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DairyBusiness: By the Numbers

Updated April 25, 2012

2011 ‘mailbox price’ sets record at $20.20/cwt.

 It may seem like ancient history, but the 2011 federal order all-market “mailbox price” of $20.20/cwt. set a record high, surpassing the previous high set in 2007 by $1.04/cwt., and $3.91 more than 2010/cwt., according to USDA’s Ag Marketing Service.

 

Mailbox prices are collected and published monthly through federal milk marketing order market administrator offices. The mailbox price is defined as the net price received by dairy farmers for milk, including all payments received for milk sold, and deducting costs associated with milk marketing. All mailbox prices are reported at test; there is no adjustment to 3.5% butterfat.

 

Even though mailbox prices were high by historical standards, in some cases milk checks likely did not cover expenses, especially when factoring in unusually high feed prices. In 2011, USDA’s U.S. average milk-feed price ratio ranged from 1.73 in May to 2.12 in March, with income over feed  costs averaging about $8 for the year. In 2010 by contrast, when milk prices were nearly $4/cwt. lower, the milk-feed price ratio bottomed out in December at 1.98, but peaked at 2.40 in October resulting in a more profitable year in general.

 

Strong dairy product sales in 2011, measured as commercial disappearance, and record export markets, contributed to the higher milk prices. Sales were up 1.6%, while exports accounted for 13.3% (on a total solids basis) of U.S. production. Exports of dairy products were record highs in both volume and dollars.

 

Mailbox Price by Year

                      All Market         Difference from

Year            Mailbox Price        Previous Year

2011               $20.20                      $3.91

2010               $16.29                      $3.47

2009               $12.82                     ($5.57)

2008               $18.39                     ($0.77)

2007               $19.16                       $6.32

2006               $12.84                      ($2.14)

2005               $14.98                      ($0.92)

2004               $15.90                        $3.62

2003               $12.28                        $0.37

2002               $11.91                      ($2.86)

2001               $14.77                        $2.62

2000               $12.15                       ($1.84)

 

 

 

Pennsylvania IOFC

Lower milk prices and higher soybean prices pushed Penn State University’s measure of income over feed costs (IOFC) to its lowest level since September 2009, according to Jim Dunn, professor of agricultural economics. The net effect was a decrease in income over feed costs of 66¢/cow/day in March to $5.97/cow/day, down 10% from February. It compares to $5.24/cow/day in September 2009.

 

The Pennsylvania all-milk price was down 90¢ to $18.70/cwt. Feed costs (to produce 65 lbs. of milk) rose from last month by 7¢/cow/day, to $6.18/cow/day. Feed costs per hundredweight on milk produced averaged $9.51/cwt., up 11¢/cwt. from February. 

Based on these estimates, the milk margin (estimated amount from the Pennsylvania all milk price that remains after feed costs are paid) was $9.19/cwt.

 

Corn, alfalfa hay, and soybean meal prices were each up in March, with soybean meal prices up 3%. The current high soybean meal prices will make the April feed cost estimate higher, despite the lower corn prices in April.

 

To see the full report, visit http://dairyoutlook.aers.psu.edu/

 

Total solids trade balance

February U.S. dairy exports were equivalent to 12.6% of U.S. milk solids production, the 23rd straight month in which exports have been between 12%-15% of output. Exports were equivalent to 13.3% of U.S. milk solids production in 2011 and 12.8% in 2010. Meanwhile, imports as a percent of milk solids production were just 3.0% in February 2012. 

Source: U.S. Dairy Export Council, National Milk Producers Federation.

 

Dairy exports top $400 million for 12th straight month

The value of February 2012 U.S. dairy exports topped $400 million for the 12th consecutive month. At $437 million, February exports were up 3% from January 2012 and up 11% from February 2011. 

At $245 million, February 2012 imports were down 4% from January 2012, but up about 15% from February 2011.

Year-to-date fiscal year (FY) 2012 (October 2011-February 2012) exports were estimated at $2.142  billion, up 27% from the same period a year earlier. FY ’12 imports were estimated at $1.331 billion, up 13%. The FY ’12 dairy trade surplus stands at $811 million. 

February 2012 cheese imports were estimated at $75 million, down 3% from January 2011 and 9% less than February 2011. Y-T-D FY ’12 cheese imports are estimated at $476 million, up 2% from the same period in FY ’11.

