DairyProfit Update for Sept. 12, 2012
USDA’s World Ag Supply & Demand Estimates report lowered projected milk production for 2012, forecasting output for both 2012 and 2013 below 200 billion lbs. for the first time since March.
• 2012 production and marketings were projected at 199.9 billion lbs. and 198.9 billion lbs., respectively, both down 100 million lbs. from last month’s estimates. If realized, 2012 production would be up about 1.9% from 2011; marketings would be up 1.8%. The 2012 decrease reflects a slower rate of growth in milk per cow in the second half of the year.
• 2013 milk production and marketings were estimated at 198.9 billion lbs. and 197.9 billion lbs., respectively, unchanged from last month. If realized, both would be down 0.5% from 2012.
With projected milk production lowered and demand somewhat stronger, 2012 dairy prices were forecast higher. The all milk price is forecast at $17.80-$18.00/cwt. for 2012 and $17.85-$18.85/cwt. for 2013.
On the cost side of the dairy equation, the 2011/12 estimated season-average corn price is $6.25/bushel, with the projected range for the 2012/13 season lowered 30¢ on both ends of the range compared to a month ago, to $7.20-$8.60/bushel.
The U.S. season-average soybean price for 2012/13 is projected unchanged at $15.00-$17.00/bushel, compared to a 2011/12 season-average price of $12.45/bushel. Soybean meal prices are projected at $485-$515/ton, up $25.00 on both ends of the range compared to last month’s forecast, and up from the 2011/12 season-average price of $397/ton.
Members of the National Milk Producers Federation (NMPF) joined hundreds of other farmers on Capitol Hill on Sept. 12, rallying to urge Congress to pass a new, five-year farm bill before current farm programs expire in less than three weeks.
One of them was NMPF first vice chair Ken Nobis, a dairy farmer from St. John, Mich., who told those assembled that politics shouldn’t stand in the way of helping America’s farmers.
“Dairy farmers have worked with Democrats and Republicans, in the Senate and the House, to create a farm bill that saves taxpayers money, and at the same time offers dairy producers a more effective safety net when times are tough,” Nobis said. “It would be a tragic mistake, after this bill has already passed the Senate, and the House Agriculture Committee, to let it wither and die on the political vine, rather than make the necessary effort to get it passed in the coming weeks.”
There are fewer than 10 days left on the legislative calendar of the House of Representatives before the Congress adjourns in October. If the bill can’t be approved this fall, the path forward is murky at best. Other possible outcomes include a farm bill being passed by a lame duck session of Congress after the November elections, or a one-year extension of current farm programs.
NMPF is a founding member of the Farm Bill Now coalition, which brought dozens of groups and hundreds of farmers together for the rally at the steps of the U.S. Capitol.
July dairy trade slips, but still tops $400 million
July 2012 U.S. dairy exports continued to slide from May’s record, but still surpassed $400 million for the 17th consecutive month. At $402 million, exports were down 8% from June, and down about 2% from July 2011. July’s exports pushed the fiscal year 2012 (October 2011-July 2012) total to $4.435 billion, up 21% from the same period in FY ’11.
At $274 million, July 2012 imports were up 11% from June 2012, and 8% more than July 2011. FY ’12 imports, at $2.631 billion, were up 10%.
The FY ’12 dairy trade surplus now stands at $1.804 billion, compared to $1.642 billion in FY ’11.
July 2012 cheese imports were valued at $87 million, up 18% from June. FY ’12 cheese imports, at $876 million, were down 2%.
MARKETS: Butter, cheese bounce back; Class III futures mostly higher
Today's market closing prices:
Butter: up 2.0¢, to $1.84/lb.
Cheddar blocks: up 1.0¢, to $1.84/lb.
Cheddar barrels: up 3.0¢, to $1.80/lb.
Grade A nonfat dry milk: unchanged, at $1.70/lb.
Extra Grade nonfat dry milk: unchanged, at $1.6350/lb.
Class III milk: -2¢ to +20¢ through December 2013. Based on current CME closing prices, the average for September-December 2012 is $19.44/cwt.; the full year 2012 average is $17.30/cwt.; and the 2013 average is $18.67/cwt.
Corn lower, but soybeans, meal jump
Corn: -5¢ to -11¢ through September 2013. The September-December 2012 average is $7.70/bu.; 2013 average is $7.26/bu.
Soybeans: +29¢ to +45¢ through September 2013. The September-November 2012 average is $17.44/bu.; 2013 average is $15.68/bu.
Soybean meal: +$10.00 to +$17.10/ton through September 2013. The September-December 2012 average is $532.93/ton; 2013 average is $448.21/ton.
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