DairyBusiness Update for 9.16.13
California state lawmakers supported a proposal to provide temporary price increases to the state's dairy producers during a hearing, Sept. 12.
The proposal has two basic tenets. First, there will be an emergency price relief for up to one year in an amount of no more than 46¢/cwt. to be assigned to Class 4b milk. This will replace the existing emergency price relief.
Second, the sliding scale used to value whey in the Class 4b formula will be restructured to result in a new ceiling of $1.00/cwt. contributed to Class 4b, achievable at current market prices.
A long-term solution also includes funding for a California Dairy Future Task Force – whose members are dairy producers and processors – that is charged with providing economic research materials and proposed structural changes to the California dairy industry’s milk pooling and milk pricing programs. Read more …
California’s Milk Producers Council (MPC) joined fellow dairy farmer groups and cooperatives in providing economic and legal testimony to support the proposal being considered at the hearing, Sept. 12.
While producer groups and cooperatives testified in support of the proposal, said Rob Vandenheuvel, MPC general manager, processors and their representatives testified one-after-another in strong opposition to the proposal, even going so far as to claim that there was never an agreement or that “they heard that producers had walked away from an agreement.” Read more …
CIH: Late September margins improved
Dairy margins improved during the first half of September, as lower projected feed costs against a backdrop of steady milk prices helped to strengthen projected forward profitability, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC.
On both an absolute and relative basis, margin projections are currently strongest in nearby Q4 where they are above the 80th percentile of the previous 10 years, with margin projections through the first half of 2014 above the 70th percentile.
USDA’s September World Ag Supply & Demand estimates report raised the projection for corn production and ending stocks. Milk prices wile continue to move sideways, with Class IV futures maintaining their historically strong premium over Class III contracts. Part of that strength would appear to stem from the export market as butter/milkfat shipments surged during July.
The California Department of Food and Agriculture (CDFA), U.S. Environmental Protection Agency (EPA) and their partner agencies in the California/Federal Dairy Digester Working Group have announced a joint solicitation for dairy digester concept proposals. Read more ...
Proposals should include development, installation and operation of dairy manure digester and co-digester projects and may include processes for the treatment and disposal of waste streams from the digester operations to address environmental impacts. Dairy digester and co-digester development is expected to take place on individual dairies or at centralized facilities located within California.
A copy of solicitation and the funding matrix can be found at http://www.waterboards.ca.gov/centralvalley/dairy_digester_proposal/dd_solicitation_guidance_v4.pdf
By Darrel Good
Department of Agricultural and Consumer Economics
University of Illinois
USDA's September corn and soybean production forecasts were reasonably close to the average trade guesses reported before the release of the September Crop Production report, according to Darrel Good, University of Illinois ag economist.
Prices will likely continue to be unsettled as harvest reports become more numerous and the market forms expectations about the October production forecasts.
At this juncture, there is a high probability the 2013 U.S. corn crop will be large enough to result in a meaningful increase in stocks by the end of the current marketing year. Prospects of ample supplies point to an average marketing year farm price in the mid $4.00 range. Cash prices would be expected to follow a typical large-crop pattern of establishing lows at harvest time followed by modest increases that would about cover the cost of storage.
Soybean prices are expected to remain high relative to corn prices, with a marketing year average farm price in the high $12.00 range. The price pattern for soybeans may follow more of a short-crop pattern, however, particularly if the production forecast declines in October. Such a pattern would point to the highest prices at harvest and declining prices as consumption adjusts and the South American crop advances. Read more ...
MARKETS: Products decline; Class III futures mixed
Cash cheese and butter prices begin the new week on a down note, according to DairyBusiness Update associate Editor Lee Mielke. The block price closed this morning at $1.82/lb., down 2¢. Cheddar barrels lost 2.25¢, slipping to $1.79/lb. One uncovered offer of each took the prices lower.
One offer took the butter price down 1¢, to $1.52/lb.
Grade A nonfat dry milk price was unchanged this morning, holding at $1.83/lb., and Extra Grade remained at $1.78/lb., with nothing happening in either market.
Today’s market closing prices:
Butter: down 1¢, to $1.52/lb.
Cheddar blocks: down 2¢, to $1.82/lb.
Cheddar barrels: down 2.25¢, to $1.79/lb.
Grade A nonfat dry milk: unchanged, at $1.83/lb.
Extra Grade nonfat dry milk: unchanged, at $1.78/lb.
Class III milk: -39¢ to +5¢ through September 2014. Based on current CME closing prices, the September-December 2013 average is $17.61/cwt.; with an overall 2013 average of $17.68/cwt.; and a 2014 average of $16.77/cwt.
Corn futures lower, soybeans, meal futures lower
Today’s futures prices at the Chicago Mercantile Exchange:
Corn: -7¢ through December 2014, settling in a range of $4.56-$4.96/bushel.
Soybeans: -4¢ to -26¢ through September 2014. November 2013 through September 2014 contracts settled in a range of $12.18-$13.48/bushel.
Soybean meal: -$2.30 to -$14.300/ton through September 2014. October 2013-September 2014 contracts settled in a range of $375-$431/ton.
• Dairy markets heading down: Bill Brooks, FC Stone.
• Ask The Silage Doctor: Bob Charley, Lallemand Animal Nutrition
• Corn & Soybean Production: Darrel Good, University of Illinois
The Global Dairy Trade auction takes place tomorrow. FC Stone’s eDairy Insider Opening Bell this morning reported that product offerings from Fonterra have been declining as the cooperative's regular orders take up surplus milk. Time will tell what impact that will have on world prices which are already above U.S. domestic levels.
USDA announces the October federal order Class I base milk price on Wednesday, Sept. 18, with the September Dairy Outlook also issued that afternoon. The August Milk Production report and the monthly Livestock Slaughter report (including cull dairy cow numbers) are out Thursday, Sept. 19.
Today on Facebook
• Photo of the Day: Madalynn Grosenick, 8 months old, is already a little farm girl on Crimson Ridge Dairy, Watertown, WI, owned by her parents Jim and Shelly Grosenick. She loves this red Holstein heifer and would crawl right into her pen if she could! ~Photo by Shelly Grosenick #HolsteinWorldPOTD
• Dairy farmers in Colorado are dealing with incredible flooding. Please keep them in your thoughts.
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