 

FY ’12 U.S. dairy trade

                     Exports        Imports   Difference

Month         $ million       $ million     $ million

Feb. ’12           437               245             +192

Jan. ’12           426               255             +171 

Dec. ’11           430               273             +157

Nov. ’11           438                309           +129

Oct. ’11            411               249            +162

YTD total       2,142           1,331             +811

Source: USDA Economic Research Service

 

February volumes improve slightly

U.S. dairy export volumes improved slightly in February (compared with recent months), boosted

by continued strong sales of milk powder and cheese, according to trade data released April 12 by USDA's Foreign Agricultural Service. In the December-February period, U.S. exports of dry ingredients (milk powder, whey, lactose), cheese and butterfat were 391,565 tons, up 1% from the previous year.

 

Nonfat dry milk/skim milk powder exports were stronger in February, increasing 10% from January volume (on a daily average basis) and registering the highest figure since October 2010. In the December-February period, sales to Mexico were up 54% from the prior year, but shipments to Southeast Asia were off 27%. Exports to the Middle East/North Africa were up 2%.

 

Whey exports slumped in February, with total volume off 9% from January (daily-average basis)

and the lowest since July 2010. China remains the major customer, but in the December-February

period, U.S. whey sales to China were down 3% vs. the prior year. Meanwhile, exports to Mexico

were up 51%.

 

U.S. cheese exports improved in February vs. previous months. In the December-February period,

shipments to Mexico were steady (+1% vs. prior year), while Japan (+24%) and Saudi Arabia

(+41%) posted strong gains. However, shipments to South Korea dropped 32%.

 

Butterfat export volumes remained light in February. In the December-February period, leading butterfat customers were Saudi Arabia and Iran.

 

U.S. dairy cattle exports remain strong

February U.S. female dairy cattle exports topped 6,000 head for the fourth time in five months, with Russia again the leading destination for most of them, according to USDA’s Foreign Ag Service.

February 2012 exports totaled 6,440 head, bringing the year-to-date (Y-T-D) total to 10,947 head, compared to 8,162 head for the same period in record-setting 2011.

Russia imported 4,438 U.S. dairy replacement females in February, bringing its Y-T-D total to 7,038 head, or about 65% of all U.S. exports so far this year.

Last year’s leading U.S. female dairy cattle export market, Turkey, imported 1,226 head in February, for a two-month total of 1,954.

Other substantial markets were Canada, 400 head; and the United Arab Emirates, 346.

 

February alfalfa hay exports a record

February U.S. alfalfa hay exports topped 150,000 metric tons for the fifth time in six months, according to USDA’s Foreign Ag Service. February alfalfa hay exports totaled 167,933 metric tons, quite possibly the largest volume on record, and bringing the 2012 two-month total to 310,473 metric tons.

Previous high monthly total alfalfa hay exports were 163,034 metric tons in December 2010 and 162,213 metric tons in May 2009.

Japan was again the leading monthly U.S. alfalfa hay market, importing 53,187 metric tons in February, for a two-month total of 99,471 metric tons, about 32% of the U.S. Y-T-D total. 

The United Arab Emirates (UAE) imported 45,977 metric tons of U.S. alfalfa hay in February,  bringing its 2012 total to 87,007 metric tons, or about 28% of all U.S. exports so far this year.

China, South Korea and Taiwan rounded out the top five markets, both for the month and year-to-date.

U.S. exports of other hay in February totaled 151,014 metric tons, for a two-month total to 301,697 metric tons. Japan imported 180,462 metric tons of other hay from the U.S. during the first two months of 2012, or nearly 60% of the total. South Korea, China, UAE and Taiwan (in order) rounded out the top five markets for other hay, both in February and year-to-date.

 

AFBF surveys retail milk prices 

According to the American Farm Bureau Federation’s quarterly Marketbasket Survey, shoppers in 24 states reported paying the following average prices for milk in half-gallon containers in the first quarter of 2012:

• regular milk: $2.46, up 9¢ from the prior quarter, and up 9% compared to the same quarter a year earlier. (The price for one gallon of regular milk was $3.53, down 23¢ from the prior quarter, but up about 2% from the first quarter of 2011.)

