DairyProfit Update for Dec. 24, 2012
WUD proposes temporary California milk price increases
Western United Dairymen (WUD) proposed temporary formula changes to increase Class 1, 2, 3 and 4b milk prices in California during a hearing, Dec. 21. The temporary increases are sought for a period of six months, the maximum allowable period set by California Department of Food & Agriculture secretary Karen Ross.
WUD’s proposed changes would:
• Class 1: raise milk fat 1.05¢/lb.; raise milk solids-not-fat 8.93¢/lb.; and raise the milk fluid carrier 0.26¢/lb.
• Class 2 and 3: raise milk fat and milk solids-not-fat 8.2¢/lb.
• Class 4b; raise milk solids-not-fat 11.5¢/lb.
WUD CEO Michael Marsh said escalating feed prices and regulatory pressures in the state were key factors in rising costs, calling on CDFA to take immediate action on the price formulas.
CDFA has 62 days to respond to the proposals presented at the Dec. 21 hearing.
For more information on California milk price calculations, visit www.cdfa.ca.gov/dairy/howto_calc_prices_main.html
Look for updates on the Dec. 21 hearing at www.cdfa.ca.gov/dairy/dairy_hearings_matrix.html
Other testimony
Barbara Martin, Tony Martin Dairy
Rob Vandenheuvel, General Manager, Milk Producers Council
Cold storage inventories
Nov. 30 butter stocks totaled 127.14 million lbs., down 12% from Oct. 31, but 36% more than November 2011. Total cheese stocks, at 941.85 million lbs., were down 1% from October 2012 and down 4% from November 2011. American cheese, at 581.25 million lbs., was unchanged from October and 2% less than a year earlier.
Milk: November COP
| Costs | Nov. 2012 | Oct. 2012 | Nov. 2011 |
| All feed | $15.01 | $15.94 | $12.39 |
| Operating(1) | $18.26 | $19.27 | $15.66 |
| Overhead(2) | $8.56 | $8.68 | $8.22 |
| Total | $26.81 | $27.95 | $23.87 |
1/ includes feed; 2/ includes labor
Source: USDA Economic Research Service
November milk COP improves a little
Lower feed prices helped bring U.S. average milk production costs down in November 2012, according to USDA’s monthly Milk Cost of Production estimates. Cost estimates are based on total farm costs per hundredweight of milk sold.
The preliminary November 2012 average total cost was $26.81/cwt., down $1.13/cwt. from October 2012. However, the November 2012 COP is still $2.94/cwt. more than November 2011.
The January-November 2012 average is $25.55/cwt., up $2.49 from the same period in 2011.
November purchased feed costs were down 86¢ from October, but $1.96 more than November 2011. At $14.17/cwt., 2012 year-to-date average feed costs are up $2.21/cwt. from 2011. Other than feed, other operating costs were largely unchanged from a year ago, with labor and capital recovery costs pushed allocated overhead costs slightly higher.
U.S. slaughter cattle and calves in feedlots with capacity of 1,000 or more head totaled 11.3 million head on Dev. 1, 6% less than a year earlier. November placements totaled 1.92 million (1.84 million net), about 6% less than a year earlier. November fed cattle marketings totaled 1.76 million, 1% less than a year earlier.
December IOFC declines in Wisconsin
Wisconsin dairy producers’ estimated income over feed costs (IOFC) dropped significantly in December, according to Ken Bolton, with UW-Extension’s Center for Dairy Profitability.
The estimated December IOFC declined $1.06/cwt., to $10.50/cwt. for a Wisconsin herd with an annual production average of 22,000 lbs. of milk per cow. The month’s estimated income over total variable costs for the same herd was $8.36/cwt.
The December predicted Wisconsin mailbox price is $20.32/cwt., down $1.93 from November. The December Class III price is forecast at $18.65/cwt., down $2.25 from November. Milk Income Loss Contract (MILC) program payments are no longer available.
Prices for corn and soybean meal were up, while all other feed prices, including forages, remained steady. Feed cost per dollar of milk revenue increased 4¢, to 48¢.
December marks the ninth month in 2012 with IOFC above $8.00/cwt. at the 22,000-lb. milk production level. That compares to only three months (of 11 evaluated) above $8.00/cwt. IOFC recorded in 2009.
For further information, contact Ken Bolton via email, kenneth.bolton@ces.uwex.edu.
MARKETS: Butter slides down the chimney; Class III futures mostly higher
Today's market closing prices:
Butter: down 4.0¢, to $1.4975/lb.
Cheddar blocks: unchanged, at $1.74/lb.
Cheddar barrels: unchanged, at $1.6550/lb.
Grade A nonfat dry milk: unchanged, at $1.5575/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: steady to +32¢ through December 2013. Based on current CME closing prices, the 2012 average is $17.44/cwt.; the 2013 average is $18.48/cwt.; and the 2014 average is $16.38/cwt.
Corn, soybean and meal futures slightly higher
Corn: slightly higher through December 2013. The 2013 average is $6.70/bu.
Soybeans: +6¢ to +9¢ through November 2013. The 2013 average is $13.97/bu.
Soybean meal: +$1.00 to +$2.30/ton through December 2013. The 2013 average is $407.28/ton.
For a sample copy of DairyProfit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.
Stay connected to DairyBusiness Communications on the go with the DairyBusiness News section on our HolsteinWorld APP for iPhone and Droid. Simply go to http://www.widgetbox.com/mobile/app/holstein-world-rblodgett
