DairyBusiness Update: April 17, 2014Print
Dairy Margins Deteriorating
Dairy margins deteriorated since the end of March due to both weaker milk prices and higher feed costs, according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC.
Margins remain strong in nearby Q2 at the 96th percentile of the previous 10 years, while deferred margins are at or near the 90th percentile through the first quarter of 2015. While still very high from a historical perspective, milk prices have started to slip recently following weakness in dairy product values.
Both block and barrel cheese prices have generally been in retreat since late March while cash butter prices on the CME have similarly experienced weakness after flirting with $2.00/lb. recently.
The latest results of the Global Dairy Trade auction reflected the fifth consecutive drop in price, with all products declining except anhydrous milk fat.
Corn prices meanwhile have firmed recently in response to tighter stocks reflected in the April WASDE report along with slow planting progress. USDA reported corn ending stocks down 125 million bushels from March due to a similar increase in the export forecast, with the figure falling on the low end of trade expectations.
USDA also released the first crop progress report of the season, with corn plantings at 3% complete through April 13 vs. 6% on average for this point.
Soybean meal prices are also drawing support from USDA reporting soybean ending stocks down 10 million bushels from March, suggesting a continued tight supply of soybean meal through the remainder of the season.
For more details, log on to www.cihmarginwatch.com
Winter Still in the Northeast/Warm in Southeast
Milk production at the farm level is up in the Northeast and Mid-Atlantic regions, according to USDA’s Dairy Market News (DMN). Milk supplies are plentiful, with steady Class I demand. The Northeast region is still experiencing winter weather conditions after getting a modest accumulation of snowfall this week.
The Southeast region's warm temperatures are facilitating increases in milk production. Shipments of milk supplies are being transferred from bottlers to various manufacturers, due to a decline in Class I demand. Production in Florida is flat to strong this week. Weather conditions are conducive to cow comfort levels. Dairy cows are being moved from field grass over to feed as contacts note that an early flush is possible, due to early lactation. Class I demand is strong this Easter/Passover week, although tourists are returning to the North as warmer temperatures prevails.
Banning Chocolate Milk is Not a Good Idea
Roger Segelken writes in the Cornell Chronicle, To health-minded PTA parents, it must have seemed a good idea at the time: Reduce sugar and milk fat in kids’ diets by banning chocolate milk from elementary schools and substituting skim.
But children in 11 Oregon schools, surveyed by the Cornell Center for Behavioral Economics in Child Nutrition Programs, had other ideas.
“Banning chocolate milk backfired; milk sales dropped by 8 percent, 29 percent of white milk was thrown out, and 7 percent of kids stopped eating school lunch altogether,” reports Andrew Hanks, lead author and research associate in the behavioral economics center, based in the College of Agriculture and Life Sciences. “This is probably not what parents wanted to see.”
The Cornell study, published April 16 in the online science journal PLOS ONE as “A Pilot Study Evaluating the Cafeteria Consequences of Eliminating Flavored Milk,” tells what happens when chocolate milk-loving kids are suddenly confronted with something thinner and paler. The article proposes what researchers hope can be a healthful compromise.
“Members of the school district’s PTA were adamantly opposed to offering chocolate milk in the cafeterias, claiming it was as bad as soda,” Hanks recalls. “While this policy does eliminate the added sugar in chocolate milk, it also introduces a new set of nutritional and economic consequences. Children typically don’t choose foods for health, but rather for taste.”
Nutritionally, after the milk substitution, students consumed less sugar and fewer calories; however, they also consumed less protein and calcium.
Read more at http://www.news.cornell.edu/stories/2014/04/chocolate-milk-ban-riles-schoolchildren.
Dairy Processors to Meet in Washington
Registration is now open for IDFA's 2014 Washington Conference, the industry’s popular legislative fly-in, scheduled to be held June 25-26, in Washington, D.C. This year, IDFA has added Regulatory RoundUP, June 24-25, to coincide with Washington Conference.