• “rbST-free” milk: $3.42, up 8¢ from the previous quarter, and 6% more than the first quarter of 2011. It is about 40% higher than the reported price of a half-gallon of regular milk. The retail markup on “rbST-free” milk = 96¢/half-gallon X 23.25 half-gallons/cwt. = $22.32/cwt.

• organic milk: $4.19, up 28¢ compared to the fourth quarter of 2011, and up 13% compared to the first quarter a year earlier. It is about 70% higher than the reported price of a half-gallon of regular milk.

 
 

May California Class 1 prices lower

California’s May Class 1 milk prices declined for the fifth consecutive month, to $16.94/cwt. in the North and $17.21/cwt. in the South. Both are down 27¢ from April 2012 and $3.96 from May 2011. 

Through the first five months of 2012, the California Class 1 price averaged $18.03/cwt. (North) and $18.30/cwt. (South), both down $1.00 from the same period in 2011.

The May 2012 federal order Class I base price will be announced April 18.

 

 

2012 U.S. milk production, marketings to top 200 billion lbs.

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released April 10, raised both 2012 milk production and marketing estimates to more than 200 billion lbs., again pressuring 2012 milk and dairy product price projections lower.

Total 2012 milk production is now estimated at 201.1 billion lbs., up 1.4 billion lbs. from last month’s estimate, due to higher-than-expected cow numbers and more milk production per cow. Compared to last month’s estimates, the milk production forecast was raised for every quarter of 2012. If realized, 2012 production would be 2.50% more than 2011 actual production. 

Estimated 2012 milk marketings, at 200.2 billion lbs., were raised 1.5 billion lbs. from last month. If realized, 2012 marketings would be up 2.5% from 2011.

With higher forecast 2012 milk production and weaker-than-expected product demand, price forecasts for cheese, butter, NDM and whey were lowered. As a result, annual average Class III, Class IV and all milk price forecasts were reduced from last month. According to the USDA forecast, the 2012 all milk price will be in a range $17.25-$17.75/cwt.

 

Buying feed? USDA projects higher 2012 prices

With the numbers digested from the 2012 Prospective Plantings report on March 30, further analysis of potential 2012 crops and prices is underway. USDA’s World Ag Supply & Demand Estimates (WASDE) report, released April 10, points to little change in the corn outlook, but reduces anticipated soybean supplies.

For dairy producers buying feed, USDA narrowed the range for the season-average (2011-12) corn price forecast (paid to growers), at $6.00-$6.40/bushel. That compares to $5.18/bushel in 2010-11 and $3.55/bushel in 2009-10.

The projected 2011/12 U.S. season-average soybean price was raised to $12.00-$12.50/bushel, up 25¢ on the mid-range forecast from last month. That compares to $11.30/bushel in 2010-11 and $9.59/bushel in 2009-10.

Soybean meal prices were forecast at $335-$355/ton, up $20 on the mid-range. That compares to $345.50/ton in 2010-11 and $311.25/ton in 2009-10.

 

 

February dairy product output also leaps

We knew February 2012 U.S. milk production was up 8% from February 2011 (4.3% on a daily basis), and that milk had to go somewhere. Now we know where. USDA’s monthly Dairy Products report was released April 4. Due to Leap Day in 2012 year-over-year total are also comparisons on a daily basis:

Total cheese output (excluding cottage cheese) was 857.8 million lbs., 6.2% more than February 2011 (up 2.6% from February 2011 on a daily basis). Through the first two months of the year, 2012 (with an extra day) production is up 4.4% from 2011.

Italian type cheese production totaled 367.0 million lbs., 4.5% more than February 2011 (up 0.9% on a daily basis). Year-to-date (YTD) production is up 3.4%.

American type cheese production totaled 347.5 million lbs., 5.7% more than February 2011 (up 2.0% on a daily basis). YTD production is up 4.4%.

Cheddar cheese production totaled 258.0 million lbs., 6.2% more than February 2011 (up 2.5% on a daily basis). YTD production is up 3.4%.

Butter production was 170.1 million lbs., 13.9% more than February 2011 (up 10.0% on a daily basis). YTD production is up 11.1%.

Dry milk powders: Nonfat dry milk, human – 170.7 million lbs., up 54.7% (up 49.3% on a daily basis). YTD production is up 42.8%. Skim milk powders – 18.2 million lbs., down 49.7% (down 51.5% on a daily basis). YTD production is down 24.0%.

