DairyBusiness Update for 8.29.13Print
FY 2013-2014 dairy export picture remains bright
USDA issued its quarterly Ag Trade Outlook report on Aug. 29, and dairy numbers continue to be promising for 2013 and into 2014. Lower U.S. energy prices, a depreciating dollar and more available credit are positive factors for the U.S. ag trade outlook into next year.
The value of fiscal year 2013 (FY ’13) dairy exports was raised $500 million from May’s forecast, to $5.8 billion. Higher prices and volumes – due to lagging milk production in the European Union (EU) – are expected to drive the increase.
For FY ’14, U.S. dairy exports are forecast to decline $200 million from FY ’13, to $5.6 billion, as volumes and global prices are expected to moderate. It would still be the second-highest total on record.
The FY ’13 U.S. dairy import forecast was reduced $100 million, to $3.1 billion. The forecast for FY ’13 cheese imports was unchanged at $1.2 billion. Looking into FY ’14, USDA estimated the value of dairy product imports at $3.2 billion, with $1.3 billion of that being cheese. If realized, both would be up $100 million from FY ’13.
USDA released its “2013 Farm Income Forecast” on Aug. 28. Drilling down into dairy, 2013 receipts from milk marketings are forecast at $39.8 billion, up $2.8 billion from last year and exceeding the previous high of $39.5 billion set in 2011. (See table on U.S. farm sector livestock cash receipts and value of production). USDA estimated an average milk price of $19.70/cwt. for 2013, up 6% from 2012 and second only to 2011’s $20.24/cwt. Milk production is expected to be about 1% above 2012 and 3% above 2011. (See U.S. annual average price for selected crops and livestock.) U.S. dairy producers are expected to receive $225 million in Milk Income Loss Contract (MILC) program payments in 2013, down 50% from 2012. Read more ...
Applying political pressure in the Senate Ag Committee chair's home state of Michigan, International Dairy Foods Association (IDFA) president and CEO Connie Tipton authored a newspaper guest column charging dairy policy contained in the Senate Farm Bill would raise milk prices for families and lower-income consumers.
Tipton's column appeared in the Sunday edition of the The Oakland (Michigan) Press, which reaches 71,000 readers in cities to the north and west of Detroit. U.S. Sen. Debbie Stabenow is a Michigan Democrat and is pushing for approval of the Senate Ag Committee’s Farm Bill proposal, which includes the Dairy Market Stabilization program.
In her column, Tipton recommended support of the House-passed version of the Farm Bill, which “would offer dairy farmers an effective net without forcing higher prices on consumers.” She noted the House version was supported by Michigan U.S. Reps. John Dingell, John Conyers, Fred Upton and Mike Rogers. Read more …
Next LGM-Dairy policy sale is Aug. 30
The next Livestock Gross Margin-Dairy (LGM-Dairy) sales period begins Friday afternoon, Aug. 30, according to Alan Zepp, Risk Management Program coordinator with Pennsylvania’s Center for Dairy Excellence. LGM-Dairy will be offered for sale by crop insurance agents, with producers eligible to purchase margin insurance for a 10-month period (October 2013 to July 2014), or any combination of months during that period.
Reviewing market fundamentals and conditions in his monthly “Protecting Your Profits” conference call, Zepp said current default milk and feed prices indicate insurable margins for the 10-month period are down from a month ago, but above the actual average margins for the same 10-month period over the past five years.
The October 2013-July 2013 average of expected margins ($0.00 deductible policy) is $13.32/cwt., $1.06/cwt. above the five-year average actual margin of $12.26/cwt., and 68¢/cwt. more than the 10-year average of $12.64/cwt. The three-year average margin (2010-2012) for the October-July period was $13.72/cwt.
The premium for a $0 deductible policy to insure a $13.44/cwt. margin is estimated at 54¢/cwt. (13¢/cwt. to insure a $12.44/cwt margin for a $1 deductible policy).
“Protecting Your Profits” information and a recorded podcast is posted at http://centerfordairyexcellence.adobeconnect.com/p73m4lodrsk/. The website also adjusts LGM-Dairy estimated margins weekly, based on updated futures prices. For further information, producers can contact Zepp at email@example.com or phone 717-346-0849.
July Iowa and Nebraska dairy producer income margins may have improved slightly in July, but they remained below breakeven levels, according to Robert Tigner, Extension Educator.
