DairyBusiness Update for Feb. 8, 2013
(correcting difference in 2013/2012 first-quarter averages)
March California Class 1 prices lower
California’s March 2013 Class 1 milk prices are $19.33/cwt. for the North and $19.60/cwt. for the South. Both are down 50¢ from February 2013, but $1.73 more than March 2012. They're the lowest since August 2012.
That puts the three-month average at $19.80/cwt. for the North and $20.07/cwt. for the South, $1.13 above the three-month average a year ago.
The March federal order Class I base price will be announced February 21.
USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Feb. 8, boosted both 2012 and 2013 milk production estimates from a month earlier. The increases were primarily attributed to more milk per cow, as lower forecast feed prices are expected to support higher milk yields in 2013.
• 2012 production and marketings were projected at 200.3 billion lbs. and 199.3 billion lbs., respectively. Both are up 300 million lbs. from January’s forecast. If realized, 2012 production and marketings would be up about 2.1% and 2.0%, respectively, from 2011.
• 2013 milk production and marketings were both raised 1.1 billion lbs. from January’s projections, to 201.0 billion lbs. and 200.0 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.3% from 2012 estimates.
On the cost side of the dairy equation, the 2012/13 estimated season-average corn price range was lowered 5¢-35¢/bushel, in a range of $6.75-$7.65/bushel, according to the USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Feb. 8. However, the U.S. season-average soybean price was projected 5¢/bushel higher on both ends of the range, at $13.55-$15.05/bushel. Soybean meal prices were unchanged compared to last month’s forecast, at $430-$460/ton.
Even though USDA raised beef production estimates, it left the 2013 steer beef price forecast unchanged at $125-$134/cwt. Beef production is raised based mostly on heavier carcass weights, but cow slaughter in the first quarter of 2013 is expected to be relatively high.
Got your fiscal year 2013 Milk Income Loss Contract (MILC) program payment “start month” established?
Brian Gould, UW-Madison dairy economist, updated projected FY ’13 MILC payments based on milk and feed futures prices at the close of trading on Feb 7. The projected payments (cents/cwt.) – down slightly from forecasts a week ago – are: January – 11.41¢; February – 39.06¢; March – 60.44¢; April – 42.95¢; May – 34.95¢; June – 26.77¢; July – 3.67¢; and August-September – 0.00¢.
A reminder: The “relief period” for dairy producers with annual production above the payment cap of 2.985 million lbs. and wishing to change their “start month” in FY ’13 is Feb. 1-28.
For additional information, visit Gould’s “Understanding Dairy Markets” website: http://future.aae.wisc.edu/.
MARKETS: Cheese higher; 2013 Class III futures mixed
Today's market closing prices:
Butter: unchanged at $1.5550/lb.
Cheddar blocks: up 0.25¢, to $1.65/lb.
Cheddar barrels: up 0.5¢, to $1.56/lb.
Grade A nonfat dry milk: unchanged at $1.52/lb.
Extra Grade nonfat dry milk: unchanged at $1.56/lb.
Class III milk: -13¢ to +1¢ through December 2013. Based on current CME closing prices, the 2012 average is $17.44/cwt.; the 2013 average is $18.11/cwt.; and the 2014 average is $16.42/cwt.
Corn lower, soybean, meal futures sharply lower
Corn: -2¢ to -4¢ per bushel through December 2013. The 2013 average is $6.53/bu.
Soybeans: -34¢ to -44¢ per bushel through November 2013. The 2013 average is $13.86/bu.
Soybean meal: -$15.00 to -$17.400/ton through December 2013. The 2013 average is $392.26/ton.