Whey products: Dry whey, total – 89.3 million lbs., up 9.2% (up 5.4% on a daily basis). YTD production is up 7.2%.

December caps record-setting dairy export year

By Dave Natzke

The value of December 2011 U.S. dairy exports topped $400 million for the 10th consecutive month, pushing the value of 2011 dairy product exports to a record $4.88 billion. 

 

At $430 million, December 2011 exports were the third highest monthly total of the year, down 2% from November 2011, but up 23% from December 2010. 

 

At $273 million, December 2011 imports were down 12% from November 2011, but up 3% from December 2010.

 

Total 2011 exports were estimated at $4.479 billion, up 29% from 2010. Total 2011 imports were estimated at $2.934 billion, up 12% from 2010. The 2011 dairy trade surplus was $1.945 billion. 

 

December 2011 cheese imports were estimated at $99 million, down 15% from November and down 3% from December 2010. 2011 cheese imports were estimated at $1.073 billion, up 11% from 2010.

 

U.S. cheese exports were strong in December. In the fourth quarter, shipments to Mexico were up 14% from the prior year, while additional gains were registered in exports to South Korea (+12%), Japan (+45%) and Saudi Arabia (+134%).

 

2011 U.S. dairy trade

                         Exports         Imports          Difference

Month             $ million        $ million          $ million

Dec. ’11              430                 273                 +157

Nov. ’11              438                 309                +129

Oct. ’11               411                 249                +162

Sept. ’11             419                 208                +211

Aug. ’11              433                 243               +190

July ’11               412                254                +158

June ’11              429                240                +159

May ’11               401                212                 +189

April ’11              403                242                 +161

Mar. ’11               421                278                +143

Feb. ’11               348                214                +134

Jan. ’11               335                 211               +124

YTD ’11 total    4,879              2,934            +1,945

Source: USDA Economic Research Service

 

Some volumes decline

While cheese exports were up, the higher December dairy product values hid some lower export volumes, according to the U.S. Dairy Export Council. Nonfat dry milk/skim milk powder exports slipped in December, falling to their lowest level since July 2010 (on a daily-average basis). In the fourth quarter, sales to Mexico were up 11% from the prior year, but shipments to Southeast Asia were off 20% and exports to the Middle East/North Africa were down 55%.

 

December exports of total whey proteins were down slightly from November, due to a drop-off in whey protein concentrate shipments. China remains the major customer; in the fourth quarter, U.S. whey sales to China were up 22%. Meanwhile, shipments to Southeast Asia were down 9% and exports to Mexico were up 1%.

 

Butterfat export volumes in the second half of the year were down 43% from the first half. In the fourth quarter, leading butterfat customers were Saudi Arabia, Iran and Mexico.

 

2011 female dairy cattle exports nearly double 2010

By Dave Natzke

 

December 2011 U.S. female dairy cattle exports totaled 7,019 head, the fourth-highest monthly total of the year, according to USDA’s Foreign Ag Service. December’s exports brought the 2011 total to 73,639 head, compared to 37,590 head for all of 2010.

Russia jumped to the top of the list of importers in December, with 3,909 head, for a 2011 total of 8,993 head, the third-leading foreign customer for U.S. female dairy cattle last year.

The leading 2011 importer, Turkey, imported 2,192 U.S. dairy females in December, for a 2011 total of 49,998 head (68% of the U.S. total).

Mexico, the second-leading market for U.S. heifers, imported 574 head in December, for a 2011 total of 11,102 head, 

Canada imported 272 head in December, for a 2011 total of 3,130, good for fourth on the annual list.

 

U.S. female dairy cattle exports, 2007-2011

Year           Total 

2011         73,639

2010         37,590

2009         16,209

2008         15,794

2007           8,385

 

Leading U.S. female dairy cattle importers, 2011

Country  2011 total

Turkey      49,998

Mexico      11,102

Russia        8,993

Canada       3,130

 

Source: USDA’s Foreign Ag Service

 

 

 

2011 U.S. alfalfa hay exports top 2010

By Dave Natzke

 

December U.S. alfalfa hay exports topped 150,000 metric tons for the fourth consecutive month, bringing the 2011 total to 1.602 million metric tons, surpassing 2010’s total of 1.443 million metric tons, according to USDA’s Foreign Ag Service.

