DairyBusiness Update for June 17, 2013
A new study from Cornell University shows that the proposed Farm Bill dairy program will cost more than a bipartisan amendment that will be offered this week by U.S. Reps. Bob Goodlatte (R-Va.) and David Scott (D-Ga). The study, “2013 Farm Bill Dairy Title Proposal Redistributes Program Benefits toward States with Larger Farms,” also finds that the currently proposed Dairy Security Act is significantly weighted to benefit large farms, according to the International dairy Foods Association (IDFA).
“As did the Congressional Budget Office, the Cornell report finds that the Dairy Security Act will cost taxpayers more than the alternative,” said Jerry Slominski, senior vice president of legislative affairs and economic policy for the International Dairy Foods Association. “The report also contradicts a previous study from the University of Missouri, which claimed the opposite.” Read more …
April fluid sales up a little
April 2013 packaged fluid milk sales totaled 4.34 billion lbs., up 1.1% from April 2012. (Sales were not adjusted for calendar considerations as in previous monthly reports).
April sales of conventional products, at 4.15 billion lbs., were up 0.6%; organic products, at 191 million lbs., were up 13.5%. Organic represented about 4.4% of total sales for the month.
January-April 2013 total packaged fluid milk sales, at 17.41 billion lbs., were down 2.3% from the same period a year earlier. Year-to-date sales of conventional products, at 16.68 billion lbs., were down 2.4%; organic products, at 730 million lbs., were up 1.2%. Organic represented about 4.2% of total sales.
Source: Dairy Market News
USDA will release the June 1 Grain Stocks and June Acreage reports on June 28, setting the tone for both old- and new-crop corn and soybean prices. These reports have the potential to provide large surprises, according to University of Illinois ag economist Darrel Good.
This is particularly the case for corn, since feed and residual use of corn is not estimated on a continuing basis, but instead is revealed by the stocks estimate. A surprise in the stocks estimate would be an indication that feed and residual use was occurring either more rapidly or more slowly than projected.
Expectations for planted and harvested acreage estimates will be based on the March report of planting intentions of 97.282 million acres for corn and 77.126 million acres for soybeans and likely changes from intentions based on the very late planting season. Since the survey for the estimates was conducted in the first half of June, estimates may still reflect intentions in some cases. The price reaction to the USDA reports will depend on the differences between expected and actual estimates. The estimates for corn hold the most potential for surprises.
Dairy margins were fairly steady over the first two weeks of June, with declining feed costs and milk prices roughly offsetting one another, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC. From a historical perspective, forward margins remain very strong, above the 80th percentile of the previous 10 years through the first half of 2014, and at the 90th percentile in Q4.
Milk prices have held largely steady. USDA’s World Ag Supply & Demand Estimates report left the 2013 milk production forecast unchanged, but lowered their estimate for 2014 as relatively weak milk-to-feed ratios in Q3 and Q4 are expected to slow production growth in the first half of next year. Forecasts for both 2013 cheese and butter prices were lowered from last month, reflecting greater stocks and weaker than expected prices to date. Visit www.cihmarginwatch.com.
MARKETS: Blocks lower; Class III futures slightly higher
Today's market closing prices:
Butter: unchanged at $1.5350/lb.
Cheddar blocks: down 0.75¢, to $1.7150/lb.
Cheddar barrels: unchanged at $1.7725/lb.
Grade A nonfat dry milk: unchanged, at $1.7025/lb.
Extra Grade nonfat dry milk: unchanged at $1.70/lb.
Class III milk: steady to +17¢ through June 2014. Based on current CME closing prices, the 2013 average is $18.16/cwt.; and the 2014 average is $17.00/cwt.
Corn, meal futures lower; soybeans mostly lower
Corn: +5¢ to +13¢ per bushel through December 2014. The remaining 2013 average is $5.95/bu.
Soybeans: -12¢ to +1¢ per bushel through November 2014. The remaining 2013 average is $13.92/bu.
Soybean meal: -$1.60 to -$7.00/ton through December 2014. The remaining 2013 average is $404.80/ton.
Today on Facebook
To celebrate June Dairy Month, Milk Promotion Services of Indiana launched a special website, “30 Dairies in 30 Days,” featuring a different dairy farm family daily throughout June.
Happy first day to our new Associate Editor of HolsteinWorld, Parker Welch. Parker is a graduate of Virginia Tech and you can reach him at email@example.com or 800-334-1904 (ext. 235).
• DMI's Tom Gallagher discusses dairy sustainability
• Tom McBeth from Central Life Sciences talks fly control
Tuesday on DairyLine
• FCStone’s Bill Brooks looks at last week’s WASDE report
• Ask the Silage Doctor: Looking into 2013 rop production’s crystal ball
This week in DairyBusiness Update:
1) USDA outlook: Relatively weak milk-to-feed price ratios are expected to slow milk production growth into the first half of 2014.
2) NMPF/CWT: Mulhern to succeed Kozak atop NMPF; CWT doubles assessment and extends program through 2015.
3) Western analysis: Frazer LLP’s annual Dairy Farm Operating Trends summary does not provide a pretty financial picture.
4) Industry: MilkPEP to launch ‘Protein Fight Club’ promotion, highlighting milk’s powerful punch for breakfast.
5) Washington: It was a busy week, with a noisier one to come, as the House tackles the farm bill.
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