With lower feed costs, July total costs (excluding labor and management) decreased 93¢/cwt., to $18.81/cwt. The average milk price declined 32¢/cwt. from June, to $19.03/cwt. Adding the average Milk Income Loss Contract (MILC) payment of 8¢/cwt. (down from 24¢ in June), the July milk price/MILC total was $19.11/cwt.
The budgeted break-even price for a freestall dairy with a 24,000-lb. rolling herd average (RHA) declined about $1.12/cwt., to $21.00/cwt.
Based on this budget, herds producing 24,000 lbs. of milk per cow per year saw a $2.63/cwt. return over variable costs in July. Adding fixed costs, labor and management, the return dropped to 52¢/cwt. Adding a charge for returns to management resulted in a loss of $1.80/cwt. Read more ...
MARKETS: Cheese mixed; Class III futures mostly lower
The cheese price roller coaster headed down a bit this morning, at least for the blocks, according to DairyBusiness Update associate editor Lee Mielke. A carload of 40-lb. cheddar block sold at $1.76/lb., but an uncovered offer took the price down 2.25¢, to $1.7275/lb. A sale of 500-lb. barrels nudged the price up to $1.7550/lb., and an unfilled bid pushed it a little higher, to $1.7575/lb, up 1.75¢ on the day. Maybe there’s some Labor Day grilling being planned.
Butter closed at $1.4350/lb., up 0.5¢. Three sales took place, 1 at $1.43/lb. and 2 at $1.4350/lb. Two bids at $1.42 were left on the board, as was an uncovered offer at $1.4375/lb.
Grade A nonfat dry milk remained at $1.80/lb. and Extra Grade at $1.78/lb., with no activity.
Today’s market closing prices:
Butter: up 0.5¢, to $1.4350/lb.
Cheddar blocks: down 2.25¢, to $1.7275/lb.
Cheddar barrels: up 1.75¢, to at $1.7575/lb.
Grade A nonfat dry milk: unchanged, at $1.80/lb.
Extra Grade nonfat dry milk: unchanged, at $1.78/lb.
Class III milk: -34¢ to +4¢ through December 2014. Based on current CME closing prices, the August-December 2013 average is $17.44/cwt., with an overall 2013 average of $17.59/cwt.; and the 2014 average is $16.62/cwt.
Corn, soybean meal futures mixed; soybeans lower
Today’s futures prices at the Chicago Mercantile Exchange:
Corn: -7¢ to +3¢ through December 2014, settling in a range of $4.81-$5.15/bushel.
Soybeans: -3¢ to -10¢ through November 2014, with November 2013 through September 2014 contracts settling in a range of $12.45-$13.68/bushel.
Soybean meal: -$2.30 to +$4.10/ton through September 2014. October 2013-September 2014 contracts settled in a range of $380-$434/ton.
Friday on DairyLine:
• New Zealand dairy producers face a big decision right now – whether to take steps to slow down grass growth, according to the Daily Dairy Report’s Sarina Sharp. She talks with DBU associate editor Lee Mielke about it on tomorrow’s DairyLine broadcast.
USDA issues its August Ag Prices report tomorrow afternoon. It includes the latest milk-feed price ratio, as well as the feed cost adjuster to determine the July Milk Income Loss Contract (MILC) program payment.
Looking ahead to next week, Monday is the Labor Day holiday. The California Department of Food and Agriculture issues its August 4a and 4b milk prices on Tuesday, Sept. 3. The July Dairy Products report is out on Wednesday, Sept. 4. August federal order Class II, III & IV prices are announced on Thursday, Sept. 5.
Today on Facebook
• This September and October, consumers are invited to enter the “Improve Your Castle” contest courtesy of Saputo Cheese USA Inc.’s brand of imported Danish and Dutch specialty cheeses: King's Choice Cheeses. One lucky grand prize winner will receive a $3,000 gift card to The Home Depot®* in this home improvement-themed contest.
• Photo of the Day: Proud smiles! Seen here are (l-r) Maine State Holstein show Junior Champion, Martin-Place Damion Tres, from Martin-Place Farm exhibited by Megan Caruso and Reserve Junior Champion, Morrill Heztry Clover, from Beech Haven Ladies exhibited by Kennedy Kimball. Congrats to both of these Juniors! ~Photo by Julie Martin #HolsteinWorldPOTD
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