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DairyProfit Update for Sept. 24, 2012

CWT assists with 6.6 million lbs. of cheese, butter export sales

Cooperatives Working Together (CWT) accepted 13 requests for export assistance from Dairy Farmers of America, Darigold, Land O’Lakes and Maryland & Virginia Milk Producers Cooperative Association to sell 5.880 million lbs. of cheddar and Monterey Jack cheese, and 687,842 lbs. of butter to customers in Asia, Central America, Europe and the Middle East. The product will be delivered September 2012 through March 2013.

So far in 2012, CWT has assisted member cooperatives in making export sales totaling 91.6 million lbs. of cheese, 58.1 million lbs. of butter and 123,459 lbs. of anhydrous milk fat. The product will go to 34 countries on four continents. On a butterfat basis, the milk equivalent of these exports is 2.116 billion lbs., or the same as the annual milk production of 100,700 cows.


July fluid sales lower

July 2012 U.S. packaged fluid milk sales totaled about 4.09 billion lbs., down 1.4% from July 2011. When adjusted for calendar composition, sales totaled 4.14 billion lbs., down 1.8%.

July sales of conventional fluid products, at 3.927 billion lbs., declined 1.4%; sales of organic milk products, at 164 million lbs., also down 1.4%. Organic sales represented about 4.0% of total sales. 

January-July sales totaled 30.432 billion lbs., down 1.5% from the same period in 2011 (30.481 billion lbs., -1.7%, adjusted). Conventional fluid products, at 29.195 billion lbs., declined 1.7% from the same period in 2011; organic milk products, at 1.237 billion lbs., increased 2.4%. Organic sales represented about 4.1% of total sales.

Source: Dairy Market News


Dairy cow culling

While cull cow slaughter topped 2 million head between January-August 2012, the U.S. dairy herd shrunk by only 22,000 head, indicating a large number of replacement heifers.

USDA estimated 275,300 culled dairy cows were slaughtered under federal inspection in August 2012, up 36,300 from July 2012 and 30,700 more than August 2011. Through the first eight months of 2012, cull cow slaughter totaled 2.038 million head, up 128,200 from the same period in 2011. 


U.S. cattle on feed 

U.S. slaughter cattle and calves in feedlots with capacity of 1,000 or more head totaled 10.6 million head on Sept. 1, 1% less than a year earlier. August placements totaled 2.00 million, about 11% less than a year earlier. August fed cattle marketings totaled 1.96 million, 5% less than a year earlier.


August cold storage 

With August 2012 milk production dipping below year-ago levels, so were stocks of dairy products, according to USDA’s Cold Storage report. 

Butter stocks on Aug. 31 totaled 204.5 million lbs., down 13% from July 31, but still up 23% from August 2011. 

Total cheese stocks, at 1.003 billion lbs., were down 4% from July 2012 and down 6% from August 2011. American cheese, at 615.0 million lbs., was down 3% from July and 5% less than a year earlier.


What's behind soybean price slide?

November 2012 soybean futures reached a high of $17.89/bushel on Sept. 4, but have declined sharply since then. Several fundamental factors have contributed to the decline in soybean prices: a smaller domestic crush; an export slowdown due to economic concerns in China; the expectation of a large South American soybean crop in 2013; and early reports of better-than-expected yields of the current USDA will provide a new yield forecast in the Oct. 11 Crop Production report. 

The Oct. 11 USDA Crop Production report will provide an update of planted and harvested acreage and a new yield forecast.

A soybean price rally would not be expected at harvest time, particularly if USDA confirms prospects for a larger crop, according to University of Illinois ag economist Darrel Good. However, the on-going tightness of supplies and the need to further ration consumption should provide some underlying price support through the end of the calendar year, he said.


MARKETS: Butter up; Class III futures slightly lower

Today's market closing prices:

Butter: up 4.0¢, to $1.93/lb.

Cheddar blocks: unchanged, at $2.00/lb.

Cheddar barrels: unchanged, at $1.96/lb.

Grade A nonfat dry milk: down 1.0¢, to $1.68/lb.

Extra Grade nonfat dry milk: unchanged, at $1.6350/lb.

Class III milk: -1¢ to -23¢, October 2012 through July 2013. Based on current CME closing prices, the average for September-December 2012 is $19.78/cwt.; the full year 2012 average is $17.41/cwt.; and the 2013 average is $18.85/cwt.


Corn, soybeans, meal mostly lower

Corn: -2¢ to -3¢ through September 2013. The 2013 average is $7.07/bu.

Soybeans: -5¢ to -12¢ through September 2013. The 2013 average is $14.92/bu.

Soybean meal: -$2.90 to +$0.70/ton through September 2013. The 2013 average is $427.48/ton.