December 2011 U.S. exports totaled 154,132 metric tons, the fourth-highest monthly total of 2011.

Japan was the leading 2011 U.S. alfalfa hay market, importing 48,007 metric tons in December, for a 2011 Y-T-D total to 585,186 metric tons, about 37% of the U.S. Y-T-D total. 

The United Arab Emirates (UAE) imported 43,753 metric tons of U.S. alfalfa hay in December,  bringing its 2011 total to 527,456 metric tons, or about 33% of all U.S. exports so far this year.

On annual basis, China ranked third, importing 31,745 metric tons in December, for a 2011 total of 177,374 metric tons. South Korea ranked fourth, at 166,125 metric tons (16,709 metric tons in December). Taiwan was fifth, with a 2011 total of 97,904 metric tons.

Exports of other hay in December totaled 132,315 metric tons, for a 2011 total to 1.735 million metric tons. The 2011 total fell just short of 2010’s total of 1.781 million metric tons. Japan, South Korea, UAE, China and Taiwan (in order) were the top five markets for other hay in 2011.

 

U.S. hay exports, 2010-2011

Alfalfa            Metric tons 

2011             1.602 million

2010             1.443 million

 

Other             Metric tons 

2011             1.753 million

2010             1.781 million

 

 

Leading U.S. hay importers, 2011

Alfalfa hay      Metric tons

Japan                   585,186

UAE*                     527,456

China                   177,374

South Korea        166,125

 

Other hay        Metric tons

Japan                1,012,094

South Korea        406,733

UAE*                     134,265

China                   100,268

* United Arab Emirates

Source: USDA’s Foreign Ag Service

 

Friday's numbers: Trade, price updates

 

Dairy trade balance still solid

Based on latest information from the U.S. Dairy Export Council and National Milk Producers Federation, December U.S. dairy product exports were equivalent to 13.0% of U.S. milk solids production, the 21th straight month in which exports have been between 12% and 15% of output. In 2011, exports were equivalent to 13.3% of U.S. milk solids production, compared with 12.8% in 2010. 

Meanwhile, imports as a percent of milk solids production were just 2.9% in 2011.

 

Powder exports show signs of weakening

According to Alan Levitt, editor of the CME Daily Dairy Report, U.S. exports of nonfat dry milk/skim milk powder were slightly slower in December, falling to their lowest daily average level since July 2010. Shipments were 74.2 million lbs., down 12.7% from November, according to USDA’s Foreign Agricultural Service. 

In addition, December NDM/SMP exports were below 40% of production for the first time since April 2010. Since May 2010, the U.S. exported 53% of the milk powder produced, Levitt noted.

December cheese shipments totaled 44.8 million lbs., down 2% from November (daily-average basis). It was the ninth time in the last 13 months that U.S. cheese exports topped 40 million lbs.

Butterfat shipments, on the other hand, remained slow. December sales were just 7.1 million lbs., down 21% from November. Export volumes in the second half of the year were down 43% from first-half volumes. Butterfat imports in December (8.3 million lbs.) topped exports for the first time since August 2009.

 

California Class 1 prices decline

California’s March Class 1 milk prices declined for the third consecutive month. March 2012 prices are $17.60/cwt. for the North and $17.87/cwt. for the South. Both are down 92¢ from February 201 and $1.64 from March 2011.

 Through the first quarter of 2012, the Class 1 price average is $18.67/cwt. for the North and $18.94/cwt. for the South. Both are up $1.15 from the same period in 2011.

The federal order Class I base price will be announced Feb. 17.

 

Gould updates MILC payment projections

Using futures CME settle prices for Feb. 10, Dr. Brian Gould updated estimates of 2012 Milk Income Loss Contract (MILC) payments.  Find regular updates on the UW-Madison Understanding Dairy Markets website:  

 

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MILC Payment Forecasts Based on Futures

Settlement Prices Feb 10, 2012

 

 

 

 

 

 

Year

Month

Forecast Target  Mover

Forecast Mover*

Predicted MILC Payment

 

 

                       $/Cwt.

2011

Dec

17.42

18.47*

0.0000

2012

Jan

17.34

18.80*

0.0000

 

Feb

16.96

17.03*

0.0000

 

Mar

17.13

16.56

0.2559

 

Apr

17.25

16.00

0.5621

 

May

17.35

15.94

0.6331

 

Jun