DairyProfit Update for April 18, 2012
May Class I base: $15.85/cwt.
The May federal order Class I base milk price is $15.85/cwt., up 19¢ from April 2012, but $3.90 less than May 2011. Through the first five months of 2012, the Class I average is $16.73/cwt., down from $17.70/cwt. for the same period of 2011.
Dr. Brian Gould, University of Wisconsin-Madison dairy economist, projects a May Milk Income Loss Contract (MILC) payment of 77.86¢/cwt.
USDA’s monthly Livestock, Dairy & Poultry Outlook report (released April 18) echoes last week’s World Ag Supply & Demand Estimates (WASDE) report, raising both 2012 milk production and marketing estimates to more than 200 billion lbs., again pressuring 2012 milk and dairy product price projections lower.
Average U.S. cow numbers are estimated at 9.215 million head for 2012, up 21,000 from 2011. Due to a slightly more adverse feed outlook for producers, combined with higher cull cow prices and lower milk prices over the course of the year, is likely to lead to lower cow numbers by year-end. However, the decline is projected to be less than expected last month.
Milk per cow is estimated at 21,825 lbs. in 2012, up 479 lbs. from 2011. Production per cow is likely to remain above trend in 2012 as a result of the mild winter and the heavy slaughter that has removed marginal producers from the herd.
The Class III price was reduced to $16.10-$16.60/cwt., and the Class IV price was lowered to $15.35-$15.95/cwt. The all-milk price is now forecast at $17.25-$17.75/cwt.
USDA’s monthly Milk Production report will be released Thursday afternoon, April 19.
April U.S. beef outlook mixed for cull cow prices
USDA’s monthly Livestock, Dairy & Poultry Outlook report provided mixed messages for cull dairy cow prices, which have driven to record highs early in 2012.
Improving early-season pasture conditions and an early start to corn planting have improved the outlook for beef production costs, and high retail beef prices have met with consumer resistance. Drought conditions in the Southern Plains and Southwest appear to be moderating as La Niña transitions into a more normal weather pattern and improved prospects for pasture availability.
However, longer-term, there is anecdotal evidence Southern and Southwestern cattle producers are buying stockers rather than cows to graze this summer. This strategy could delay the rebuilding of national beef cow inventories. And, the heavy rate of cow slaughter observed during the first quarter of 2012 will also affect the calf crop in 2012, 2013 and early 2014.
The direction Choice and Select cutout values will take in the near term is uncertain and will partially depend on how much current negative consumer responses to lean finely-textured beef (LFTB) impact the whole beef sector. According to industry and analysts’ estimates, LFTB contributed 3%-6% of total lean beef supplies. If producers of ground beef products move away from using LFTB, they will need to find alternative lean beef sources. Cow slaughter is a primary source of lean beef for ground products, which could likely lead to higher cull cow prices.
House ag subcommittees announce Farm Bill hearings
House Ag Committee chair Frank Lucas announced another series of hearings on the 2012 Farm Bill to begin next week. Six subcommittees will hold the hearings throughout April and May in Washington, D.C.
The subcommittee on Livestock, Dairy, and Poultry will hold a hearing on federal dairy programs, April 26.
The subcommittee on General Farm Commodities and Risk Management will hold a hearing on risk management programs, May 16 & 17.
Other hearings include:
• April 25 – Rural Development Programs
• April 26 – Conservation Programs
• May 8 – Nutrition & Specialty Crop Programs
• May 10 – Credit Programs
• May 18 – Energy & Forestry Programs
For additional information, visit http://agriculture.house.gov/default.aspx
AMS: Most product prices lower
USDA’s Ag Marketing Service released the latest National Dairy Products Sales Report for the period ending April 14. Highlights include:
• Grade AA butter prices (25 kilogram and 68-lb. boxes) averaged $1.45/lb., down 2.7¢ from the previous week.
• 40-lb. cheddar cheese blocks averaged $1.52/lb., down 2.4¢.
• 500-lb. cheddar barrels (adjusted to 38% moisture) averaged $1.51/lb., down 3.0¢.
• USDA Extra Grade dry whey prices averaged 59.4¢/lb., down 2.0¢.
• USDA Extra Grade or United States Public Health Service Grade A nonfat dry milk prices averaged $1.27/lb., up 0.7¢ from the previous week.
MARKETS: Class III futures continue downward
Today's market closing prices:
Cheddar barrels: unchanged at $1.46/lb.
Cheddar blocks: up 1¢, to $1.50/lb.
Butter: down 1.25¢, to $1.4125/lb.
Extra Grade nonfat dry milk: unchanged at $1.1575/lb.
Grade A nonfat dry milk: unchanged at $1.1775/lb.
Class III milk: -4¢ to -27¢ through January 2013. Based on current closing prices, the 2012 average is $15.77/cwt.; 2013 average is $16.04/cwt.
Grain futures lower
Corn: -6¢ to -15¢/bushel through December 2012. The 2012 average is $5.66/bu.; 2013 average is $5.42/bu.
Soybeans: -17¢ to -18¢ through November 2012. The 2012 average is $13.86/bu.; 2013 average is $12.96/bu.
Soybean meal: -$2.00 to -$4.40 through December 2012. The 2012 average is $378.63/ton; 2013 average is $338.61/ton.
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