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DairyBusiness Update: Dec. 10, 2013

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Will corn prices really be higher next year?

Much of the discussion in the corn market, and in crop markets in general, has become focused on the potential for a protracted period of low prices and the likely impact on farm incomes and land values. There even appears to be some competition relative to who can forecast the lowest corn prices for next year and beyond. This is just opposite the situation of a year ago when the drought-reduced U.S. crop invoked forecasts of extreme prices on the high side. Read more …

 

Chobani Twin Falls facility reaches full production capability

Chobani, Inc. announced its Twin Falls, Idaho, facility has reached optimal production capability. In addition to its original plant in upstate New York, Chobani Greek Yogurt opened the Idaho plant – the largest yogurt facility in the world – in late December 2012. Chobani's $450 million Twin Falls plant supports close to 1,200 local jobs.

"Our Twin Falls facility is ready to take on the increased production capacity and innovation it was designed for in order to help us meet the remarkable growth we're experiencing," said Hamdi Ulukaya, founder and CEO of Chobani. "This accomplishment allows us to sustainably and efficiently meet rising national demand and is a testament to the hard work of our new leadership, as well as those who have been with us from the beginning."

To support the supply and distribution of its products throughout the country, Chobani will rebalance and optimize the production of its yogurt between its facilities in upstate New York and Twin Falls, increasing production in Twin Falls given its design, size and innovation capability while Chobani's New York facility will remain the key manufacturing and distribution hub of Chobani's important and strategic East Coast region. 

For more information, visit www.chobani.com. Like Chobani on Facebook at www.facebook.com/chobani and follow on Twitter @chobani.

 

Mielke’s Market Daily                  

(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Cash block cheese crept up 0.75¢ this morning and hit $1.88/lb. Three cars traded hands at that price and a bid at $1.87/lb. went unfilled. Even the barrels got some traction this morning, inching up 0.5¢ on an unfilled bid, following yesterday’s 5.75¢ decent. The Cheddar barrels are now at $1.78/lb, an unsustainable 10¢ below the blocks. Butter was unchanged, following a gain yesterday of 1.5¢, and held at $1.66/lb. Five carloads exchanged hands, 2 at $1.6576/lb., 1 at $1.6550/lb., 1 at $1.6525/lb., and 1 more at $1.6550/lb. One bid at $1.66/lb. and an offer at $1.6650/lb. were left on the board. Cash Grade A nonfat dry milk tacked on 0.25¢ on a couple sales at $2.06/lb., just 5¢ shy of the record high. Two unfilled bids at $2.0575/lb. were left at the close. Extra Grade was up 1.75¢ on a sale and a bid and is now trading at $2.04/lb.

Today’s market closing prices:
Butter: Unchanged, at $1.66/lb.
Cheddar blocks: Up 0.75¢, to $1.88/lb.
Cheddar barrels: Up 0.5¢, to $1.78/lb.
Grade A nonfat dry milk: Up 0.25¢, to $2.06/lb.
Extra Grade nonfat dry milk: Up 1.75¢, to $2.04/lb.

California Class I milk prices start 2014  
The California Department of Food and Agriculture announced the state’s January 2014 Class milk price at $22.84 per hundredweight for the north and $23.11 for the south. Both are up $1.11 from December 2013 and are $2.60 above January 2013. The January 2014 Federal order Class I base price will be announced by USDA on Wednesday, December 18.

 

WASDE: 2013 milk output lowered but raised for 2014

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Dec. 10, reduced projected 2013 milk production estimates from a month earlier, based on recent cow number estimates. The 2014 estimate was raised as higher milk forecast prices and lower expected feed costs support a more rapid increase in cow numbers and output per cow.
   • 2013 production and marketings were projected at 201.6 billion lbs. and 200.7 billion lbs., respectively. The production estimate is down about 100 million lbs. from last month’s projection and the milk marketings estimate is unchanged. If realized, 2013 production and marketings would be up 0.65% from 2012.

