DairyProfit Update for Nov. 29, 2012
U.S. Rep. Frank Lucas (R-Okla.) was re-elected to serve a second term as chair of the House Ag Committee next year, but when the 2012 Farm Bill is completed remains in question.
Speaking on DairyBusiness Radio, National Milk Producers Federation’s Chris Galen said the U.S. faces both a “fiscal cliff” and a “dairy cliff,” providing pressure for Congress to act.
“In recent weeks, while there’s been a lot of rhetoric about the need to compromise to keep the country from going over the fiscal cliff, there's no concrete deal,” Galen said. “The same is true of the Farm Bill: there's a lot of good intentions expressed about wanting to finish the work that's been done in the Senate and House, but there hasn't been any talk about scheduling votes on the Farm Bill. It's been three weeks since the elections, and as of (Wednesday), there's no definite path on how this will get resolved.”
After this week, Congress is scheduled to be session only on Dec. 3-6 and Dec. 11-14.
United Dairymen of Arizona will be among nearly two dozen organizations and companies headed to Russia, Dec. 3-7, on a trade mission to promote U.S. ag exports. The mission, led by USDA Under Secretary for Farm and Foreign Agricultural Services Michael Scuse, will also include representatives of some other major dairy states, including Idaho and Missouri.
The House of Representatives recently approved H.R. 6156, the Russia and Moldova Jackson-Vanik Repeal Act of 2012, in a bipartisan vote, 365-43. This bill ensures that U.S. agricultural producers can benefit from Russia's membership in the World Trade Organization (WTO) by establishing permanent normal trade relations (PNTR).
The National Milk Producers Federation and U.S. Dairy Export Council actively supported approval of PNTR with Russia as part of work necessary to reopen the dairy market to U.S. exporters. The Russia dairy market has been closed to U.S. dairy products for more than two years due to Russian insistence on certain dairy certificate statements and accompanying facility inspection requirements that were not acceptable to the U.S.
Milk production in major exporting nations slowed in the third quarter of 2012, according to the U.S. Dairy Export Council’s November Global Dairy Market Outlook report. A summary of major dairy regions follows:
• European Union-27: Milk deliveries were estimated to be off 1.1% in the third quarter. Poor weather and tight margins have driven output lower. Production is down in key regions including France, Ireland and the United Kingdom. Meanwhile, Germany and the Netherlands are near year-ago levels.
• United States: Heavier culling this year, compounded by the summer drought, has put the United States in contraction mode. Cow numbers dropped 84,000 head in six months. Production was down 0.2% in the August-October period. Margins have improved slightly, but a quick improvement is not expected.
• New Zealand: The 2012/13 season is off to a good start. Output was up 8.4% in the July-September period. For the full year, production is projected to be up 2-3% on top of last year’s record pace.
• Australia: Milk production was up 2.1% in the third quarter. 2012-13 production is projected to be 2% higher than last year.
• Argentina: After two years of double-digit growth, milk deliveries were down 2.2% in the third quarter as unfavorable weather impacted productivity.
To see the full report, visit www.usdec.org/files/GDMO/USDEC%2DGDMO%2D201211%2DAbridged.pdf
A nationwide survey commissioned by the International Dairy Foods Association (IDFA) found 81% of Americans agree that individual farmers should have the freedom to decide how much milk they produce and not have a limit set by government policy.
The survey, which was conducted online in October among 2,094 adults by Harris Interactive on behalf of the IDFA, also found that 74% of Americans believe milk prices should be based on what consumers are willing to pay. Only nine percent think milk prices should be set by government policy.
IDFA, headquartered in Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA opposes the Dairy Market Stabilization Program included in the proposed Dairy Security Act.
Despite this year’s historic low levels and record high prices for agriculture commodities, global agricultural commodity markets are expected to shift from a squeeze to a surplus in 2013, but prices will remain volatile, according to Rabobank’s annual commodities outlook. The report, titled “Outlook 2013 – Rebalancing on a Tightrope,” analyzes how global macro uncertainty is shaping the agricultural commodity markets, specifically the impact of a weak U.S. Dollar on prices, as well as how speculative money flows will continue to drive trading patterns. It also provides comprehensive 2013 price forecasts and price comparisons against 2012 forecasts.
Rabobank makes the following predictions for 2013:
• Corn - Prices to fall 24% from Q1 2013 to average USD $6/bushel in Q4 2013 during the U.S. 2013/14 harvest. Despite the bearish outlook, the beginning of 2013 is expected to see prices rise from current levels to encourage further demand rationing in the U.S..
• Soybeans - Prices are expected to remain supported in Q1 2013 on tight export supplies before declining as production rebounds later in the year, with prices for the year averaging below 2012 levels.
• Soymeal - CBOT soymeal prices are likely to drop by nearly USD $75/ton from current levels by the end of 2013 as demand slows.
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