DairyProfit Update for Nov. 28, 2012
USDA released its latest Farm Sector Income Forecast – a look at the national agriculture income/cost balance sheet – indicating 2012 U.S. net farm income will decline almost $4 billion from its all-time high in 2011. Net cash income is expected to decline almost $2 billion.
The value of agricultural sector production is expected to increase, with gains anticipated for crops, livestock and especially revenues from services and forestry sales. However, those solid gains in the projected annual value of U.S. agricultural production will be more than offset by increases in purchased inputs. In particular, U.S. livestock feed expenses are forecast to increase almost $10 billion in 2012, up 18%, on top of a 20% increase in 2011.
Gross cash receipts for milk are expected to decline from 2011, despite USDA expectations of more milk cows producing more milk per cow in 2012. Milk receipts totaled about $39.3 billion in 2011, with 195.3 billion lbs. of milk marketed, and an average all-milk price of $20.14/cwt. As of mid-November, USDA forecast 2012 milk marketings of 198.7 billion lbs., at an average all-milk price of $18.55/cwt., yielding a total of about $36.9 billion.
For 2012, dairy producers are expected to receive $460 million in Milk Income Loss Contract (MILC) program payments. Primarily based on the high prices of the feed components in the dairy feed ration, the National Average Dairy Feed Ration Adjustment in 2012 has raised the benchmark MILC program price and triggered payments to dairy producers.
To see the full report, visit www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/2012-farm-sector-income-forecast.aspx.
Judge denies CDFA lawsuit over Class 4b pricing
San Bernardino County (Calif.) Superior Court Judge Joseph Brisco denied a petition filed against the California Department of Food and Agriculture (CDFA) alleging the agency failed to follow the law in refusing to bring California’s Class 4b price into better alignment with the prices being paid by cheese manufacturers in federal orders, according to Western United Dairymen.
The “Writ of Mandate” was filed on behalf of Dairy Farmers of America, Security Milk Producers Association, Milk Producers Council and California Dairy Campaign. The judge issued a tentative ruling Nov. 9, denying petitioner’s writ of mandate stating, “Petitioners have not demonstrated that Secretary Ross’ quasi-legislative act of determining the Class 4b milk price formula, after public hearing and full economic and technical analysis by CDFA experts, was arbitrary and capricious or entirely lacking in evidentiary support.”
The board of directors for Family Dairies USA, Manitowoc Milk Producers Cooperative and Milwaukee Cooperative Milk Producers have called for a membership vote on the proposed merger of the three cooperatives. Members of the cooperatives are asked to mail votes into their respective cooperative by Dec. 18, 2012. If passed by the membership vote, the three cooperatives could become the largest Midwest dairy marketing cooperative.
Membership votes on the proposed merger must be received by the member’s respective cooperative by 4 p.m. on Dec. 17, 2012, if sent via mail. Members are encouraged to mail their ballots to the listed office within their information packet in advance to meet the deadline. Members may also hand deliver their vote on Dec. 18, 2012 to their respective cooperatives’ special meeting being held to approve the merger and count ballots. If the merger passes, the new, combined cooperative will begin business function Jan. 1, 2013.
Ag groups urge Mississippi River ‘emergency’ declaration
The American Farm Bureau Federation (AFBF) has urged President Barack Obama to issue a presidential declaration of emergency for the Mississippi River. In a letter to President Obama and top administration officials, AFBF and nearly 20 other national organizations said there could be an economic catastrophe in America’s heartland as soon as mid-December if the administration does not take emergency action to ensure that water levels do not fall below the level needed to support commercial navigation.
Because of this year’s severe drought, waterborne commerce on the middle Mississippi River is in danger, especially now that the U.S. Army Corps of Engineers has begun to implement plans to reduce the release of water to the river from dams on the upper Missouri River.
Aside from issuing an emergency declaration, the groups requested that President Obama direct the Corp to immediately remove the rock pinnacles along the river and release enough water from the Missouri River reservoirs to preserve a nine-foot navigation channel on the Mississippi River.
Attached to the joint letter were letters from the governors of Missouri, Illinois and Iowa, 15 U.S. Senators, and 62 U.S. House members urging prompt federal action on Mississippi River navigation.
MARKETS: Butter, barrels lower; Class III futures higher
Today's market closing prices:
Butter: down 5.0¢, to $1.6225/lb.
Cheddar blocks: unchanged, at $1.8250/lb.
Cheddar barrels: down 2.0¢, to $1.7550/lb.
Grade A nonfat dry milk: unchanged, at $1.5575/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: +4¢ to +33¢ through December 2013. Based on current CME closing prices, the average for November-December 2012 is $19.96/cwt.; the full year 2012 average is $17.48/cwt.; and the 2013 average is $18.53/cwt.
Next price announcements: California November Class 4a/4b prices are announced Dec. 3. Federal order Class II, III & IV prices are announced Dec. 5.
Corn, soybeans and meal futures mixed
Corn: steady to pennies higher through September 2013. The 2013 average is $7.16/bu.
Soybeans: -2¢ to -5¢ through September 2013. The 2013 average is $13.88/bu.
Soybean meal: -$1.80 to +$0.60/ton through September 2013. The 2013 average is $399.71/ton.