DairyProfit Update for April 17, 2012
In response to current market conditions, California Dairies, Inc. (CDI), the largest member-owned milk marketing and processing cooperative in California, producing 43% of the state’s milk, recently cautioned its member-owners that penalties for overproduction of milk may be incurred per the terms of CDI’s internal supply management program.
In effect since 2008, CDI’s internal supply management program was designed to place limitations on the amount of milk that each member would be allowed to ship to the cooperative. Penalties may apply to those members who ship more milk than the baseline amount they were assigned. Since May 2009, CDI has not penalized any member for over production.
For additional information on CDI, visit www.californiadairies.com.
The U.S. Environmental Protection Agency (EPA) released the 17th annual U.S. greenhouse gas GHG inventory. The final report shows overall emissions in 2010 increased by 3.2% from the previous year. The trend is attributed to an increase in energy consumption across all economic sectors, due to increasing energy demand associated with an expanding economy, and increased demand for electricity for air conditioning due to warmer summer weather during 2010.
According to EPA calculations, “agriculture” was responsible for 6.3% of total U.S. GHG in 2010. Methane (CH4) and nitrous oxide (N2O) were the primary GHG emitted by agricultural activities. Methane emissions from enteric fermentation and manure management represent about 21% and 8% of total CH4 emissions from anthropogenic activities, respectively.
More on the greenhouse gas inventory report: http://www.epa.gov/climatechange/emissions/usinventoryreport.html
CIH April dairy margin summary
Dairy margins were weaker over the past two weeks, particularly in nearby periods where the loss in milk value exceeded the savings from lower feed costs since the end of March, according to the mid-April Dairy Margin Watch from Commodity & Ingredient Hedging, LLC. Margins remain negative in nearby Q2 and below historical averages through the end of 2012, while the Q1 2013 margin is only at the 60th percentile of the past 5 years.
While milk prices remain on the defensive, there are some rays of hope the market may begin to stabilize. The export market has been positive, and dairy cow slaughter for the week ending March 31 was 12.5% higher than the comparable week last year.
With negative nearby margins and strong demand for leaner dairy cow beef due to the consumer fallout from LFTB, dairy producers may be receiving the economic incentive they need to reduce the dairy cow herd. Also positive, the corn market has been under pressure recently due to a record planting pace through mid-April, as well as the lack of a reduction in old-crop corn ending stocks in the April World Ag Supply & Demand Estimates report – contrary to trade expectations.
MARKETS: Class III futures lower
Today's market closing prices:
Cheddar barrels: unchanged at $1.46/lb.
Cheddar blocks: up 0.25¢, to $1.49/lb.
Butter: unchanged, at $1.4250/lb.
Extra Grade nonfat dry milk: down 1.0¢, to $1.1575/lb.
Grade A nonfat dry milk: unchanged at $1.1775/lb.
Class III milk: -1¢ to -25¢ through May 2013. Based on current closing prices, the 2012 average is $15.88/cwt.; 2013 average is $16.06/cwt.
Corn futures mixed; soy complex higher
Corn: -6¢ to +3¢/bushel through December 2012. The 2012 average is $5.74/bu.; 2013 average is $5.43/bu.
Soybeans: +6¢ to +7¢ through November 2012. The 2012 average is $14.03/bu.; 2013 average is $13.11/bu.
Soybean meal: +$2.90 to +$3.40 through December 2012. The 2012 average is $381.85/ton; 2013 average is $341.04/ton.
• New York dairy producer Sandy Stauffer shares his experience traveling to Japan to learn more about the U.S. Dairy Export Council’s activities.
• Dairy Farmers of America broke ground for a new dairy ingredient facility in Nevada. DFA’s Glenn Wallace tells us about it.
• How would the Dairy Security Act change milk pricing and the relationship with milk futures? University of Wisconsin’s Brian Gould explains.
• Ask the Silage Doctor: Any way to nail down hay prices this year? Lallemand’s Dr. Bob Charley comments:
• Udder Health: Three ways the California Milk Test can manage your somatic cell count
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