DairyBusiness Update for 7.11.13
The House passed a version of the Farm Bill (HR 2642) on Thursday, July 11, after splitting out nutrition/feeding programs. The 216-208 vote was strictly along partisan lines. The bill contains 11 of the 12 titles of the original Farm Bill voted down by the House in late June. House leadership removed the nutrition title, which includes the food stamp program (SNAP) and other programs.
The House version includes the Goodlatte-Scott dairy policy proposal, and not the Dairy Security Act approved by the Senate. Commodity, conservation, research, rural development and other titles from the previously considered Farm Bill remain. The bill also repeals 1949 and 1938 “permanent” farm bill laws.
Divided in the House, passage of this version of the Farm Bill was also divided in dairy. Read more ...
USDA’s World Ag Supply & Demand Estimates (WASDE) report, released July 11, raised projected 2013 milk production estimates by 200 million lbs. from a month earlier, but kept 2014 production estimates steady. Despite weaker forecast milk prices, forage supplies and feeding margins will likely continue to support modest
gains in milk production.
• 2013 production and marketings were projected at 202.0 billion lbs. and 201.1 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.8% from 2012.
• 2014 production and marketings were projected at 204.5 billion lbs. and 203.6 billion lbs., respectively. If realized, 2014 production and marketings would be up about 1.2% from 2013.
Cheese and butter prices are forecast lower for 2013, based on larger supplies. Prices for 2014 are lowered, as the larger carry-in stocks overhang the market. The 2013 NDM price forecast is raised from last month on strong export demand, but the forecast for 2014 is unchanged. The whey price forecasts for both 2013 and 2014 are unchanged from last month.
As a result, the Class III price forecasts are lowered from last month in line with lower product prices. The Class IV price forecast is unchanged for 2013, as lower butter prices are largely offset by higher NDM prices. However, the Class IV price is lowered for 2014, reflecting lower butter prices.
The 2013 all milk price is forecast at $19.50-$19.80/cwt.; the 2014 price is projected in a range of $18.70-$19.70/cwt.
Impacting cull cow prices, estimated 2013 beef production was reduced from last month, according to USDA’s World Ag Supply & Demand Estimates (WASDE) report, released July 11. Steer and heifer slaughter in the second quarter was lower than expected, more than offsetting higher forecast slaughter in the second half of the year. However, the cattle price forecast for 2013 is lowered from last month, as prices have weakened recently. The 2013 steer price was estimated in a range of $124-$127/cwt., down $1-$3 from last month. The 2014 forecast is in a range of $126-$137/cwt., down $1-$2 from last month’s forecast.
On the cost side of the dairy equation, the 2013/14 season-average farm price for corn was projected at $4.40-$5.20/bushel, unchanged from last month, but down sharply from the record $6.75-$7.15/bushel average for 2012/13, according to USDA’s World Ag Supply & Demand Estimates (WASDE) report, released July 11.
Corn production for 2013/14 is lowered 55 million bushels with the lower harvested area and the projected yield unchanged at 156.5 bushels per acre. Projected production remains just below 14 billion bushels and would be 858 million above the record in 2009/10. Corn supplies for 2013/14 are lowered 90 million bushels, with a 5-million-bushel increase in imports only partly offsets the lower beginning stocks and production.
The U.S. season-average soybean price for 2013/14 is forecast at $9.75-$11.75/bushel, unchanged, but down from $14.40/bushel in 2012/13. Soybean meal is forecast at $290-$330/ton in 2013/14, also unchanged from last month, and compared to $455/ton in 2012/13.
Soybean production is projected at 3.42 billion bushels, up 30 million due to increased harvested area. Harvested area, estimated at 76.9 million acres in the June 28 Acreage report, is 0.7 million above the June projection. The soybean yield is projected at 44.5 bushels per acre, unchanged from last month. Soybean supplies are 30 million bushels above last month’s forecast reflecting the production change. Affecting cottonseed prices, USDA raised cotton ending stocks for both 2012/13 and 2014, due to a reduction in exports. Planted area and expected yield were increased, but expected harvested area was decreased, resulting in unchanged production totals relative to last month.
USDA opens bids for ‘Greek’ yogurt school pilot
USDA’s Farm Service Agency is accepting processor bids to procure high-protein yogurt products for a new pilot program for schools. USDA will launch the pilot in New York, Arizona, Idaho and Tennessee, but yogurt manufacturers from any area of the country are invited to submit bids.
The pilot stems from a request last year by U.S. Sen. Charles Schumer (D-N.Y.) and other members of Congress to consider adding “Greek” yogurt to the USDA list of foods state agencies can order with USDA food entitlement funds, including those used for the National School Lunch Program.
According to the International dairy Foods Association, the current school nutrition standards, which went into effect last year, encourage school menu planners to use high-protein foods that are low in sodium, like low-fat and fat-free yogurt to satisfy the meat and meat alternate component in meals.
MARKETS: Powder higher; Class III futures lower
Cash block cheese inched up another quarter-cent today in Chicago, hitting $1.6750/lb. on a trade, while an offer went uncovered. Barrel backed down 1.5¢, slipping to $1.67/lb., on five trades. Butter dropped another 1.75¢ and is now trading at $1.4950/lb.. Five cars found new homes on the day, with an offer going uncovered. Cash nonfat dry milk was bid higher. Grade A inched up 0.25¢, to $1.7450/lb., while Extra Grade closed at $1.7250/lb., up 1.5¢.
Today’s market closing prices:
Butter: down 1.75¢, to $1.4950/lb.
Cheddar blocks: up 0.25¢, to $1.6750/lb.
Cheddar barrels: down 1.50¢, to $1.67/lb.
Grade A nonfat dry milk: up 0.25 cent, to $1.7450/lb.
Extra Grade nonfat dry milk: up 1.50 cents, to $1.7250/lb.
Class III milk: -23¢ to -1¢ through March 2014. Based on current CME closing prices, the 2013 average is $17.85/cwt.; and the 2014 average is $17.16/cwt.
Corn, soybean, meal futures higher
A summary of today’s futures prices at the Chicago Mercantile Exchange:
Corn: +7¢ for July 2013, to $7.17/bushel; +3¢ to +6¢ per bushel, September 2013 through December 2014, settling in a range of $5.27 to $5.53/bushel.
Soybeans: +9¢ for July 2013, to $16.01/bu.; +3¢ to +6¢ September 2013 through November 2014, settling in a range of $12.45-$13.32/bushel.
Soybean meal: +$5.20 for July 2013, to $525.70/ton; +$1.80 to +$5.20/ton, October 2013 through December 2014, settling in a range of $372-$390/ton.
• Ag Secretary Tom Vilsack disagrees with splitting the Farm Bill and is asking Congress to resolve the issue.
• Mike Hutjens provides tips on getting optimal growth and muscle development from your heifers.