• 2014 production and marketings were projected at 205.3 billion lbs. and 204.3 billion lbs., respectively. If realized, 2014 production and marketings would be up about 1.8% from 2013.

   The 2013 cheese price forecast was reduced, reflecting current prices. However, strength in current prices for butter, NDM, and whey resulted in higher price forecasts for those products.

   For 2014, despite higher dairy production, demand strength in importing countries and improving domestic demand in the U.S. is expected to support prices for all products.

   The Class III milk price is unchanged for 2013 as lower forecast cheese prices offset higher whey prices but the forecast is raised for 2014 based on higher forecast cheese and whey prices.

    The Class IV price forecast is raised for both years on higher butter and NDM prices. The all-milk price was forecast at $19.90-$20.00/cwt. for 2013; and $19.70-$20.50/cwt. for 2014.

Dairy price forecasts

  Estimated Forecast Forecast
  2012 2013 2014
Class III ($/cwt.) 17.44 17.90-18.00 17.05-17.85
Class IV ($/cwt.) 16.01 18.95-19.15 19.00-19.90
All milk ($/cwt.) 18.53 19.90-20.00 19.70-20.50
Cheese ($/lb.) 1.7076 1.760-1.770 1.690-1.770
Butter ($/lb.) 1.5943 1.530-1.560 1.500-1.610
NFDM ($/lb.) 1.3279 1.695-1.715 1.715-1.775
Dry whey (¢/lb.) 59.35 58.5-59.5 55.5-58.5
 

Source:USDA WASDE report, Dec. 10, 2013

Beef prices

Affecting cull cow prices, December cattle price projections for 2014 were raised from November’s estimate, as demand for fed cattle remains strong. Beef exports were raised for both 2013 and 2014. The 2013 steer price was estimated in at $125.82/cwt. The 2014 forecast is in a range of $128-$137/cwt., up $2 on the bottom end of last month’s forecast.

 

Crop Report: Cottonseed

USDA’s Dec. 10 Crop Production report raised the estimated cottonseed harvest slightly. Compared to the November estimate, output was pegged at 4.367 million tons, up 10,000 tons. Even with the increase, the annual cottonseed harvest remains the smallest since 2009.

 

More U.S. dairy products leaving USA
Cooperatives Working Together (CWT) accepted 33 requests for export assistance from Bongards Creameries, Dairy Farmers of America, Maryland Virginia Milk Producers Cooperative Association, Northwest Dairy Association (Darigold), Tillamook County Creamery Association and United Dairymen of Arizona to sell 5.064 million lbs. of Cheddar, Gouda and Monterey Jack cheese and 1.863 million lbs. of butter to customers in Asia, Central America, Europe, the Middle East and North Africa. The product will be delivered through May 2014.

So far in 2013, CWT has assisted member cooperatives in selling 129.41 million lbs. of cheese, 91.64 million lbs. of butter, 44,092 lbs. of anhydrous milk fat and 218,258 lbs. of whole milk powder to 40 countries on six continents. These sales are the equivalent of 3.26 billion lbs. of milk on a milkfat basis.

 

Have a "dairy good" Christmas
Consumers are being reminded ’Tis the season to enjoy real dairy products such as butter, cheese, whipped cream, and eggnog. The newly named, animated character, DairyUS, based on the REAL® Seal logo, shares that message in a video released yesterday by the National Milk Producers Federation (NMPF). Visitors to the REAL® Seal website www.realseal.com will be reminded throughout the holiday season that December is the perfect time to incorporate real dairy products in their holiday recipes.

There are no further USDA reports issued this week that we regularly monitor so the cash dairy market traders won’t have much to feed on outside the weather and national or international developments.

Wednesday on DairyLine:

• Will corn prices be higher next year? Darrel Good, University of Illinois.
• Professional Dairy Producers Foundation programs have great impact – Shannon Hext, PDPF.

 

 

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