s no mention of that at all—none at all,” says Vilsack. ‘It’s an unfortunate circumstance where I think a reporter had basically an idea and a story that he wanted to write, and what I told him wasn’t necessarily consistent with that—but he just decided to write it anyway—which is unfortunate because it gets a lot of misinformation out there.”

The accuracy of the article aside, Vilsack’s USDA has been criticized by some for putting too much emphasis on rural development programs, and organic and so-called “local food” initiatives, and not enough on traditional farming.  Vilsack defends his efforts to spur economic development in rural America, but says he continues to be a fierce advocate for strong farm safety net programs as well.

“We understand that there are certain risks inherent in agriculture that are probably different than virtually any other business, industry or occupation in the country,” he says, “and that we need a strong safety net in order to protect not just our farmers and ranchers, but also the consumers who, in this country, benefit from a relatively affordable food supply which is safe and abundant.”

At the same time, Vilsack says deficit reduction is a big challenge. He proudly points out that USDA has already saved four billion dollars that was put towards deficit reduction by renegotiating the agency’s agreement with crop insurance companies.

 AUDIO: Tom Vilsack (4 min MP3)

Link to Bloomberg Businessweek article

Link to Vilsack’s statement on the Bloomberg article

R-CALF responds to NCBA criticism

R-CALF USA has fired back at the National Cattlemen’s Beef Association after NCBA criticized R-CALF for aligning itself with an animal rights and environmental organization.

The group in question is Food & Water Watch, which regularly attacks agriculture on the issues of animal rights and the environment.  R-CALF has partnered with Food & Water Watch in support of the proposed GIPSA livestock marketing rules.  NCBA issued a news release criticizing R-CALF for that affiliation.

R-CALF president Bill Bullard calls NCBA’s criticism “absurd”.  He says the partnership with Food & Water Watch and other consumer groups not only helps R-CALF attain its goals. He says it also gives cattlemen the opportunity to educate those groups on the safety and wholesomeness of beef and to explain the industry’s production practices.

In its parting shot, R-CALF calls NCBA’s criticism “a desperate attempt to deflect attention away from the fact that the National Cattlemen’s Beef Association stands accused of cheating and misusing government-mandated Beef Checkoff Program dollars.”

Next Page »