As printed in our August 10, 2012 issue...

THE WORST DROUGHT IN OVER 50 YEARS badly damaged the nation's corn and soybean crop as 40 percent is located in severe drought areas. Future contracts traded at new records in July and have since fallen back: corn is near $8 per bushel while soybeans are at $16.50.

MORE THAN 80 PERCENT of major field crops are covered by federal crop insurance. For those buying feed for livestock, that provides little relief.

CLASS III FUTURES CONTINUE TO CLIMB, but not as fast as feed. The remaining five contracts for 2012 rose nearly $1.25 per cwt. since Independence Day. CME block cheese moved up 7-3/4 cents to close at $1.71-3/4.

THE FARM BILL WAS APPROVED on a 35 to 11 vote by the House Agriculture Committee on July 11 after being approved by the full Senate in late June. All versions contain provisions of the Dairy Security Act.

HOUSE LEADERSHIP HAS NOT SCHEDULED full debate on the farm bill at the magazine's close. Once the August 3 recess begins, the bill cannot be debated until the House reconvenes on September 10. If action isn't taken by September 30, it would mark the first time that a House farm bill, once out of committee, has been kept off the floor while its deadline passes.

THE 0.9 PERCENT GAIN in June's national milk production was the smallest this year. For the first time since December 2009, cow numbers declined in back-to-back months, dropping 30,000 head from May. The national dairy herd is still up 45,000 head compared to last June.

CALIFORNIA MILK OUTPUT FELL 0.3 percent while Wisconsin rose 2.5 percent; Idaho, 1.5; New York, 1.4. Milk flow dropped by 0.3 to 2.2 percent in Minnesota, Iowa, New Mexico, Pennsylvania and Texas.

NOTICEABLE DECLINES IN MILK INTAKES and butterfat levels are being reported by milk handlers in most areas, stated USDA's Dairy Market News. As a result, 2012 U.S. milk estimates have been reduced by 600 million pounds. For the year, milk would still be up 2.7 percent from 2011.

DAIRY HEIFERS WERE DOWN 2.4 percent over 2011, according to USDA's July estimate. The still robust 44.4 heifers per 100 cows is the lowest mid-year estimate since July 2009. Nationally, the entire cattle herd, including beef and dairy, stood at 97.8-million head; the smallest since 1973.

CALIFORNIA'S HIGHER STANDARDS for fluid milk may be in jeopardy due to an amendment approved in the House's version of the farm bill. The measure would no longer allow states to set more stringent standards for out-of-state agricultural products than those set at the federal level.

BRIEFLY: California's secretary of agriculture raised whey pricing mechanism by 6.25 cents or 2.5 cents per cwt. for mailbox prices. This was far short of the dairy-producer-led request. Dairy exports set a new record in May at $500 million, up 26 percent from the same time last year.

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