DairyProfit Update for June 28, 2012Print
With USDA’s Ag Prices report providing "final” May feed prices used in the Milk Income Loss Contract (MILC) program payment formula, the May MILC payment will be $1.2164/cwt., according to Brian Gould, University of Wisconsin-Madison Department of Agriculture and Applied Economics professor.
Gould also updated estimated MILC payments into early 2013, based on MILC-related futures contracts as of June 27. Based on those estimates, MILC payments will peak in June, at about $1.30/cwt., dropping to about 99.9¢/cwt. in July and 23.7¢ in August. Estimates are always subject to change. To see a new summary spreadsheet, go to the UW-Madison “Understanding Dairy Markets” website: http://future.aae.wisc.edu/collection/software/current_MILC_est.xls.
June milk-feed price ratio improves (ever so slightly)
Lower milk prices were offset by lower feed prices, helping give a small boost to the June 2012 milk-feed price ratio. The June ratio is 1.38, up from a revised estimate of 1.35 in May 2012, but below 1.87 for June 2011. It marks the 15th consecutive month the ratio has been below 2.0.
The index is based on the current milk price in relationship to feed prices for a ration of 51% corn, 8% soybeans and 41% alfalfa hay.
At $16.10/cwt., the U.S. average milk price – down 10¢ from May and $5/cwt. less than June 2011 – is the lowest since July 2010. U.S. average alfalfa hay prices declined $14, to $201/ton; corn prices were down 8¢, to $6.25/bushel; and soybean prices dipped 30¢, to $13.70/bushel.
Cull cow prices lower
Estimated monthly cull cow prices (beef and dairy combined) averaged $86.80/cwt. in June, down 90¢/cwt. from May 2012, but still $10.90/cwt. more than June 2011 ($75.90/cwt.). The June 2012 average puts the beef value of a 1,200-lb. cull cow near $1,050/head.
USDA announced a final decision which amends the “pool plant” definition of the Mideast milk marketing order. This decision is based on testimony and evidence given at a public hearing held in Cincinnati, Ohio, on Oct. 4-5, 2011.
The decision amends the pool plant definition to more adequately identify the plants that service the fluid milk needs of the marketing order. Specifically, the amendment will regulate fluid milk plants physically located within the Mideast marketing area that have a Class I utilization of at least 30% and whose combined Class I route disposition and transfers into federal milk marketing areas is greater than 50%.
The final decision will be published in the June 28, 2012 Federal Register.
Weekly dairy product price report
USDA’s Ag Marketing Service released national dairy product sales report highlights for the week ending June 23:
• Grade AA butter prices averaged $1.40/lb., up 1.0¢ from the previous week.
• 40-lb. cheddar cheese blocks averaged $1.62/lb., up 3.6¢; 500-lb. cheddar barrels (adjusted to 38% moisture) averaged $1.58/lb., up 3.2¢.
• USDA Extra Grade dry whey averaged 49.7¢/lb., down 0.9¢.
• Extra Grade/Grade A nonfat dry milk averaged $1.11/lb., up 0.7¢.
MARKETS: Product, Class III prices change little
Today's market closing prices:
Butter: unchanged, at $1.52/lb.
Cheddar blocks: down 0.25¢, to $1.65/lb.
Cheddar barrels: unchanged, at $1.6750/lb.
Grade A nonfat dry milk: unchanged, at $1.2275/lb.
Extra Grade nonfat dry milk: unchanged at $1.1950/lb.
Class III milk: mixed in a narrow range (-11¢ to +13¢) through December 2013. Based on current closing prices, the average for June-December 2012 is $17.12/cwt.; the full year 2012 average is $16.63/cwt.; and the 2013 average is $16.53/cwt.
Grain futures mostly slightly lower
Corn: Mostly slightly lower, September 2012 through September 2013. The remaining 2012 average is $6.37/bu.; 2013 average is $6.19/bu.
Soybeans: -2¢ to -10¢/bushel through September 2013. The remaining 2012 average is $14.33/bu.; 2013 average is $13.18/bu.
Soybean meal: -$2.40 to +$0.30 through September 2013. The remaining 2012 average is $417.20/ton; 2013 average is $365.63/ton.
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