DairyProfit Update for Oct. 10, 2012
California November Class 1 prices catch up to 2011
At $23.17/cwt. for the North and $23.44/cwt. for the South, California’s November Class 1 milk prices are up $2.62 from October 2012 and the highest since September 2011. And, they’ve final caught up and surpassed the prices for same month a year ago, each up about $2.90 from November 2011.
Even with those gains, however, 2012 prices for the January-November averaged $1.99/cwt. less than the same period in 2011. The 2012 averages stand at $18.96/cwt. (North), down from $20.68/cwt. in 2011; and $18.96/cwt. (South), down from $20.95/cwt.
The November federal order Class I base price will be announced Oct. 17.
What has become the standard ebb and flow of U.S. dairy prices may very well be coming to an end, according to a report released by Rabobank’s Food & Agribusiness Research and Advisory (FAR) group. The report, titled “Dysrhythmia,” predicts the U.S. dairy market can no longer depend on the predictable market cycles it had become accustomed to in the 1990s and through the mid-2000s, noting the U.S. global presence and volatile feed costs will continue to create an unpredictable marketplace.
The U.S. dairy industry has ended a decades-long period of isolation, as the explosion of prices on the world market encouraged the U.S. to begin supplying large volumes of exports – quickly bringing the U.S. and international dairy prices into alignment. With an exposure to the world market comes extreme diversity and volatility – including factors such as income growth in the developing world, dietary shifts, product contamination, shifting regulation and currency strengths in import regions.
The report also notes that producers continue to face volatile feed prices, that make less regular dairy price cycles even more difficult. Since 2007, feed prices have shifted to a higher trading range and now short-term shifts in the cost of feed do not necessarily track those of milk prices – with revenue and costs moving in the opposite direction at times.
• Oct. 11: USDA Crop Production and World Ag Supply & Demand Estimates reports
• Oct. 11-12: U.S. ag and dairy trade updates
MARKETS: Butter dips, Class III futures lower
Today's market closing prices:
Butter: down 1.0¢, to $1.93/lb.
Cheddar blocks: unchanged, at $2.10/lb.
Cheddar barrels: unchanged, at $2.06/lb.
Grade A nonfat dry milk: unchanged, at $1.66/lb.
Extra Grade nonfat dry milk: unchanged, at $1.6350/lb.
Class III milk: -5¢ to -23¢, November 2012 through September 2013. Based on current CME closing prices, the average for October-December 2012 is $20.71/cwt.; the full year 2012 average is $17.58/cwt.; and the 2013 average is $18.61/cwt.
Corn, soy futures continue lower
Corn: steady to -5¢ through September 2013. The 2013 average is $6.97/bu.
Soybeans: -5¢ to -27¢ through September 2013. The 2013 average is $14.27/bu.
Soybean meal: -$8.40 to +$1.00/ton through September 2013. The 2013 average is $412.30/ton.
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