DairyProfit Update for May 10, 2012
California: June Class 1 prices lower
California’s June Class 1 milk prices declined for the sixth consecutive month: North – $16.81/cwt.; South – $17.08/cwt. Both are down 13¢ from May 2012 and $4.60 from June 2011. Through the first six months of 2012, the California Class 1 price averaged $17.83/cwt. (North) and $18.10/cwt. (South), both down $1.59 from the same period in 2011.
The May 2012 federal order Class I base price will be announced May 23.
USDA’s World Ag Supply & Demand Estimates (WASDE) report, released May 10, raised 2012 U.S. milk production and marketing estimates, and offered a first glimpse at 2013. The report lowered the milk price outlook for 2012, with a slight improvement in 2013.
Forecast milk production in 2012 is raised from last month, primarily reflecting a slower decline in cow numbers and slightly faster growth in milk per cow. Total 2012 milk production is estimated at 201.9 billion lbs., up 800 million lbs. from last month’s estimate. If realized, 2012 production would be up 2.9% from 2011. Estimated 2012 milk marketings, at 200.9 billion lbs., were raised 700 million lbs. from last month, and would also be up 2.9% from 2011.
High feed prices and weakening milk prices during 2012 are expected to pressure producer returns, leading to declines in 2013 cow numbers. However, improvements in returns during 2013 will moderate the rate of decline. Milk per cow is expected to continue to grow, supporting increased milk production.
Total 2013 milk production is estimated at 202.6 billion lbs., with marketings estimated at 201.6 billion lbs. If realized, 2013 production and marketings would be up just 0.3% from 2012.
For more, including the outlook for milk, feed and beef prices, click here.
Video: PRO-DAIRY’s Julie Berry interviews Greg Wickham, CEO, Dairylea
On behalf of DairyBusiness Communications, PRO-DAIRY’s Julie Berry sat down with Greg Wickham, CEO, Dairylea Cooperative, to discuss issues facing dairy this spring. Topics included the need for federal dairy policy reforms that include supply/growth management provisions, at a time when there seems to be regional differences in milk demand/supply; how the short-term milk surplus sends contradictory messages regarding long-term milk needs in the Northeast; and antitrust lawsuits and their potential impact on the ability of cooperatives to work for their producer members.
To view the video, click here.
To read the transcripts click here.
Video: PRO-DAIRY’s Julie Berry interviews Chuck Connor, president, National Council of Farmer Cooperatives (NCFC)
The United Nations has declared 2012 as the International Year of the Cooperative. On behalf of DairyBusiness Communications, PRO-DAIRY’s Julie Berry sat down with Chuck Connor, president, National Council of Farmer Cooperatives (NCFC), to discuss the impact of agricultural cooperatives on economies – from local to global – and how cooperatives bring value to their farmer members.
To view the video, click here.
USDA released the May World Ag Supply & Demand Estimates (WASDE) and May Crop Production reports on May 10. The WASDE report, which included the first forecasts for the 2012-13 marketing year, contained some very bearish projections for corn, but the soybean and wheat forecasts have mixed implications
In reviewing the reports, University of Illinois ag economist Darrel Good said the projections for corn consumption during the current and upcoming marketing year continue to appear inconsistent. Feed and residual use appears under-stated for the current year and over-stated for next year. Prospective exports also appear under-stated for next year. On the production side, USDA has started with very aggressive yield and production forecasts. It is not clear why 2011 was not included in the trend analysis of yields. Still a build-up in stocks appears likely next year and suggests prices will continue to moderate back to the levels of 2007-08 through 2009-10.
Soybean forecasts are pretty much in line with expectations and support prospects for continued historic high prices.
Forecasts for the 2012-13 marketing year are subject to substantial change over time. The next check points for judging current forecasts will be the June 12 Crop Production and June 30 Acreage and Grain Stocks reports. Expect more surprises!
MARKETS: Barrels down; butter up
Today's market closing prices:
Cheddar barrels: down 0.5¢, to $1.4475/lb.
Cheddar blocks: unchanged, at $1.4925/lb.
Butter: up 0.25¢, to $1.3025/lb.
Extra Grade nonfat dry milk: unchanged, at $1.0825/lb.
Grade A nonfat dry milk: unchanged, at $1.1225/lb.
Class III milk: +3¢ to +19¢, May through December 2012; steady to slightly lower, January through December 2013. Based on current closing prices, the 2012 average is $15.45/cwt.; 2013 average is $15.73/cwt.
Corn lower; soybeans higher
Corn: -3¢ to -20¢/bushel through December 2013. The 2012 average is $5.58/bu.; 2013 average is $5.26/bu.
Soybeans: +23¢ to +25¢ through January 2013. The 2012 average is $14.19/bu.; 2013 average is $12.86/bu.
Soybean meal: +$8.60 to +$10.40 through January 2013. The 2012 average is $405.35/ton; 2013 average is $344.79/ton.