"We strongly encourage all members to take advantage of the rare opportunities for access and networking that Regulatory RoundUP and Washington Conference will offer," said Connie Tipton, IDFA president and CEO. “There is no more effective proponent for your business than you.”
During Washington Conference, participants will meet with members of Congress and their staffs, and become the grassroots lobbyist, the strongest advocate, for their business. The conference agenda provides attendees with valuable dairy policy briefings and the opportunity to meet and discuss industry priorities with policymakers in Washington.
At Regulatory RoundUP, compliance and regulatory professionals will meet face-to-face with the decision-makers and the regulation officials who have direct responsibility for the rules that affect dairy plants, products and personnel.
Together, Washington Conference and Regulatory RoundUP will offer three days of comprehensive policy and regulatory discussions with key federal officials and legislators.
For more information, contact Maria Velasco at firstname.lastname@example.org or call 202-220-3524.
Mielke Market Daily/Week’s End Review
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Last Friday’s small cheese price rally turned into a sustained recovery this week and reversed 3 weeks of declines. The cash blocks tacked on another 5.75¢ this morning on 4 sales, ending the Good Friday holiday-shortened week at $2.28/lb. The 1st 3 sales were at $2.2325/lb., with the 4th sale at $2.28/lb. An unfilled bid again rolled the barrels higher, this time 7¢, following yesterday’s 2¢ rise, and closed today and the week at $2.2575/lb., 2.25¢ below the blocks.
The blocks are up 11¢ on the week, 40¢ above a year ago, but 15.25¢ below their record March 24 peak. The barrels are up 17.75¢ on the week, 48.75¢ above a year ago, but 12¢ shy of their record high. Four cars of block traded hands this week and none of barrel, the barrel price gains all came on unfilled bids so someone must be breaking out the barbecue grill and needs some cheese. The still climbing NDPSR-surveyed block price hit $2.4149/lb., up 1.6¢, while the barrels averaged $2.3440/lb., down 1.5¢.
FC Stone market analyst Ryan Cox wrote in this morning’s Insider Opening Bell that "International prices have weakened, but demand is decent. Retailers were reluctant to bump up prices."
Cash butter was unchanged, after 3 days of loss, and closed at $1.89/lb. An offer at $1.90/lb. was again left on the board.
Cash butter resumed its decline this week, after holding all last week at $1.97/lb. It is down 8¢ this week but still 10.25¢ above a year ago. Seven carloads traded hands this week. NDPSR butter averaged $1.9839/lb., up 2.5¢.
Cash nonfat dry milk dropped 2.5¢ this morning on an offer, and closed the day and the week at $1.8650/lb., down4.25¢ on the week. Twelve carloads found new homes this week in the spot market.
Cox says "The nonfat market has been weak and buyers have been stepping aside, expecting prices to weaken further based on international markets."
Today’s Market Closing Prices
Butter: Unchanged, at $1.89/lb.
Cheddar blocks: Up 5.75¢, to $2.28/lb.
Cheddar barrels: Up 7¢, to $2.2575/lb.
Grade A nonfat dry milk: Down 2.5¢, to $1.8650/lb.
Class III milk: April $24.21, +9¢; May $22.14, +14¢; & Jun. $20.37, -1¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $19.32, +6¢ from Wednesday. The 2nd half average is now at $18.96, +4¢ from Wednesday.
Again the markets are closed tomorrow for Good Friday and reopen on Monday. Next week will have a lot for the markets to feed on. The preliminary March Milk Production report is issued Monday afternoon, along with NASS annual Livestock Slaughter report. The preliminary March Cold Storage report is out Tuesday, USDA announces the May Federal order Class I base milk price Wednesday afternoon, and the monthly Livestock Slaughter report is out Thursday.
Friday on DairyLine:
DairyBusiness Update Associate Editor, Lee Mielke, recaps the week’s dairy markets
and major dairy stories
Dr. Mike Hutjens discusses NDF - Neutral Detergent Fiber in his weekly “Feed facts”
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