DairyBusness Update: Dec. 23, 2013

November Cold Storage report sends shivers/warms hearts?
   Cash dairy traders will only have one shortened day before Christmas to respond to this afternoon’s November Cold Storage report which showed strong draw downs, particularly in butter stocks from October and a year ago.
   The November 30, 2013 butter inventory stood at 121.4 million lbs., according to preliminary data, down 60.4 million lbs. or 33% from October, 2013 and 5.9 million lbs. or 5% below November 2012. Revisions added 8 million lbs. to the original October 2013 estimate. The October 2013 butter inventory was originally reported to be up 20% from October 2012 and 19% above September 2012.
   American type cheese, at 616.1 million lbs., was down 10.1 million lbs. or 2% from October, but 4.4 million lbs. or 1% above a year ago. The total cheese inventory stood at 998.5 million lbs., down 21.2 million lbs. or 2% from October but 12.6 million lbs. or 1% above November 2012.

U.S. Grains Council report indicates corn crop high quality
   Record production, high quality and minor weather-related impacts are the top-line findings of the 2013/2014 Corn Harvest Quality Report, released by the U.S. Grains Council.
   Total U.S. corn production of 13.989 billion bushels (355.3 million metric tons) is an all-time record, and the average yield of 160.4 bushels/acre (10.1 tons/hectare) is the second highest on record. Weather was again the challenge, as a cold and wet spring delayed planting across much of the corn belt. Some areas also experienced flash-drought conditions in mid-summer, although this was generally offset by cooler temperatures.
   These weather adversities slightly reduced planted acreage and yield, while harvest quality remained very high. As compared to prior years, weather-related impacts were modest and predictable. Aflatoxins were significantly lower than in the 2012 crop, with 99.4% of the samples testing below the FDA aflatoxin action level of 20 parts per billion. Starch content was up, while protein content, which is inversely related to starch, was down slightly. Oil content was similar to 2011 and 2012. Moisture content, reflecting weather conditions, was slightly higher, as were stress cracks, but total damage levels remained very low, comparable to 2012 and below 2011 levels. Average test weight remained well above the limit for No. 1 grade corn, indicating overall good quality. Read more …

Hula tops national corn yield contest 
  
David Hula of Charles City, Va., broke the corn yield world record in the 2013 National Corn Growers Association (NCGA) Corn Yield Contest, according to DuPont Pioneer.  Winning the No-Till/Strip-Till Irrigated category, David Hula produced an entry of 454.98 bushels per acre, the highest mark ever recorded by the NCGA in its annual contest. Hula planted Pioneer® brand hybrid P2088YHR. 
   Johnny Hula, also of Charles City, Va., had the second highest recorded yield at 421.26 bushels/acre, placing second in the No-Till/Strip-Till Irrigated category, and  Double ‘SA’ Farms, Inc., Hart, Texas, had the third highest yield, winning the Irrigated category at 418.34 bushels/acre.
   The NCGA Corn Yield contest is an annual U.S. national competition among corn growers with the goal of capitalizing on the high genetic yield potential of today’s corn hybrids. Growers compete in six corn production classes, including non-irrigated (A and AA), no-till/strip-till non-irrigated (A and AA), irrigated and no-till/strip-till irrigated classes.  The class A Non-Irrigated Class is open to corn producers in the continental United States, except for Illinois, Indiana, Iowa, Minnesota, Missouri, Ohio or Wisconsin. The AA Non-Irrigated Class is for corn producers entering a hybrid located in Illinois, Indiana, Iowa, Minnesota, Missouri, Ohio or Wisconsin.
   For a list of national winners, yield totals and hybrids numbers, go to http://www.pioneer.com/ncga/

