DairyBusiness Update for 11.4.13
‘Mark & Bob Show’ returns: Not so scary, but some surprises
Halloween brought both tricks and treats. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin-Madison, and Bob Cropp, UW-Madison professor emeritus, enjoy holiday leftovers while discussing the implication of the latest milk production report. You can hear their thoughts on cows, milk production per cow, stocks and exports in a short (9-minute) video here.
Cropp: Dairy Situation & Outlook
University of Wisconsin-Madison professor emeritus Dr. Bob Cropp weighed in on last Friday’s September Milk Production report, stating that the report shows cow numbers higher in July than February, but down both for August and September.
September cow numbers were down 19,000 head from February and were just 0.1% higher than a year ago. While cow slaughter has been running about 3% higher than a year ago in recent weeks, the January cattle inventory report showed more than enough replacements to grow the nation’s cow herd, according to Cropp.
“With dairy producers facing much more favorable margins (returns over feed cost) than a year ago, it is surprising that there weren’t more cows for September than what this report shows,” he said.
“Milk per cow for September was estimated to be just 0.8% higher than a year ago. This was also a smaller increase than expected since milk per cow for September a year ago was running 0.5% below the previous year. The net result was September milk production only 1.0% higher than a year ago.”
With respect to milk prices, Cropp said increased domestic sales and strong exports both the Class III and Class IV price will show further strength for November. A November Class III price of about $18.75/cwt. and a Class IV price of about $20.60/cwt. seems likely.
At these milk prices and lower feed costs than a year ago, milk production
will continue to run above a year ago, Cropp predicted. However, with this last USDA report on September milk production, perhaps the increase in milk production may not be as strong as expected. More milk and after seasonal orders of butter and cheese are filled milk prices will begin to decline by December.
The Class III price may stay near $18.00/cwt. and the Class IV price above $20.00/cwt., according to Cropp. For the first quarter of next year the Class III price could stay in the low $17s and the Class IV price in the mid‐$19s. With the recent increase in cheese prices Class III futures also strengthened for November and December and for the first quarter of next year, and are close to these predictions.
Find the full outlook report at http://future.aae.wisc.edu/outlook/cropp_oct_13.pdf
August fluid sales take a dip
August 2013 packaged fluid milk sales totaled 4.35 billion lbs., down 2.7% from August 2012. (Sales were not adjusted for calendar considerations as in previous monthly reports). August sales of conventional products, at 4.16 billion lbs., were down 3.1%; organic products, at 195 million lbs., were up 4.8%. Organic represented about 4.5% of total sales for the month.
January-August 2013 total packaged fluid milk sales, at 34.04 billion lbs., were down 2.7% from the same period a year earlier. Year-to-date sales of conventional products, at 32.55 billion lbs., were down 2.7%; organic products, at 1.49 million lbs., were up 4.7%. Organic represented about 4.4% of total sales.
Source: Dairy Market News
September Dairy Products report: More cheese, less butter & powder
September 2013 U.S. milk production was up 1.1% compared to a year ago. That translated into small increases in cheese, but lower butter output and lower powder production, according to USDA’s monthly Dairy Products report, issued this afternoon.
September 2013 dairy product output, compared to September 2012 and year-to-date (Y-T-D) estimates included:
• Total cheese: 891.8 million lbs., up 2.3%; Y-T-D 8.3 billion lbs., up 2.2%.
• Total Italian cheese: 385.0 million lbs., up 4.5%; Y-T-D 3.5 billion lbs., up 2.3%.
• Mozzarella: 300.0 million lbs., up 4.7%; Y-T-D 2.7 billion lbs., up 2.0%.
• American-type cheese: 347.1 million lbs., down 0.3%; Y-T-D 3.3 billion lbs., up 2.6%.
• Cheddar: 240.6 million lbs., down 1.2%; Y-T-D 2.4 billion lbs., up 2.6%.
• Butter: 133.7 million lbs., down 1.9%; Y-T-D 1.4 billion lbs., up 1.4%.
• Dry milk powders – Nonfat dry milk, human, 76.4 million lbs., down 9.6%, Y-T-D 1.2 billion lbs., down 16.0%; and skim milk powders, 54.2 million lbs., up 24.3%, Y-T-D 453.9 million lbs., up 80.0%.
• Dry whey (total): 69.7 million lbs., down 6.9%; Y-T-D 705.9 million lbs., down 7.1%.
• Yogurt: 424.7 million lbs., up 6.0%; Y-T-D 3.6 billion lbs., up 5.8%.
Mielke’s Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
The pundits are giving their views on last Friday’s September Milk Production report. Output was lower than many expected, and FC Stone dairy economist Bill Brooks points out that milk per cow and the number of milk cows were lower than expected. Meanwhile, the markets were anticipating this afternoon’s September Dairy Products report.
Cash traders this morning sat on their hands in the cheese market. The blocks were unchanged for the first time in three sessions, holding at $1.9025/lb. Barrels remained at $1.87/lb. There was no activity in either market.
Butter gained 1.25¢, following Friday’s 3.25¢ jump, and is now trading at $1.5450/lb. Two cars traded hands: 1 at $1.5425/lb. and 1 at $1.5450/lb.
Cash powder was quiet again today, with Grade A holding at $1.91/lb. and Extra Grade at $1.85/lb. A bid of Grade A at the existing price was left on the board.
Today’s market closing prices:
Butter: up 1.25¢, to $1.5450/lb.
Cheddar blocks: unchanged, at $1.9025/lb.
Cheddar barrels: unchanged, at $1.87/lb.
Grade A nonfat dry milk: unchanged, at $1.91/lb.
Extra Grade nonfat dry milk: unchanged, at $1.85/lb.
Class III milk: -19¢ to +10¢ through December 2014. Based on current CME closing prices, the Q4 2013 average is $18.32/cwt.; with an overall 2013 average of $17.92/cwt.; and a 2014 average of $17.00/cwt.
Eyes will be on tomorrow’s Global Dairy Trade auction. Meanwhile, the monthly World Agricultural Supply and Demand Estimates is issued Friday afternoon, and California’s December Class I milk prices are also scheduled to be announced on Friday.
Corn, soybeans, soybean meal futures trading
Today’s futures prices at the Chicago Mercantile Exchange:
Corn: -1¢ through December 2014, settling in a range of $4.26-$4.66/bushel.
Soybeans: -2¢ to +5¢ through November 2014. November 2013 through August 2014 contracts settled in a range of $12.13-$12.64/bushel.
Soybean meal: +$1.40 to +$3.30/ton through December 2014. December 2013-September 2014 contracts settled in a range of $359-$397/ton.
Coming Wednesday in DairyBusiness Weekly:
(Our digital-only magazine)
• Natalie remembered for service, character
• Implement a successful vaccination program
• DCC’s nutrition curriculum builds healthy eating habits
• USDA Milk Production report is back
• Cornell’s TDB acclaimed for its form, function
• Canola can do it for farmers, consumers
• Repeat performances: Cows that get it done on both sides of the border
• Check out our industry briefs and show and sale calendar, view our product spotlight, listen to our podcasts and more!
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