CIH: April dairy margins improve
Dairy margins continued to improve since the end of March, with milk prices remaining very firm while feed costs appear to have stabilized following a significant selloff late last month.
From a historical perspective, forward margins are still above the 90th percentile of the previous 10 years through the first quarter of 2014, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC. That offers opportunities for dairies to protect strong levels of profitability, the CIH report said.
USDA’s April World Ag Supply & Demand Estimates (WASDE) report estimated corn ending stocks at 757 million bushels, up 125 million from March, but 67 million below the average private estimate, as feed and residual use was not lowered as much as expected. Soybean ending stocks were left unchanged at 125 million bushels, and the monthly report noted a higher projection for soybean meal exports. That data appears to have stabilized old-crop futures, while a delayed start to spring planting across the Midwest due to cold, wet weather is helping to
support new-crop prices at the same time.
Milk prices appear to be drawing support from a delayed spring flush due to the colder weather across the Northern Hemisphere that has affected not only the U.S., but Europe as well. Meanwhile, the market is still adjusting to declining production in New Zealand, with Fonterra reporting a 16.3% drop in milk collections during March relative to last year, following a 2.3% year-over-year decline in February.