Southeast DFA settlement: Checks mailed Dec. 19
  
“Southeast Milk” checks from the Dairy Farmers of America Inc. (DFA) lawsuit settlement were mailed on Dec. 19, according to Julia Walker, AgriVoice Enterprises, who has been following the lawsuit since July 2007.
   As outlined by DairyBusiness Update in late November 2013, plaintiff attorneys Baker-Hostetler and Brewer & Terry filed a motion, Nov. 26, authorizing the payments, which had initially been agreed to in January 2013. Judge Ronnie Greer approved the motion, paving the way for payments to be sent.
   According to court documents, a net settlement fund (after court-approved, standard expenses) of about $85.64 million was to be distributed on a “pro rata” basis to 6,086 eligible claimants. Walker estimates payments will average $14,000, but could range from less than $200 to tens of thousands of dollars, depending on the pounds of class-eligible milk determined per an individual claim.
   Walker urged check recipients to compare the amount of their individual check to their estimated pounds of eligible milk. Recipients with questions, or those who do not receive a check and believe they are eligible, should contact the claims administrator, Rust Consulting, at 800-874-2297 begin_of_the_skype_highlighting 


800-874-2297 FREE  end_of_the_skype_highlighting, or e-mail  info@southeastdairyclass.com. She also urged check recipients to contact their tax professionals. Read more …

Dairy market news a lot of “bull”
   It’s a daily question as to who will be fed, the bulls or the bears. Right now, it’s the bulls. FC Stone risk management consultant Chris Hildebrand wrote in this morning’s eDairy Insider Closing Bell that "All the news is bullish, and the bulls are being fed every day.” Today’s Cold Storage report had more fodder. He adds; “News that China has culled 2 million dairy cows, which has led to 10%-15% year-over-year decline in production, continues to have an impact on this market.”
   Meanwhile, most last minute orders for holiday sales are completed, according to UDSA’s Dairy Market News (DMN), but buyers are looking to secure inventories for New Year’s and the football bowl and playoff season. Cheese production is limited by tighter than expected milk supplies and competition from butter/powder plants for available milk. Block demand is good domestically and export sales continue to reduce inventories.
   DMN warns that “Higher prices are beginning to restrict some of the export demand.” Barrel demand is also showing some increased interest. It remains to be seen broker Dave Kurzawski’s warning last week that “a CME price near $2/lb. would start to attract product to the exchange."
   Butterwise; FC Stone market analyst Derek Nelson wrote in the December 20 Insider Closing Bell that butter demand is “very strong and U.S. butter is competitively priced in world markets, which is moving butter offshore."
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Mielke’s Market Daily for Monday
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
It’s just hours away now but Santa set another gift under dairy’s Christmas tree this morning. Cash barrel cheese gained another 1¢, as traders anticipated this afternoon’s November Cold Storage report and that could spark even more “gifts” ahead. The block cheese price remained at $2/lb. today, with no activity, while the barrels advanced on a single unfilled bid and hit $1.96/lb., narrowing the spread to a more normal 4¢.
   A single trade took cash butter up 1.75¢ this morning, 3rd session in a row of gain, and hit $1.60/lb. One bid at $1.59/lb. went unfilled.
   Cash powder was quiet. Grade A remains $2.11/lb. and Extra Grade at $2.09/lb., with no activity in either market.

Today’s market closing prices:
Butter: Up 1.75¢, to $1.60/lb.
Cheddar blocks: Unchanged, at $2.00/lb.
Cheddar barrels: Up 1¢, to $1.96/lb.
Grade A nonfat dry milk: Unchanged, at $2.11/lb.
Extra Grade nonfat dry milk: Unchanged, at $2.09/lb.
Class III milk: Jan.$19.59, -4¢, Feb.$18.98 -4¢, Mar.$18.78 -11¢. Based on current CME closing prices, the Q4 2013 average is $18.68/cwt.; with an overall 2013 average of $17.99/cwt.; and a 2014 average of $18.08/cwt.
   Class III futures started today strong but then fell off into the close despite an uptick in CME spot barrel prices. FC Stone risk management consultant, Joe Kobel, reports that "The first-half contracts closed 3 to 11 cents lower” but says he “Doesn’t anticipate a full-blown breakdown, but the market is rejecting levels above current prices."
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Looking ahead:
   There are no further USDA reports that we regularly monitor in this Christmas holiday-shortened week. The markets close at noon tomorrow for the Christmas break and reopen Thursday and Friday. The CME closes at the regular time on Tuesday, Dec. 31, and reopens on Thursday, Jan. 2 and Friday, Jan. 3.