DairyProfit Update for Oct. 16, 2012
2012 CWT cheese export assistance nears 100 million lbs.
Cooperatives Working Together (CWT) is nearing a monumental feat for exports: helping its member cooperatives export 100 million lbs. of cheese in 2012.
For the week ending Oct. 12, CWT accepted seven requests for export assistance from Dairy Farmers of America, Darigold and Upstate Niagara Cooperative to sell 2.798 million lbs. of cheddar and Monterey Jack cheese and 302,033 lbs. of butter to customers in Asia, Central America and the Middle East. The product will be delivered October 2012 through March 2013.
So far in 2012, CWT has assisted member cooperatives in making export sales of 99.7 million lbs. of cheese, 58.4 million lbs. of butter and 127,868 lbs. of anhydrous milk fat. The product will be shipped to 34 countries on four continents. On a butterfat basis, the milk equivalent of these exports is 2.197 billion lbs., the same as the annual milk production of 104,600 cows.
Since the beginning of October, quarterly dairy margins have improved for the next three quarters (Q4 2012, Q1 & Q2 2013), flattening out in Q3 2013, according to Commodity & Ingredient Hedging’s (CIH) Margin Watch report. The profitability outlook for dairy producers continues to be quite favorable over the next four quarters, with margins above the 85th percentile of the last 5 years through Q3 2013. Milk prices have been flat to higher over the past two weeks, while feed costs continue to slide.
USDA reported September milk cow inventories to be lower from August and, along with a decline in production per head, helped support milk prices.
Exports for butter were weaker than average for July, while cheese exports were strong relative to seasonal trends, down 5% from June compared to down 9.5% on average. Cold storage for both cheese and butter were reported to be down in August from July, in line with what normally would be expected over the period.
MARKETS: Cheese, butter prices tumble, near-term Class III futures follow suit
Today's market closing prices:
Butter: down 5.5¢, to $1.8750/lb.
Cheddar blocks: down 9.0¢, to $2.01/lb.
Cheddar barrels: down 9.0¢, to $1.97/lb.
Grade A nonfat dry milk: unchanged, at $1.63/lb.
Extra Grade nonfat dry milk: unchanged, at $1.6350/lb.
Class III milk: 62¢-73¢ lower November-December 2012. Based on current CME closing prices, the average for October-December 2012 is $20.43/cwt.; the full year 2012 average is $17.51/cwt.; and the 2013 average is $18.61/cwt.
Meal futures slightly lower
Corn: -1¢ to +1¢ through September 2013. The 2013 average is $6.94/bu.
Soybeans: +1¢ to +4¢ through September 2013. The 2013 average is $14.16/bu.
Soybean meal: -$0.30 to -$3.30/ton through September 2013. The 2013 average is $407.06/ton.
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