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CIH: Late April dairy margins weaken

CIH: Late April dairy margins weaken
Dairy margins dipped slightly since the middle of April, as a sharp rise in corn and steady-to-lower milk prices combined to pressure profitability, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC. In the bigger picture, forward margins still remain highly profitable, projected at or above the 90th percentile of the previous 10 years through the first quarter of 2014.
Milk futures prices have been largely steady over the past couple weeks, with the exception of deferred contracts that have displayed some weakness. Stronger dairy product prices in weekly sales reports appear to be supporting nearby futures, along with increased cow culling due to high beef prices, although the outlook is less certain further in the future. The stronger indicated margins seem to be slowing down the pace of cow slaughter recently, which, along with cheaper feed costs projected for new crop, may combine to increase milk production later in the year. Visit www.cihmarginwatch.com.
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