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DairyProfit Update for Aug. 27, 2012

July 2012 milk COP a record high

Higher feed prices pushed U.S. average milk production costs to a record high in July 2012, according to USDA’s monthly Milk Cost of Production estimates. The July 2012 costs surpassed previous highs in July-August 2008 by $1.75/cwt.

The preliminary July 2012 average total cost was $27.43/cwt., up $2.05 from June 2012, and $3.61/cwt. more than July 2011. Cost estimates are based on total farm costs per hundredweight of milk sold.

July purchased ($9.27/cwt.) and homegrown ($6.42/cwt.) feed costs were up $1.32 and 32¢, respectively, from June, and up $2.63 and 58¢, respectively, from July 2011. The overall feed cost of $15.85/cwt. was up $1.65/cwt. from June and $3.22/cwt. from July 2011. Feed costs represented about 58% of total costs.

Fuel and energy costs were steady to lower compared to the previous month and year, helping prevent even higher operating costs. Total operating costs (including feed) were up $1.75¢/cwt. from June and $3.16/cwt. from July 2011.

Increases in labor, opportunity costs of unpaid labor, and capital recovery of machinery and equipment pushed unallocated overhead costs up 29¢/cwt. from June.

To see the full report, click here.


Milk Cost of Production, total costs per $/cwt. milk sold


July 2012

June 2012

July 2011

All feed








Allocated overhead**




Total costs




1/ includes feed; 2/ includes labor

Source: USDA Economic Research Service




CWT assists with 4.6 million lbs. of cheese export sales

Cooperatives Working Together (CWT) accepted 14 requests for export assistance from Dairy Farmers of America and Foremost Farms to sell 4.581 million lbs. of cheddar and gouda cheese to customers in Asia, the Middle East, North Africa and the South Pacific. The product will be delivered August 2012 through February 2013.

So far in 2012, CWT has assisted member cooperatives in making export sales of 78.3 million lbs. of cheese and 56.4 million lbs. of butter/anhydrous milk fat (adjusted for cancellations) to 33 countries on four continents. On a butterfat basis, the milk equivalent of these exports is 1.953 billion lbs., or equivalent to the annual milk production of 93,000 cows.


USDA announces final rule amending the Mideast order

USDA announced a final rule which amends the “pool plant” definition of the Mideast federal milk marketing order. This decision is based on testimony and evidence given at a public hearing held in Cincinnati, Ohio, Oct. 4-5, 2011.

This amendment will more adequately identify the plants that service the fluid milk needs of the marketing order. Specifically, the amendment will regulate fluid milk plants physically located within the Mideast marketing area that have a Class I utilization of at least 30% and whose combined Class I route disposition and transfers into Federal milk marketing areas is greater than 50%.

This amendment was originally proposed in a recommended decision issued on Feb. 24, 2012. The program received only four comments all in support of the recommended decision. Producers whose milk is pooled on the Mideast milk marketing order approved these amendments. The order, as amended, will become effective Oct. 1, 2012.

The final rule was published in the Aug. 27, 2012 Federal Register. For additional information about the decision contact: Paul Huber; USDA/AMS/Dairy Programs; 1325 Industrial Parkway North, Brunswick, OH 44212; Tel. (330) 225-4758; email: phuber@fmmaclev.com.


USDA expands contracting authority for beef checkoff program

USDA’s Agricultural Marketing Service  announced a final rule expanding the contracting authority for the Beef Promotion and Research Program.

The Beef Promotion and Research Act requires that the Beef Promotion Operating Committee enter into contracts with established national non-profit industry-governed organizations. The Beef Promotion and Research Order also required that such organizations be active and ongoing before the enactment of the Act in 1986.

Several beef industry organizations met recently and agreed that it was necessary to expand the contracting authority to uphold the integrity of the beef checkoff program. The rule eliminates the date requirement so that organizations otherwise qualified, but created since 1986, are now eligible to contract with the Beef Promotion Operating Committee to provide Beef Checkoff programs, as long as they have been active and ongoing for at least two years. The change will allow the Beef Promotion Operating 

Details of the final rule will be published soon in the Federal Register. Copies of the final rule and additional information will be available at www.regulations.gov, or from Craig Shackelford; Marketing Programs Division, Room 2628-S; Livestock and Seed Program, AMS, USDA; STOP 0251; 1400 Independence Avenue, SW.; Washington, D.C. 20250-0251; phone (202) 720-1115; fax (202) 720-1125.


USDA animal health advisory committee nominees sought

 Agriculture Secretary Tom Vilsack is renewing the advisory committee on animal health and is seeking nominations for membership on the committee.

The committee's members advise USDA on strategies, policies and programs to prevent, control or eradicate animal diseases. They consider agricultural initiatives of national scope and significance and advise on matters of public health, conservation of national resources, stability of livestock economies, livestock disease management and traceability strategies, prioritizing animal health imperatives, and other related aspects of agriculture.

Up to 20 members will be selected for the committee, including producers, processors, marketers, researchers, state and tribal agricultural agencies, trade associations and others.

The nomination form is available at www.ocio.usda.gov/forms/doc/AD-755.pdf. Nominations are due by Sept. 10. 


MARKETS: Butter inches up; Class III futures mixed

Today's market closing prices:

Butter: up 0.25¢, to $1.8025/lb.

Cheddar blocks: unchanged, at $1.8525/lb.

Cheddar barrels: unchanged, at $1.8025/lb.

Grade A nonfat dry milk: unchanged, at $1.6650/lb.

Extra Grade nonfat dry milk: unchanged, at $1.6250/lb.

Class III milk: steady to mixed in a narrow range through September 2013. Based on current CME closing prices, the average for August-December 2012 is $19.38/cwt.; the full year 2012 average is $17.42/cwt.; and the 2013 average is $18.63/cwt.


Corn, soybeans, meal futures mostly lower

Corn: -2¢ to -8¢ through September 2013. The September-December 2012 average is $7.98/bu.; 2013 average is $7.40/bu.

Soybeans: -3¢ to -13¢ through September 2013. The September-November 2012 average is $17.25/bu.; 2013 average is $15.12/bu.

Soybean meal: -$4.10 to +$0.70/ton through September 2013. The September-December 2012 average is $524.67/ton; 2013 average is $422.14/ton.