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DairyProfit Update for Sept. 27, 2012

Rabobank report: The return of milk scarcity 

Rabobank has published a new report looking at the global dairy industry in the third quarter (Q3) of 2012, predicting “renewed supply scarcity” in the next year.

In the report, the bank’s Food & Agribusiness Research and Advisory group examined supply, demand and pricing developments in key markets around the world. It said the impetus for a tightening market comes largely from the supply side, where low milk prices, extreme feed costs and unfavorable weather are expected to slow production growth in export regions to a trickle.  

Rabobank forecasts a reduction in the exportable surplus available from the “Big 7” export regions (the European Union, U.S., Australia, New Zealand, Brazil, Argentina and Uruguay) in the closing months of 2012 and first half of 2013 – the first such reductions in more than four years.

On the demand side, Rabobank said some anticipated  improvement in the economic position of consumers should provide an impetus to improved demand for dairy.  However, the story will be far more compelling in developing regions than the West, where employment and income growth are expected to remain at modest levels.  


Dean Foods exploring Morningstar sale

Dean Foods confirmed it is exploring the potential sale of its Morningstar business. 

In a statement posted on its website, Dean did not identify a buyer for Morningstar, “but believes the business possesses an attractive portfolio in a growing marketplace and a top-notch management team. The company only intends to sell the Morningstar business if it can do so in a transaction that maximizes shareholder value and helps ensure the future success of the business.”

Morningstar Foods is a leading warehouse delivery dairy business that produces and sells traditional and specialty items, including cultured dairy products, ice cream mixes, coffee creamers, aerosol whipped toppings, traditional and value-added milks, and blended iced beverages to retailers and foodservice providers nationwide.

Dean previously announced the spinoff of its WhiteWave unit, filing a registration statement for an initial public offering of common stock.  


IDFA, constituent groups name leadership

The International Dairy Foods Association (IDFA) and its three constituent organizations – the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA) – elected new officers and voted on new board members during fall bard meetings last week. Leading each association for the next year will be: IDFA Chair Mike Nosewicz, vice president – manufacturing, fresh dairy, The Kroger Co.; IDFA Vice Chair and NCI Chair Jon Davis, president and CEO, Davisco Foods International, Inc.; IDFA Secretary and MIF Chair Ed Mullins, executive vice president & CEO, Prairie Farms Dairy, Inc.; and IDFA Treasurer and IICA Chair Patty Stroup, head of procurement, global milk products procurement, Nestle S.A.

For a complete list of IDFA, MIF, NCI and IICA leadership, click here.  


MARKETS: Cheese dips, Class III futures follow

Today's market closing prices:

Butter: unchanged, at $1.94/lb.

Cheddar blocks: down 0.75¢, to $2.0750/lb.

Cheddar barrels: down 0.5¢, to $2.0350/lb.

Grade A nonfat dry milk: down 1.0¢, to $1.67/lb.

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

Class III milk: -5¢ to -32¢, October 2012 through December 2013. Based on current CME closing prices, the average for September-December 2012 is $20.06/cwt.; the full year 2012 average is $17.50/cwt.; and the 2013 average is $18.67/cwt.


Corn, soybeans, meal futures lower

Corn: -8¢ to -12¢ through September 2013. The 2013 average is $6.78/bu.

Soybeans: -2¢ to -10¢ through September 2013. The 2013 average is $14.51/bu.

Soybean meal: -$2.00 to -$7.80/ton through September 2013. The 2013 average is $414.4/ton.


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