DairyBusiness Update for 9.20.13
We have SNAP; dairy will add crackle and pop
The House passed a separate bill covering USDA nutrition programs, designed to cut an estimated $39 billion from Supplemental Nutrition Assistance Program (SNAP) programs over the next decade. The vote on H.R. 3102, the Nutrition Reform and Work Opportunity Act of 2013, was 217-210, with all Democrats and 15 Republicans voting against the bill.
The approval provides the second piece of a House Farm Bill, but how it is incorporated into final Farm Bill negotiations remains to be seen. The Senate version of the Farm Bill includes both agriculture and nutrition programs. The House now has separate proposals for a five-year Farm Bill and a three-year nutrition program. The House version’s cuts to nutrition programs is about 10 times the level of the Senate version.
And, of course, the negotiations will also need to address two different dairy policy proposals. The Senate version includes the National Milk Producers Federation’s (NMPF) Dairy Security Act, with its Dairy Market Stabilization Program. The House version incorporates the so-called Goodlatte-Scott Amendment, which includes only margin insurance.
Cattle on feed down 7%; placements, marketings low
Cattle and calves on feed for slaughter market in U.S. feedlots with capacity of 1,000 or more head totaled 9.9 million head on Sept. 1, 7% less than a year earlier. August placements totaled 1.79 million head (1.73 million net), down 11% from a year earlier. August fed cattle marketings totaled 1.88 million, down 4%. August placements are the lowest, and marketings the second lowest for the month since USDA started tracking the series in 1996.
MARKETS: Mielke’s weekly summary
The cash cheese market showed no reaction to yesterday’s August Milk Production report, according to DairyBusiness Update associate Editor Lee Mielke. Most analysts believe the report fed the bears.
Prices were unchanged this morning, with no activity whatsoever, and not one pound was sold all week in the spot market. Mid-September cheese prices reversed three weeks of gains, and the block price closed this morning at $1.7950/lb., down 4.5¢ on the week and 20.5¢ below a year ago. Barrels closed at $1.7675/lb., also down 4.5¢ on the week and 19.25¢ below a year ago.
Butter stole the show today in Chicago, where 36 carloads were sold, with prices ranging from $1.5550/lb. to $1.60/lb. at the close when the dust had settled. That’s up 7¢ on the day and the week but still 29¢ below a year ago. 1 bid at $1.60 and 1 offer at $1.6050/lb. were left on the board. A whopping 67 cars were sold on the week, up from 47 last week, as interest grows for the upcoming holidays. FC Stone brokers tell me the highest single week sales of butter totaled 147 loads the week of Nov. 21, 2003, when butter was only trading three time a week.
Cash powder came to life this morning when four sales of Grade A occurred at $1.83/lb. One bid at $1.8450/lb. tried to pry more lose, but no seller stepped to the plate. Extra Grade remained at $1.78/lb. where it’s been since Aug. 22, but 1 bid today at $1.78/lb. got no response either.
Today’s market closing prices:
Butter: up 7¢, to $1.60/lb.
Cheddar blocks: unchanged, at $1.7950/lb.
Cheddar barrels: unchanged, at $1.7675/lb.
Grade A nonfat dry milk: up 1.5¢, to $1.8450/lb.
Extra Grade nonfat dry milk: unchanged, at $1.78/lb.
Class III milk: -12¢ to +9¢ through March 2015. Based on current CME closing prices, the September-December 2013 average is $17.75/cwt.; with an overall 2013 average of $17.73/cwt.; and a 2014 average of $16.78/cwt.
A couple of interesting perspectives on what most everyone agrees was a bearish Milk Production report comes from High Ground Dairy’s Eric Meyer. Meyer points out in his daily update this morning that the 0.2% growth in milk production between July and August is “surprising” “and a little suspicious, because it has never happened in the past. We scoured the historical milk production data and could not find a year when U.S. milk production grew in August over July.”
And, FC Stone risk management consultant Ron O’Brien pointed out in this morning’s eDairy Insider Opening Bell that "Milk is currently tight on both the East and West Coasts, so even though milk production was up substantially in August compared with the previous year, demand is also likely stronger than a year ago." Next week will be very telling.
Corn, soybeans and soybean meal futures lower
Today’s futures prices at the Chicago Mercantile Exchange:
Corn: -7¢ to -8¢ through December 2014, settling in a range of $4.51-$4.91/bushel.
Soybeans: -15¢ to -24¢ through November 2014. November 2013 through August 2014 contracts settled in a range of $12.55-$13.18/bushel.
Soybean meal: -$3.00 to -$8.90/ton through December 2014. October 2013-September 2014 contracts settled in a range of $370-$413/ton.
Virginia Tech’s Dairy Center
• Farm Bill talk goes social: Tom Vilsack, Ag Secretary
• Fuel Up to Play 60 having an impact on today’s youth: Brad Scott, DMI Update
• Spotlight on Virginia Tech Dairy Center: Lacey Koontz
USDA issues its August Cold Storage report Monday afternoon, Sept. 23, and the monthly Ag Prices report – including the latest milk-feed price ratio – is out Friday, Sept. 27.
This week in DairyBusiness Update:
1) We have SNAP: Dairy policy will add crackle, pop to Farm Bill negotiations
2) USDA bullish: Latest dairy outlook bullish on prices. Maybe too much?
3) Trends: October Class I base, California production costs and August milk production are all up
4) Industry: Dairy a leader in ‘private label’ sales; companies to invest in equipment
5) Washington: Court rules for EPA over Chesapeake Bay TMDLs
Today on Facebook
• Photo of the Day: Megan Gilbert shares this photo she captured of her cow "Coco" during the summer months of 2012. Megan states that Soldier-Rest Lavan Coco-ET was a great heifer with a promising future as a cow, but was lost shortly after calving. She was owned by Bradley & Megan Gilbert of Morristown, TN. #HolsteinWorldPOTD
• The Morsan 300 Sale wrapped up with a $6,023 average on 259 female lots! High seller today was Lot 160 - BKB Goldwyn Amenda at $87,000 - purchased by Westcoast Holsteins.
• Dr. Elmer Woelffer and Dr. Don Williams are the 2013 Cattle Production Hall of Fame Inductees at this year's AABP conference held in Milwaukee, WI.
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